Question.        Is a Restrictive Covenant contained in a deed enforceable?

Answer. Yes, but it is subject to interpretation.

Existing Neighbors seek to prevent Constructing Neighbor from continuing construction in his rear yard in alleged violation of a restrictive covenant in the deed for the adjoining residence.

Existing Neighbors sold the subject property to Constructing Neighbor. In the deed, Existing Neighbors added the following handwritten language to the bottom of page 1:

Restrictive Covenant — No additions or alterations above one story or 17.00 feet to the top of roof of any structure as measured from the existing basement floor elevation shall be made to any part of the subject premises. This Restrictive Covenant shall remain in effect as long as [Existing Neighbors] maintain [the property next to the one being sold] as their primary residence.

(the "Restrictive Covenant")

The handwritten Restrictive Covenant bore the handwritten initials "CN" on the left margin representing Constructing Neighbor's acknowledgment.

Shortly after the property was transferred, a contractor began work in the rear yard. It appeared that Constructing Neighbor was adding a structure to the rear of his home which appeared to be an attached room or gazebo. Existing Neighbors then marked a line on their fence that they alleged was the Restrictive Covenant's maximum height. Existing Neighbors then informed the contractor working on Constructing Neighbor's home that the work appeared to violate the Restrictive Covenant. Existing Neighbors also told Constructing Neighbor of the alleged violation. Constructing Neighbor continued to perform work in the rear yard on the gazebo structure and chimney.

To enforce the covenant, Existing Neighbors wants the New York City Department of Buildings to issue a stop work order and a directive that Constructing Neighbor comply with the Restrictive Covenant. Constructing Neighbor alleges that the Restrictive Covenant is not enforceable

Constructing Neighbor admits that at the closing he was presented with the Restrictive Covenant, handwritten into the deed. He admitted that the handwritten language "specifically state[d] no 'addition' or 'alteration,' and he understood that the Restrictive Covenant meant "no additions or alterations to the Premises." He further testified that he believed the "gazebo" or "covered porch," as he identified the backyard structure, was not an addition or alteration under the building code. In his testimony and affidavit, Constructing Neighbor stated he understood that Existing Neighbors "did not want any new structure obstructing their view from their second floor." Constructing Neighbor did not believe, however, that his structures obscured their view. Therefore, Constructing Neighbor was aware and agreed to the Restrictive Covenant and its intent.

Case law is clear that restrictive covenants will be enforced when the intention of the parties is clear and the limitation is reasonable and not offensive to public policy.

Under RPAPL 1951(2), a court may extinguish a restriction if "the restriction is of no actual and substantial benefit to the person seeking its enforcement or seeking a declaration or determination as to its enforceability, either because the purpose of the restriction has already been accomplished or, by reason of changed conditions or other cause, its purpose is not capable of accomplishment." The court may declare the restrictive covenant unenforceable when balancing of equities, the restrictive covenant is of no actual and substantial benefit.  The burden is borne by the party seeking to extinguish the covenant and must show the (1) lack of benefit derived from enforcement of the restriction, and (2) legally cognizable reason for the extinguishment of the restriction under RPAPL 1951, such as changed conditions which render the purpose of the restriction incapable of being accomplished.

Existing Neighbors argue that the Restrictive Covenant herein was intended to maintain the Existing Neighbors' view of the ocean by restricting any alteration or addition to the neighboring home over a certain height. This limitation was reasonable and understood by Constructing Neighbor. This restriction does not offend public policy and may be accomplished.

Constructing Neighbor has not carried its burden to show the Restrictive Covenant is not enforceable or extinguishable.

The Restrictive Covenant does however have limitations which must be defined. The first inquiry is what is an alteration or addition, and then how is the height limit defined — to one story or 17.00 feet, or the lesser of the two.

Proceeding to defining an addition or alteration, we first turn to the common usage of the terms and whether the gazebo or chimney fit within either definition. Thus, the Merriam-Webster dictionary defines an addition as a "a part added (as to a building or residential section)" and an alteration as "the result of changing or altering something."

Constructing Neighbor argues that §27-232 of the Building Code of the City of New York defines these terms as follows: addition — "An extension or increase in floor area or height of a building that increases its exterior dimensions;" and alteration — "Any addition, or change in modification of a building, or the service equipment thereof, that affects safety or health and that is not classified as a minor alteration or ordinary repair. The moving of a building from one location or position to another shall be deemed an alteration."

Constructing Neighbor has identified the structure in the backyard as a "covered porch" or "gazebo" that would not be enclosed and without enclosure, it is merely a porch. Constructing Neighbor explained, through his architect that as a porch, therefore, it does not meet the definition of "Addition" within the Building Code since it does not increase the floor area of the residence. As such, Constructing Neighbor argues that the gazebo or covered porch, and chimney do not fit within the restrictions set forth in the Restrictive Covenant.

It is relatively clear that the "gazebo" type structure and the extended chimney, not existing prior to 2016 are additions and/or alterations to the residence. The "gazebo" is a substantial structure with a floor, and large scalloped roof that is attached to the residence, and appears to have been intended as a sun room. There were no plans on file with building department prior to the start of construction to confirm the exact type of room intended. However, the plans filed after the fact do envision an open structure.

Although the "gazebo" type structure may not increase the floor area, it changes the exterior dimensions of the residence in a permanent fashion since it is attached to the residence, as does the chimney. Moreover, the "gazebo" or "covered porch" could at any point be enclosed, and once enclosed, it would extend the floor area of the residence. Thus, the chimney and "gazebo" or "covered porch" are additions and if not they are alterations in that they are more than a "minor alteration or ordinary repair" to the residence under the building code.

The final inquiry is whether these additions or alterations exceed 17.00 feet or one story, as outlined by the Restrictive Covenant. Existing Neighbors argue that the 17.00-foot limit is violated by both structures in that the height is measured from the existing basement floor. Constructing Neighbor counterargues that the basement is more appropriately defined as a cellar under the NYC Building Code §27-232 and as such, not proper for measurement of the Restrictive Covenant height. This argument is not persuasive in that Constructing Neighbor testified that he understood the meaning of the covenant and whether the lower level of the residence is considered a basement or cellar, he understood that the Restrictive Covenant sought that floor as the basis for measurement.

