FILED: ONONDAGA COUNTY CLERK 01/24/ :11 PM

Transcription

1 SUPREME COURT STATE OF NEW YORK ONONDAGA COUNTY INTEGRATED CONSTRUCTION & POWER SYSTEMS, INC., REPLY Plaintiff, MEMORANDUM OF LAW IN SUPPORT OF -against- MOTION FOR SUMMARY RADHA KRISHNA CORP., DISMISSING Defendant. COUNTERCLAIMS JUDGMENT Index No.: 2016EF4718 RJI No.: This reply memorandum of law is in further support of plaintiff Integrated Construction & Power Systems, Inc.'s (ICPS) motion for summary judgment pursuant to CPLR 3212 dismissing defendant Radha Krishna Corp.'s (Radha Krishna) counterclaims for alleged economic damages (lost revenue), liquidated damages and costs to complete. THE STANDARD FOR SUMMARY JUD_GMENT This motion seeks dismissal of defendant's counterclaims on the grounds that (1) Radha Krishna is not entitled, as a matter of law, to special damages; (2) even if Radha Krishna were entitled to special damages, in no event would it be entitled to lost revenue; (3) Radha Krishna is not entitled to costs to complete the project when it admits that it has not, in fact, made any expenditures to "complete" the project; and (4) Radha Krishna is not entitled to "liquidated damages" in any amount when there is no written agreement at the beginning of the project providing for liquidated damages. Radha Krishna correctly states that the proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate material issues of fact. Zuckerman v. City ofnew York, 49 N.Y.2d 557, of 8

2 (1980). Plaintiff has made out its prima facie case. Once the moving party has made its prima facie showing, the party opposing summary judgment may not rely upon conclusory allegations, but must present evidentiary facts sufficient to raise a triable issue of fact. Mallad Construction Corp. v. County Federal Savings & Loan Ass'n, 32 N.Y.2d 285, 290 (1973); Tobron Office Furniture.Corp. v. Kine World Productions, 161 A.D.2d 355 (1st Dep't 1990). "The opponent of a motion for summary judgment must assemble, lay bare and reveal his proofs; merely setting forth factual or legal conclusions is not sufficient." Tobron, 161 A.D.2d at 356; see also Polanco v.. City of New York, 244 A.D.2d 322 (2d Dep't 1997) ("a shadowy semblance of an issue or bald conclusory allegations, even if believable, are insufficient to defeat a motion for su-ry judgment"). The opposing party has the burden of producing admissible evidence demonstrating the existence of a triable and material issue of fact on which its claim rests. Zuckerman, 49 N.Y.2d at 562. "[M]ere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient to defeat the motion." Id. Defendant Radha Krishna has failed to carry its burden on this motion and summary judgment should be granted. POINT I RADHA KRISHNA IS NOT ENTITLED TO SPECIAL (CONSEQUENTIAL) DAMAGES AS A MATTER OF LAW As argued in ICPS's initial brief, special damages (or "consequential damages") "are damages which arise from special circumstances that do not flow directly and proximately from the breach, but which are foreseeable and within the contemplation of the parties at the time of the contract or transaction." R.L. HAIG, COMMERCIAL LITIGATION IN NEW YORK STATE COURTS, (3d Ed. 2010). They can be imposed only when the parties contemplated the imposition of Page 2 of 8 2 of 8

3 such damages at the time of contracting and the damages are capable of proof with reasonable certainty. There is nothing in this record that would support the imposition of special damages in this case. There is no written contract. There is nothing signed by either or both parties indicating agreement on a particular completion date. There is no writing declaring "time is of the essence." There is no correspondence, or other documents contemporaneous with the negotiations and oral agreement that would support the notion that the parties agreed to a final completion date after which ICPS would be liable for special damages. Given its burden to "lay bare its proof," Radha Krishna has produced a single document - a "schedule" depicting work commencing in December and ending in mid-may, the phases of the project overlapping such that the entire motel would have to be closed for renovations, multiple questions as to durations of particular tasks (some of which were not within ICPS's scope of work) and omitting over $200, of work beyond the initially agreed upon scope of work performed by ICPS. See Affidavit of Viraj Patel dated January 4, 2019 Exhibit A. It is undisputed that work on the renovation did not start in December. It is undisputed that Radha Krishna would not allow the phases of the work to overlap and did not close down the entire hotel to allow the renovations to proceed. It is undisputed that ICPS performed more than $200, of extra work on the project not contemplated by the "schedule" and that, for example, the plans for the lobby work were not even finalized until April of In addition to that, Viraj Patel avers that "[t]hroughout [negotiations] there has always been an emphasis on completion before summer of 2015" and "everyone in Syracuse knows that renovations are performed in the winter so that your hotel is open for summer, the busiest time of the year." Patel Affidavit 3. Further, Patel claims that "plaintiff understood that delay could Page 3 of 8 3 of 8