Additionally, Constructing Neighbor argues that even if it is considered a basement, the restriction is not enough to allow any extension to the residence under the New York City Building Code since it would limit the height of the next story to a five-foot celling. This argument is unavailing, since if the Restrictive Covenant was read as a sole limit of 17.00 feet, the Restrictive Covenant would simply limit any addition to the residence with an upper portion about the 17.00-foot limit.

However, the Restrictive Covenant cites a limit of "one story or 17.00 feet." The NYC Building Code §27-232 defines one story as "[t]hat portion of a building that is between a floor level and the next higher floor level or roof above."

The chimney, whichever ever way it is argued, violated the Restrictive Covenant. The chimney is clearly an addition or alteration to the existing residence and extends above the roof of the residence, whether that limit is one story or 17.00 feet. Constructing Neighbor has argued that the change in chimney height was necessary when Constructing Neighbor replaced the fireplace in the basement. However, the counter argument wins, in that, Constructing Neighbor did not have to replace the fireplace, and no new regulations required the chimney extension. Existing Neighbors correctly argue that if the Restrictive Covenant is enforceable, and such Restrictive Covenant restricts the height of an extension to a height which violated the Building Code, then the extension is not permitted.

The "gazebo" or "covered porch" is not as clear. As measured from the floor of the basement (or cellar), this structure is above 17.00 feet. However, it is less that one story.

The testimony and submitted papers show that both parties were aware of the presence of the Restrictive Covenant, its intent and general application. However, the application of Restrictive Covenant lent itself to two different interpretations. The Restrictive Covenant did restrict the addition or alteration of the residence which was either "one story or 17.00 feet to the top of roof of any part of any structure", whichever limit was greater. Therefore, the structure or gazebo under construction in Constructing Neighbor's rear yard is no greater than one story and permitted under the Restrictive Covenant, despite its possible height above the 17.00-foot marker.

Question.        Can money be withheld from a contractor for poor workmanship and manufacturing defects?

Answer. YES, as to poor workmanship but NO as to manufacturing defects.

Window Contractor entered into a contract with Homeowners to install 20 replacement windows in Homeowners' home, including 7 windows in a single-story addition. The contract provided for a total cost of $17,152.00 with a down payment of $7,152.00 and the balance of $10,000.00 due upon completion. The work was performed in November. Homeowners were not satisfied with the work and notified Window Contractor, who returned to perform punch list items. Following that, Homeowners were still not satisfied and withheld payment of the remaining balance.

Window Contractor filed a mechanic's lien related to the work in March of the following year and seeks recovery of the unpaid balance

Window Contractor indicates he met with the Homeowners prior to the start of the project to discuss the scope of the work, the time-frame and cost. Following that meeting, a contract was signed with respect to the project. The parties disagree on what was specifically part of the contract. Window Contractor's alleges that both parties agreed to a proposed layout of the windows. Homeowners contend that there was a second proposed layout of the windows, that ultimately became the agreed upon design. According to Homeowners, the difference in the two sketches is important, and material, to the contract, and highlighted the importance of the continuity of the lines of glass and line of sight.

Homeowners contend that Window Contractor did not even install the correct window design, pointing to a difference in the sketch drawn during the initial discussions about the scope of the project, and a later email with the proposed contract, and a different design. However, under the parol evidence rule, consideration of any such extrinsic evidence would be appropriate only if there was an ambiguity in the contract. The contract at issue is a two-page document that sets forth all the necessary specifications for this project. The contract is clear and complete on its face. Therefore, consideration of extrinsic evidence, in the form of sketches or negotiations is unwarranted, and inappropriate.

The windows installed by Window Contractor were custom made windows. After the installation of the windows, Homeowners had raised concerns, so Window Contractor and a representative of Manufacturer went to the site to investigate the issues. Various items were reviewed and inspected. Paint overspray was observed on the glass, and that would have been a manufacturing error. A trim piece was also observed to be too short, and that was also a manufacturing flaw. Two of the slider sash pieces also had weather stripping showing, which would need to be fixed. There was also a nick in one of the channel pieces that would require all four sides to be replaced. Window screens on the front sliding window did not fit property, and the Manufacturer representative indicated that would be replaced by Manufacturer. There were also defects noted on the vinyl wrap of the windows, in that some of the joints did not close, and the caulking was not done properly.

Window Contractor replied by email to the issues raised by Homeowners following that inspection. Window Contractor acknowledged warranty issues that would be addressed after Homeowners made payment. Those warranty issues included replacing a window sash, and damaged siding, as well as the overspray, screens, vinyl trim and paint chips. However, there is no evidence that Homeowners paid the balance due on the contract, nor made a written warranty claim to Manufacturer.

The Window Contractor performed under the contract, however, in many instances, the workmanship was less than acceptable.

Based upon all the foregoing, the Window Contractor should recover on its claim for damages in the amount of $10,000. From that amount, however, the Homeowners may deduct for their claims of poor workmanship but not for those relating to manufacturing defects.

Question. Can an Architect recover for services rendered where there is no written contract?

Answer. Maybe, depending on the proof offered.

Architect seeks to recover for statements rendered in connection with architectural design work Architect did on three projects. The only written contract executed by the parties relates to one of the three projects.

It is undisputed that Architect received payments for work he did on each of these projects and equally undisputed that Architect rendered statements that were not fully paid for each of these projects. Architect has asserted claims for breach of oral contract, quantum meruit, account stated, and unjust enrichment on the two projects where there was no written contract and a claim for breach of a written contract for the unpaid balance on the third project.

The Owner claims that the alleged oral contracts could not have been performed within one year and therefore are unenforceable. The Owner further claims that bills for the projects lacking a written agreement were submitted after the work was done, were protested, and greatly in excess of anything the Owner authorized and thus cannot be the predicate for an account stated claim. And, finally, Owner assert that Architect failed to complete the third project and was, in all events, fairly compensated for his work on the third project before he breached the written contract by failing to complete the contracted for work.

From here on in we will focus on the projects for which there was no written contract.

Architect has proof of substantial design work on the projects as well as statements for services rendered. Architect alleges that he was fully authorized to perform all of the work and that Owner never contested the propriety of any of the statements rendered. By contrast, Owner, alleges he had more than a half dozen in person meetings and telephone calls with Architect challenging the scope of the work, much of which was either, in Owner's view, unnecessary or untimely. While Owner acknowledged that he engaged Architect to perform work on all three projects, Owner asserted that the work Architect did was beyond the scope of anything Owner authorized and much of it was unnecessary, if not worthless.

The first issue is whether the oral contracts were capable of being performed within one year and thus are enforceable. New York General Obligations Law §5-701(a)(1) requires a writing for an agreement if such agreement "by its terms is not to be performed within one year from the making thereof…." It has been well-settled by the Court of Appeals of New York that §5-701(a)(1) applies to only those contracts which, by their terms, have absolutely no possibility in fact and law of full performance within one year. The determination of whether an alleged oral contract can possibly be performed within one year from its making is not conducted by looking back at the actual performance, but rather, requires analysis of what was possible, looking forward from the day the contract was entered into. Both projects contemplated multi-year schedules and phases and, looking forward from the time the oral agreements were originally entered into, were incapable of being performed within a year. Therefore, the oral contracts are unenforceable under the Statute of Frauds.

The second issue is whether Architect made a prima facie case that he was entitled to judgment for account stated for the projects. The Architect can make a prima facie case of entitlement to judgment as a matter of law for account stated by establishing that she entered into an agreement with the Owner and sent him regular invoices pursuant to that agreement, to which the Owner did not object. This is ultimately an issue of credibility.

The third issue is whether Architect sufficiently presented evidence supporting its claim for quantum meruit. The elements of quantum meruit are: (1) the performance of services in good faith, (2) the acceptance of services by the person to whom they are rendered, (3) the expectation of compensation therefor, and (4) the reasonable value of services rendered. Architect proved that his architectural services were performed and that he expected to be compensated for them. Manifestly, Architect did not work beyond the conceptual phase of both projects with the intent to deceive Owner. Architect believed that Owner's office authorized each phase of the projects Architect worked on. Furthermore, by submitting invoices to Owner, Architect clearly expected to be compensated for his architectural services and, indeed, received partial payment for his work.

There is evidence that subordinates of Owner accepted Architect' architectural services. Owner accepted Architect' architectural services for the conceptual phase of both projects since he compensated Architect for such work. But the Owner had numerous conversations with Architect objecting to the work beyond the initial phase.

In addition, Architect failed to provide evidence of the reasonable value of his architectural services beyond the statements he sent for the services he rendered. And, as previously noted, much of the work for which Architect seeks to recover was either unnecessary or of no ultimate value to the Owner.

Because the parties never entered into a written contract, the only evidence of rates presented was the unsigned proposal and Architect's testimony. And, Owner's expert witness disputed the standard industry rates for such projects. For all these reasons, Architect is entitled to no more than he was paid on a quantum meruit basis.

Question. My contract provides for arbitration as the dispute resolution motion but plaintiff has sued me.  Can I still enforce the arbitration clause?

Answer. Yes, but you must do so quickly and without extensive participation in the litigation.

The parties entered into an "Agreement for Services" (hereinafter the Agreement). Defendant subsequently terminated the Agreement. Plaintiff sent defendant two separate invoices both of which pertained to work done prior to termination of the Agreement. These invoices went unpaid, as the result of which plaintiff commenced an action to recover the amounts due and owing. Defendant contends that it is entitled to dismissal of the complaint because plaintiff failed to comply with the dispute resolution provision in the Agreement. This provision states as follows:

"The parties desire to resolve certain disputes, controversies and claims arising out of this Agreement without litigation. Accordingly, except in the case of (i) a dispute, controversy or claim relating to a breach or alleged breach on the part of either party of the provisions of [s]ection 11, 'CONFIDENTIAL INFORMATION,' (ii) a suit, action or proceeding to compel [plaintiff] to comply with its obligations to indemnify [defendant] and [its c]ustomers pursuant to [s]ection 18, 'INDEMNIFICATION'…, or (iii) a suit, action or proceeding to compel either party to comply with the dispute resolution procedures set forth in this [s]ection 26, 'DISPUTE RESOLUTION,' the parties agree to use the following alternative procedure as their sole remedy with respect to any dispute, controversy or claim arising out of or relating to this Agreement or its breach….

"At the written request of a party, each party shall appoint a knowledgeable, responsible representative to meet and negotiate in good faith to resolve any [d]ispute arising under this Agreement. The parties intend that these negotiations be conducted by nonlawyer, business representatives. The discussions shall be left to the discretion of the representatives. Upon agreement, the representatives may utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations…..

"If the negotiations do not resolve the [d]ispute within sixty (60) days of the initial written request, the parties may pursue their available remedies in law or equity."

Although it is well established that this State favors and encourages arbitration as a means of conserving the time and resources of the courts and the contracting parties like contract rights generally, a right to arbitration may be modified, waived or abandoned.

Accordingly, a litigant may not compel arbitration when its use of the courts is clearly inconsistent with its later claim that the parties were obligated to settle their differences by arbitration.

The crucial question is what degree of participation by the defendant in the action will create a waiver of a right to stay the action. In the absence of unreasonable delay, so long as the defendant's actions are consistent with an assertion of the right to arbitrate, there is no waiver. However, where the defendant's participation in the lawsuit manifests an affirmative acceptance of the judicial forum, with whatever advantages it may offer in the particular case, his actions are then inconsistent with a later claim that only the arbitral forum is.

Under the circumstances, the defendant has waived its right to compel arbitration under the dispute resolution provision of the Agreement. Defendant clearly reviewed the Agreement upon commencement of the action and — rather than proceeding with a motion to dismiss based upon plaintiff's failure to comply with the dispute resolution provision — defendant moved to change venue under the forum selection clause. Then, when that motion was denied, defendant participated in a preliminary conference, exchanged discovery and established a date for depositions. These actions are not consistent with an assertion of the right to arbitrate. Rather, defendant's participation in this litigation manifests its affirmative acceptance of the judicial forum.

Question. Can I privately settle an unpaid wage claim with my former employee?

Answer. No.

A former employee agreed to compromise its claims unpaid wage under the Fair Labor Standards Act, 29 U.S.C. §201 et seq. (the "FLSA"), and the New York Labor Law with his former employer.

Pursuant to Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015), "stipulated dismissals settling FLSA claims with prejudice require the approval of the district court…to take effect." Id. at 206. The parties are required to submit to the Court  an executed settlement agreement together with information supporting the agreement as fair and reasonable.  This includes all classes of damages and even attorney’ fees.

Unlike the standard personal injury case, plaintiffs' counsel in FLSA cases are guaranteed an award of fees provided that the plaintiff prevails. And, as a practical matter, plaintiffs almost always prevail; though a plaintiff may not receive all of the compensatory or liquidated damages sought, it is the rare FLSA case where an employer is found to be free of any liability. 

Question.        If a subcontractor files a mechanics’ lien greatly in excess of any amount it is owed can the Contractor have the lien dismissed?

Answer. Yes.

Contractor entered into a contract with Construction Manager to provide millwork on a renovation project for Tenant. Contractor and Subcontractor thereafter entered into a subcontract for installation of the millwork in the amount of $117,500. The parties later revised that amount upward to $165,958 to reflect the installation of doors and frames, and then, when Contractor realized that that work was already part of the Subcontractor’s contract, it revised that amount downward to $141,729, giving the Subcontractor credit for half of the prior $48,458.00 upward modification. A dispute then arose between the parties regarding the amount due to Subcontractor, with Contractor contending that Subcontractor performed defective and incomplete work. Subcontractor prematurely abandoned the project in July and in September, filed a mechanic’s lien against the property in the amount of $271,004.05. Contractor paid two other contractors $137,228.50 to repair and complete the work performed by Subcontractor.

Contractor seeks to declare that the mechanic’s lien is void or invalid and pursuant to Lien Law § 39 to discharge the mechanics lien as willfully exaggerated.

It is well settled that a lienor who willfully exaggerates a lien risks the court declaring the entire lien void. Lien Law § 39 provides, in pertinent part:

“In any action or proceeding to enforce a mechanic’s lien upon a private or public improvement or in which the validity of the lien is an issue, if the court shall find that a lienor has wilfully exaggerated the amount for which he claims a lien as stated in his notice of lien, his lien shall be declared to be void and no recovery shall be had thereon. No such lienor shall have a right to file any other or further lien for the same claim.”

A determination of willful exaggeration of a mechanic’s lien requires proof that the lienor deliberately and intentionally exaggerated the lien amount.  While the fact that a lien may contain improper charges alone does not establish a willful exaggeration.  Cost and expense mark-ups by a subcontractor or a discrepancy between the lien amount and agreed contract price may provide such proof. Further, where the evidence conclusively establishes that the amount of the lien was willfully exaggerated, summary disposition is warranted.

Contractor’s proof conclusively establishes that Subcontractor deliberately and intentionally, and thus willfully, exaggerated the lien amount, possibly as retaliation. It submits proof that Subcontractor abandoned the job and filed the lien soon after it complained about Subcontractor’ work, and that the lien amount greatly exceeded the highest possible contract price with all change orders, by approximately 130%. Contractor submits invoices from Subcontractor totaling $165,958, plus overtime and change order tickets in the amount of $70,971.75, for a total of $236,929.75. Contractor also submits proof that it disputed those amounts and paid Subcontractor $120,000 by wire transfers before the lien was filed. Thus, using the highest contract price and assuming full performance under the contract, Subcontractor would be owed only $116,929.75, which is $154,074.30 less than its $271,004.05 lien. Such a discrepancy cannot be said to be mere inaccuracy, mistake or inadvertence. Subcontractor has proffered no proof or argument to the contrary.

Question.        Bond Claimant brings this state-law action for non-payment against Surety, the surety on two labor and material payment bonds issued in connection with two Public construction projects in New York City. On both projects, Bond Claimant served as a subcontractor to Principal, the principal on the bonds issued by Surety.

Can the Surety enforce an exclusive forum selection clause in the subcontract agreements between Bond Claimant and Principal?

Answer. Yes.

Bond Claimant alleges that it furnished labor, materials, and equipment to Principal in connection with two Public projects.

For each project, Bond Claimant entered into a subcontract agreement (the "Subcontract Agreements") with Principal, on January 27, 2010 and November 2, 2010, respectively.. Each Subcontract Agreement contains an identical forum selection clause, which, in relevant part, provides:

1.1 The venue of any action or proceeding shall be exclusively in the Supreme Court of the State of New York, County of Westchester, before a Justice of said Court. The parties hereto hereby waive the right to trial by jury.

1.2 Notwithstanding any contrary terms of conditions contained in any surety bond, the parties agree that the venue of any action or proceeding against any surety bonds made in connection with the Project shall be exclusively in the Supreme Court of the State of New York, County of Westchester, before a Justice of said Court. The parties hereto hereby waive the right to trial by jury.

For each project, Bond Claimant was also covered by labor and material payment bonds, issued by Surety, as surety to Principal, in the amounts of $40,000,000 (the "Project A Bond") and $116,000,000 (the "Project B Bond"), respectively. Bond Claimant alleges that these bonds-guarantees, essentially, that Principal would perform its contractual obligations to its subcontractors-create joint and several liability between Surety and Principal for any failure to perform by Principal. The parties have not indicated whether the bonds themselves contain forum selection clauses.

Bond Claimant commenced an action, seeking to recover labor and materials costs it purportedly provided to Principal on the two projects, but for which it was purportedly never paid. Only Surety-and not Principal-is named as a defendant. Surety now seeks dismissal of Bond Claimant's action, contending that the forum-selection clause in the Subcontract

Agreements between Bond Claimant and Principal is mandatory and must be enforced.

Bond Claimant contends that Surety is not a signatory to these Agreements, and that Surety therefore improperly relies on a forum selection clause that is absent in the four corners of the subject payment bonds.

Forum selection clauses are to be interpreted broadly and are not restricted to pure breaches of the contracts containing the clauses. Whether a particular claim falls within the scope of a forum selection clause is a contractual question that requires the courts to interpret the clause and, where ambiguous, to consider the intent of the parties. Courts have consistently analyzed a clauses scope by reference to the meaning of its terms.

Here, the language of the forum selection clauses is unambiguous: it applies to any cause of action brought against any surety bonds made in connection with the Project.. Although this language should not be read to encompass all claims that have some possible relationship with the contract, it is nonetheless sufficiently broad to encompass Bond Claimants particular claims here. Bond Claimants Complaint makes clear that its claims arise from its Subcontract Agreements with Principal, and it seeks damages in the amount of materials and services that remains unpaid by Principal on the Project A and Project B Projects, with Surety named only its capacity as surety.

Bond Claimant does not seriously contend otherwise. It asserts only that the venue provisions in the Subcontract Agreements cannot apply to Bond Claimants claims on the payment bonds, but otherwise offers no support for this proposition. Accordingly, its claims fall within the scope of the Subcontract Agreements forum selection clauses.

That a party is a non-signatory to an agreement is insufficient, standing alone, to preclude enforcement of a forum selection clause. Indeed, a non-signatory can enforce the forum selection clause against a signatory when the non-signatory is closely related to another signatory. Such a close relationship exists where the non-signatory’s enforcement of the forum selection clause is foreseeable to the signatory against whom the non-signatory wishes to enforce the forum selection clause.

Here, the relationship between Bond Claimant and Surety was sufficiently close for Surety, a non-signatory to the Subcontract Agreements, to nonetheless enforce the forum selection clauses contained therein. Although only Bond Claimant and Principal are signatories to the Subcontract Agreements, the enforcement of the forum selection clauses by sureties on the Project A and Project B Projects is expressly contemplated. Surety is Principal surety on both projects-and, indeed, is the surety on the payment and materials bonds pursuant to which Bond Claimant seeks recovery.

That Bond Claimant elected to sue only Surety does not permit Bond Claimant to escape its contractual obligations. It should have been foreseeable to Bond Claimant from the clear language of the forum selection clauses that Surety, as the surety on its projects, would seek enforcement of these clauses if sued anywhere but New York State Supreme Court, Westchester County.

As the first three prongs of the forum selection analysis are satisfied, the forum selection clauses in the Subcontract Agreements are presumptively enforceable. Bond Claimant may therefore defeat dismissal only if it overcomes this presumption, namely, by establishing that enforcing the forum selection clauses would be unreasonable or unjust. A forum selection clause is enforceable unless (1) its incorporation was the result of fraud or overreaching; (2) the law to be applied in the selected forum is fundamentally unfair; (3) enforcement contravenes a strong public policy of the forum state; or (4) trial in the selected forum will be so difficult and inconvenient that the Plaintiff effectively will be denied of his day in court.

Bond Claimant has not credibly argued that the forum selection clauses here should be set aside because their enforcement would be unreasonable or unjust. Instead, it offers a wholly unsubstantiated public policy concern, namely, that Surety’s requested relief would turn the construction industry upside down.  Finding that Surety can enforce the forum selection provisions of Bond Claimants contracts with Principal, however, will not preclude subcontractors from recovering against sureties. It will merely ensure that they do so in the proper forum. Here, that forum-one that Bond Claimant assented to when it signed the Subcontract Agreements-is New York State Supreme Court, Westchester County.

Answer. Yes.

The Contractor seeks to recover the total sum of $41,765.62 for services rendered. The Client retained the services of the Contractor on or about March 2010 to perform services on its behalf. The parties executed an agreement and pursuant to the agreement, the Contractor avers to sending the Client monthly invoices showing the services rendered and amounts paid and unpaid. The Contractor alleges an unpaid balance of $41,765.62.

It is the Clients contention that a settlement agreement was proposed and agreed to between the parties. The Client averred that he accepted the Contractor’s settlement proposal and agreed to make a lump sum payment as the Contractor requested. Pursuant to their agreement, the Client stated that he prepared and forwarded the settlement documents to the Contractor for execution. Then the Contractor changed his mind and backed out of the settlement.

The Contractor relies upon the fact that no written agreement was exchanged and that there was no firm and final commitment to conclude the litigation because nothing was signed and critical details were unresolved. The e-mails from the Contractor constitute signed writings within the meaning of the statute of frauds, since the Contractors name at the end of his e-mail signified his intent to authenticate the contents. Similarly, the Clients name at the end of his e-mail constitutes a signed writing (CPLR 2104) within the meaning of the statute of frauds. The Contractor laid his offer out in his e-mail of September 25, 2014 @ 4:37 P.M. The parties agreed to an amount and the Contractor wanted a lump sum payment. The Contractor also consented to the Client notifying the court of their settlement negotiation and requested that the court refrain from rendering a decision on the pending motion.

As a general rule, in order for an acceptance to be effective, it must comply with the terms of the offer and be clear, unambiguous and unequivocal. In the Clients email of September 26, 2014 @ 11:13 A.M., the Client agreed to a single payment payable in 30 days. This is what the Contractor requested. In as much as there was nothing unclear, ambiguous or equivocal about the Clients September 26, 2014 email in response to the Contractors September 25, 2014 email, it appears to constitute an effective acceptance. Once the Client agreed to a single payment, payable in 30 days, the matter was settled.

Accordingly, the parties entered into an agreement via e-mail to settle the instant action and the emails represent a signed writing pursuant to CPLR 2104 and, as such, is a valid and enforceable agreement, despite Contractors refusal to execute the stipulation.

Answer. No.

General Contractor, alleges breach of contract, violation of N.Y. UCC Article 2, unjust enrichment and violation of New York Debtor and Creditor Law, Article 10 based on, inter alia, an alleged agreement to retain Subcontractor, to provide and install windows as part of General Contractor's construction and development of certain real property (the "Property").

Subcontractor counterclaims anticipatory breach (where there has been an anticipatory breach of a contract by one party, the other party may treat the entire contract as broken and may sue immediately for the breach). In order to give rise to a cause of action for anticipatory breach, there must be a definite and final communication of the intention to forego performance. By contrast, a mere expression of difficulty in tendering the required performance, for example, is not tantamount to a renunciation of the contract.

Subcontractors asserts, General Contractor and Subcontractor entered a contract for the installation of custom windows.  Subcontractors alleges that, pursuant to the contract, General Contractor was obligated to pay the Subcontractor the sum of $120,000.00. Subcontractor further alleges that Subcontractor, purchased materials and incurred other expenses toward its performance of the parties contract, and, was ready, willing, and able to perform its obligations under the parties contract. Subcontractors asserts that, General Contractor anticipatorily repudiated the parties contract without cause, and that, as a result of the General Contractors anticipatory repudiation, the Subcontractor is rendered unable to receive the benefits of the parties contract.

Here, even accepting Subcontractors allegations as true, Subcontractors fails to allege that General Contractor made a definite and final communication of General Contractor’s intention to forgo performance under the purported contract for the installation of custom windows. Accordingly, even accepting Subcontractors allegations as true and drawing all inferences in its favor, the Subcontractor fails to state a counterclaim for anticipatory breach.

Answer. Yes.

On June 22, 2001, the Public Owner awarded a public improvement construction contract (the prime contract) to General Contractor, whereby it agreed to provide general construction services to build two new sanitation garages (the project). In furtherance of the prime contract, General Contractor, on August 22, 2001, entered into a subcontract with Subcontractor, a masonry subcontractor, to perform certain masonry work (the subcontract).

Paragraph 15 of the subcontract, in pertinent part, provided:

The Subcontractor hereby agrees that no work shall be considered as extra hereunder unless, before said work shall have been done, a separate written estimate therefor shall have been submitted to the Contractor in the same manner as is provided in the Principal Agreement. If the Contractor and/or the Owner refuses to approve the estimate for extra work, the Subcontractor shall nevertheless perform expeditiously the work called for, and in that event, should the Owner refuse to give such approval, if the Subcontractor so desires, the Contractor shall institute suit on behalf of the Subcontractor for compensation for such work providing that any and all suit fees and reasonable attorney's fees arising for such suit shall be borne by the Subcontractor. This clause in no way obligates the Contractor to pay the Subcontractor's claim for extra work unless such work was first approved by the Owner.

The bid documents indicated that work on the project was to be completed by General Contractor within a period of 42 months. Subcontractor's masonry work was to be completed by October 21, 2003, a period of 14.5 months, well before the completion of the entire project. Pursuant to the Public Owner-issued notice to proceed, work on the project was to commence on November 1, 2001. However, due to various delays and interferences impacting the project, Subcontractor was allegedly wrongfully denied access to the project site and otherwise prevented from, hindered, and delayed in commencing and performing its work within the scheduled 14.5 months. Subcontractor was unable to commence its masonry work on the project until November 11, 2003, and was unable to complete its work until over two years after the scheduled completion date. Specifically, Subcontractor's final payment applications were for the period through September 30, 2005. Subcontractor claims that, as a result, it incurred extra and additional costs due to, among other things, a late start, denial of access to the project site, revisions to the construction sequence, stop work orders, extra work, contaminated and hazardous soils, and changed conditions. Subcontractor, by various notices dated February 1, 2002 through August 29, 2005, informed General Contractor of the delays, impediments, and interferences that caused it to incur extra and additional work, costs, and losses.

In or about May 2002, Subcontractor hired an outside claims consultant to assist it in preparing a claim for the extra and additional work, costs, and losses arising from the aforementioned delays, impediments, and interferences, so that General Contractor could submit this claim to the Public Owner, pursuant to paragraph 15 of the subcontract. By letter dated June 4, 2002, and a second identical letter dated July 25, 2002, Subcontractor complained to General Contractor that increases in its compensation under the subcontract were necessary due to the delays encountered. By letter dated August 9, 2002, General Contractor responded as follows:

"In response to your 7/25/02 letter requesting an increase to your contract due to delays, we have agreed to the following terms. General Contractor will increase your contract by $100,000 to help offset your increased costs. Your revised contract amount will now be $3,100,000.00. [Subcontractor's] additional costs, due to delays, will be incorporated into [General Contractor's] claims against the owner [i.e., the Public Owner] at the completion of the contract. Any money received in the settlement of the claim (for Subcontractor) over the $100,000.00 will be forwarded to you."

Subcontractor asserts that since, in consideration for Subcontractor's agreement to defer its claims against General Contractor, General Contractor agreed to incorporate Subcontractor's claims into its own claim against the Public Owner and advance $100,000 against any amounts recovered from the Public Owner on its pass-through claims, Subcontractor did not pursue its claims against General Contractor. Subcontractor continued, however, to give General Contractor notice of the delays, impediments, and interferences resulting in extra and additional work, costs, and losses. By letter dated August 20, 2004, Subcontractor informed General Contractor that, because the costs of its materials were increasing rapidly, it would be billing for increases in costs. By letter dated August 23, 2004, General Contractor responded, "whatever information you provide for said increases must become part of our claim against the owner for these added costs."

On September 2, 2005, Claims Consultant (which had also been retained by General Contractor as its claims consultant) finalized Subcontractor's claims for additional compensation and gave them to Subcontractor for review and approval, advising it to submit them to General Contractor and to request that General Contractor submit these claims to the Public Owner on its behalf as soon as possible. By letter dated September 8, 2005, Subcontractor submitted its claims for additional compensation to General Contractor, and requested that it submit these claims to the Public Owner on its behalf as soon as possible.

After reviewing Subcontractor's claims, General Contractor's project manager, requested, on September 15, 2005, that Subcontractor make modifications to that portion of its claim which related to certain steel problems since it could potentially negatively impact General Contractor's claims, and, in further consideration of General Contractor's assuming the obligation to submit Subcontractor's claims to the owner, Subcontractor agreed to drop that part of its claim. General Contractor also requested that Subcontractor revise a schedule of its claim regarding loss of productivity, and Subcontractor revised its claim, as requested, and resubmitted it to General Contractor on October 31, 2005. According to Subcontractor, it was informed that, in January 2006, General Contractor submitted its own claims, which incorporated Subcontractor's claims and those of other subcontractors, to the Public Owner.

Thereafter, Subcontractor, periodically spoke to General Contractor, to inquire as to the status of its claims. Subcontractor claims that General Contractor informed him that Subcontractor would be hearing something regarding its claims shortly and that no further action was necessary.

By letter dated December 23, 2008, Claims Consultant advised Subcontractor that General Contractor had retained an attorney to pursue the claims, who wanted a new claims consultant to become involved with the claims, and that this would probably take considerable time. Claims Consultant further advised Subcontractor, in this letter, that it was already over a year since substantial completion was reached, and that it could not offer any further information as to when General Contractor would be submitting the claims. At the request of General Contractor, Subcontractor forwarded a copy of its delay claims to New Claims Consultant on December 30, 2008.

On August 11, 2010, General Contractor filed a verified notice of claim against the Public Owner, alleging the various delays and interferences by the Public Owner resulting in extra work, incorporating Subcontractor's claims in the amount of $2,099,192. On December 13, 2010, General Contractor commenced an action against the Public Owner seeking $15,092,471.40 on its own behalf and on behalf of Subcontractor and other subcontractors, alleging the delays, interferences, and extra work on the project.

In that action the Court held that article 56 of the prime contract established a statute of limitations period for claims against the Public Owner requiring such claims to be commenced within six months after the date the Commissioner issued a certificate of substantial completion. The Court found that General Contractor had substantially completed its work on December 7, 2007, and that this six-month period was triggered on December 27, 2007, when the Public Owner forwarded to General Contractor notice of substantial completion, requiring it to bring its claims prior to June 27, 2008 in order for those claims to be timely.

On March 21, 2014, Subcontractor filed a separate action against General Contractor. Subcontractor's complaint alleges five causes of action, including a first cause of action for breach of contract related to its contract balance allegedly due on the project, a second cause of action for breach of General Contractor's contractual duty with respect to Subcontractor's pass-through delay claims against the Public Owner, a third cause of action for breach of General Contractor's fiduciary duty to present Subcontractor's claims diligently, a fourth cause of action for breach of contract based upon any delays caused by General Contractor's own acts or omissions, and a fifth cause of action for quantum meruit.

General Contractor argues that Subcontractor's breach of contract claims (in its first and fourth causes of action) are barred by the six-year statute of limitations of CPLR 213 (2). In construction cases a contractors claim accrues upon the substantial completion of its work.

Here, Subcontractors first cause of action for breach of contract seeks recovery of the balance of sums due under the subcontract and accrued against General Contractor upon substantial completion of its work under the subcontract, on September 30, 2005. Moreover, Subcontractors breach of contract claims based upon the subcontract could not have accrued any later than December 27, 2007, when the Public Owner forwarded General Contractor notice of the substantial completion of the entire project. Therefore, since Subcontractor filed this action against General Contractor on March 21, 2014, six and a half years after General Contractors substantial completion of the project and, even more egregiously, eight and a half years after its own substantial completion of the project, its first breach of contract cause of action is time-barred (see CPLR 213 2).

Subcontractors fourth cause of action for breach of contract seeks recovery for damages for delay resulting from General Contractors own acts and omissions in causing such delays. This claim, based upon the subcontract between Subcontractor and General Contractor, also accrued upon Subcontractors completion of its work on September 30, 2005 and is time-barred.

Subcontractor’s second cause of action has been characterized by General Contractor as a claim, also based upon the subcontract, for the breach of the covenant of good faith and fair dealing in failing to diligently prosecute Subcontractors delay claims against Public Owner and the Public Owner.  General Contractor’s argument is largely founded on the language of paragraph 15 of the subcontract which obligates General Contractor, upon request of the subcontractor, to pursue unapproved extra work claims against the owner, but does not expressly include delay claims. Apart from its argument that paragraph 15 implicitly excludes delay claims and, in any event, Subcontractor failed to meet the condition precedent of submitting a written estimate to General Contractor, General Contractor contends this claim duplicates other breach of contract causes of action and must be dismissed. However, the gravamen of the second cause of action, as reflected in the pleading, is an independent claim based upon General Contractors alleged breach of a liquidating agreement, reflected in the letter of August 9, 2002, by which General Contractor became contractually obligated to pass-through Subcontractors delay and extra work claims against the Public Owner (with which Subcontractor was not in privity and, therefore, could not sue directly), in conjunction with General Contractors own claim for damages for delay and extra work caused by the Public Owners and Public Owners acts and omissions. The allegations regarding General Contractors lack of good faith and diligence in prosecuting these claims are pleaded in the context of a broadly-stated claim for breach of contract and do not constitute a duplicative claim as all contracts contain a covenant of good faith and fair dealing.

In opposition to General Contractors motion to dismiss this claim, Subcontractor contends this claim is not time-barred as suit was timely commenced on March 21, 2014, within six years of June 27, 2008, the date on which the statute of limitations expired on General Contractors claims against the Public Owner. Subcontractor points to the fact that it submitted its revised pass-through claims to General Contractor on or about October 31, 2005, more than two years before the project was deemed substantially completed by the Public Owner on December 7, 2007, and contends that General Contractor could and should have timely filed an action against the Public Owner asserting its claims, but failed to do so. Subcontractor argues that since the statute of limitations for suing the Public Owner expired on General Contractors claim on June 27, 2008, that was the date on which General Contractor breached its agreement to present Subcontractors pass-through claims to the Public Owner by allowing the statute of limitations to expire and that is the date upon which its second cause of action accrued.

In response, General Contractor argues that there was no enforceable liquidating agreement or contractual pass-through agreement by which it assumed liability for Subcontractors delay claims based upon delays caused by the Public Owner and not General Contractor. General Contractor points to the fact that paragraph 15 of the subcontract, which provided that it would institute a lawsuit for compensation against the owner on Subcontractors behalf, only pertained to extra work, as opposed to delay damages, and that Subcontractors claims herein relate solely to its recovery for delay damages and not for extra work.

General Contractor notes that case law has distinguished between recovery sought for extra work versus delay damages. General Contractor argues that the subcontract distinguished between extra work and delay damages since, in contrast to the extra work provision in paragraph 15, paragraph 12 of the subcontract specifically governed delay damages and provided that Subcontractor understands and agrees that the Contractor General Contractor shall not be liable for any damages or loss through any delay…of any other subcontractor and/or other contractors. Such provision does not, however, speak to contractors possible liability for its own conduct in causing delay damages to a subcontractor, nor does paragraph 12 relate to General Contractors liability for delays caused by the owner, and is not, therefore, per se dispositive. General Contractor asserts that since paragraph 15 did not apply to Subcontractors delay claims, as a general contractor, it was not responsible for any delay damages caused by the Public Owner, nor would it be required under the subcontract to institute suit on Subcontractors behalf. While General Contractor would not, in the absence of an express contractual undertaking, normally be responsible for delays caused by the owner unless it shared actual control over the circumstances which created such delay there is such contractual undertaking here. It is unnecessary to determine the factual question as to the nature of the damages for which Subcontractor seeks to recover, whether Subcontractors claim is for extra work or for delay, as Subcontractor relies on a separate agreement which provides an independent basis for Subcontractors second cause of action.

Subcontractor contends that the subcontract was modified by the August 9, 2002 letter (the agreement), which constituted an enforceable liquidating agreement or pass-through agreement by which General Contractor assumed the duty to assert its delay claims against the Public Owner. It is well-settled that liquidating agreements are a valid mechanism for bridging the privity gap between owners and subcontractors who sustain damages as the result of the others actions. Generally, a liquidating agreement or pass-through agreement grants the general contractor a release of its liability to the subcontractor after the general contractor prosecutes the subcontractor’s pass-through claims against the owner and conveys any recovery to the subcontractor

Liquidating agreements need not take any particular form, and may be assembled from several documents executed over a period of years. Such liquidating agreements ordinarily limit the general contractors liability to the subcontractor to the amount actually recovered from the owner, but may also require the general contractor to make an additional payment to the subcontractor

Liquidation agreements have three basic elements: (1) the imposition of liability upon the general contractor for the subcontractors increased costs, thereby providing the general contractor with a basis for legal action against the owner; (2) a liquidation of liability in the amount of the general contractors recovery against the owner; and, (3) a provision that provides for the pass-through of that recovery to the subcontractor. There is no requirement that the liquidating agreement must be part of the original subcontract, and the general contractor may assume liability for pass-through claims of the subcontractor by way of a separate liquidating agreement. Furthermore, since a general contractor is not liable to its subcontractors for delays that it did not cause, there also need not be actual contractual liability between the contractor and subcontractor in the subcontract as a prerequisite to the enforceability of a liquidating agreement. However, the general contractor, in entering into a liquidating agreement, must assume such liability in order to pursue a claim against the owner on behalf of the subcontractor.

Here, General Contractor argues that there was no liquidating agreement because it never acknowledged liability for Subcontractors increased costs. However, in response to Subcontractors requests for an increase in the amount to be paid to it due to delays, and to dissuade Subcontractor from suing, General Contractor agreed, in the August 9, 2002 letter, to make an additional payment to Subcontractor of $100,000, revising the subcontract to $3,100,000, to incorporate Subcontractors claims for delay costs into its own claims against the Public Owner, and to pay Subcontractor any money that it actually received in the settlement of the claims attributable to Subcontractors claims, above the $100,000 sum paid. The clear implication of this settlement agreement is an acknowledgment by General Contractor of liability to Subcontractor. The arrangement establishes a liquidation of such liability to $100,000, plus whatever additional compensation might be recovered from the Public Owner which would be passed through to Subcontractor.

Subcontractor correctly argues that, by this agreement, General Contractor assumed a duty to prosecute its claims against the Public Owner in good faith, and was required to commence the New York County action asserting those claims before the statute of limitations on its own claims expired. The contractual covenant of good faith and fair dealing, which is implied in every contract, applies to a liquidating agreement, and generally requires the contractor to take all reasonable steps so that the subcontractors right to an eventual recovery, if any, from the owner will be protected. Thus, a general contractor has a duty to make a good faith effort to present the subcontractors claim to the owner in a fair and serious manner. The letter of August 9, 2002, is a classic liquidating agreement, enforceable at law.

The issue remains, however, as to whether Subcontractor’s breach of contract/breach of the covenant of good faith and fair dealing cause of action is viable as having been interposed within the statute of limitations, which is six years from accrual. The liquidating agreement necessarily contemplated that General Contractor’s completion of the entire project would precede any litigation of Subcontractors claims and the contractual statute of limitations applicable to both parties under the agreement was, therefore, the six months after issuance of a Certificate of Substantial Completion as set forth in the Prime Contract. The Certificate of Substantial Completion was issued by notification on December 27, 2007, that being the date the limitations period began to run. June 27, 2008 would, therefore, mark the expiration of the statute of limitations for the claims at issue, including those of Subcontractor. Subcontractor’s breach of contract cause of action, as asserted in the second cause of action, therefore, accrued on June 27, 2008.

It was General Contractor’s failure to timely commence the legal action required under the liquidating agreement that Subcontractor claims constitutes General Contractor’s breach in performance of that contract. Accordingly, the statute of limitations for Subcontractors second cause of action, based upon General Contractor’s breach of its obligations under the liquidating/pass-through agreement, commenced to run on June 27, 2008. Having delegated to General Contractor the authority to prosecute its claims against the owner, and having relied thereon in deferring any attempt to prosecute its claims against General Contractor, it was only when General Contractor failed to act timely in performing its duty to Subcontractor that Subcontractor sustained injury as a result of General Contractors breach. Based upon the liquidating agreement set forth in the letter of August 9, 2002, Subcontractor could not prosecute its own claims sooner as it had agreed to forbear such prosecution in deference to General Contractor’s rights against the owner. The statute of limitations begins to run when a cause of action accrues (see CPLR 203a), 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. In contract actions a claim generally accrues at the time of the breach. In light of the liquidating agreement, it cannot be said, as General Contractor argues, that the statute of limitations began to run upon Subcontractors completion of its work on the project in September 2005. Rather, the cause of action accrued when the statute of limitations ran on Subcontractors claims so that General Contractor could no longer perform its contractual duty. This action, commenced on March 21, 2014, is not, therefore, barred by the statute of limitations as to the second cause of action.