4 cause financial hardship to defendant." Patel Affidavit 9. But "an emphasis on completion" and general knowledge that "renovations are performed in the winter" are insufficient to meet defendant's burden to show that consequential damages "were foreseeable and within the contemplation of the parties at the time of the contract or transaction." They are no more than a "shadowy semblañce of an issue or bald conclusory allegations, [that] even if believable, are insufficient to defeat a motion for summary judgment." Polanco, 244 A.D.2d at 322. The "foreseeability" and "contemplation of the parties'' components set a much higher bar than "an understanding that delay could cause financial hardship." As a matter of law, there must be some showing that the parties understood and agreed that going beyond a date certain would cause damages and that, at the time of contracting the plaintiff agreed to take responsibility for those damages if it did not meet that date. See Ashland Management Co. v. Janien,, 82 N.Y.2d 395 (1993); BiEconomy Market, Inc. v. Harleysville Ins. Co. ofn.y., 10 N.Y.3d 187 (2008). There is not a shred of evidence that ICPS agreed to a specific completion date or agreed to take responsibility for damages accruing after some alleged completion date. Defendant has failed to raise a triable issue of fact that would preclude summary judgment dismissing its counterclaim for special damages. POINT II RADHA KRISHNA IS NOT ENTITLED TO LOST REVENUE Radha Krishna seems not to comprehend the difference between lost profits and lost revenue, using the terms interchangeably in its papers. Revenue must be reduced by expenses to derive profits. See, e.g., S. Nicolia & Sons Realty Corp. v. AJA Concrete Ready Mix, Inc. 30 Misc. 3d 1221(A), 2011 N.Y. Misc. LEXIS 299 (Supreme Ct Nassau Co. 2011), rev'd on other grounds 137 A.D.3d 994 (2d Dep't 2016); see also N.N. Intl. (USA) v. Gladden Props, LLC, 52 Mise. 3d Page 4 of 8 4 of 8

5 1206(A), 2016 N.Y. Misc. LEXIS 2546 (Supreme Ct N.Y. Co. 2016) (plaintiff failed to raise material issue of fact regarding lost profits because it produced only evidence of decline in gross sales and no evidence of operating costs or any other measure used to calculate plaintiff's profits). Radha Krishna claims $414, in lost revenue as consequential damages and has produced no evidence of operating costs or any other measure used to calculate its profits, despite its burden on this motion and multiple prior requests that it do so. Lost profits (as consequential damages) may be awarded where "(1) the [party] 'demonstrates with certainty that such damages have been caused by the breach'; (2) 'the alleged loss [is] capable of proof with reasonable certainty'; and (3) the [party] makes 'a showing that the particular damages were fairly within the contemplation of the parties to the contract at the time it was made." ERC 16W, 46 Misc. 3d 1210(A), 2015 Misc. LEXIS 73 at 9-10 (citing Kenford Company, Inc. v. County of Erie, 67 N.Y. 2d 257, 261 (1986) (Kenford 1)); see also Biotronic v. Conor Medsystems, 22 N.Y.3d 799, 806 (2014); Kassis Mgt. Inc. v. Verizon N.Y Inc., 23 Misc. 3d 1208(A), 2010 N.Y. Misc. LEXIS 4928 (Supreme Ct N.Y. Co. 2010). Even if Radha Krishna were entitled to consequential damages, there is simply no basis for awarding lost revenue as opposed to lost profits. Radha Krishna comes forward with arguments as to why the difference in its revenue between 2015 and 2016 is attributable to ICPS's alleged delay in completion and attaches tax returns to show reduced revenue, but provides nothing that would allow the court (or plaintiff) to ascertain what portion of that lost revenue would be lost profit. Instead, Radha Krishna refers to (but does not provide) travel research reports by a leading hotel market research compañy that talks about revenue variations and asserts, without support, that "defendant's losses can only be attributable to plaintiff's failure to complete the project as agreed." Radha Krishna Memorandum Page 5 of 8 5 of 8

6 of Law at 6. Thereafter, Radha Krishna argues that because "the hotel business is a high fixed cost, low variable cost business model" somehow lost revenue is the appropriate measure of damages. Defendant provides no backup for this claim, no legal support, no expenses or proof to support this assertion. Radha Krishna Memorandum of Law at 7. Viraj Patel claims that because the $414, figure is generated by "widely used and accepted property management software" (Patel Affidavit 14), it is an "amount certain," apparêñtly in an attempt to satisfy the requirement that consequential damages be "reasonably certain and directly traceable to the breach." Kenford I, 67 N.Y.2d at 261. ICPS has no basis to dispute that the $414, figure is an amount certain; ICPS simply contends that, reflecting lost revenue rather than lost profit, it is the wrong measure. Radha Krishna has been given ample opportunity to produce evidence to support its claimed damages. ICPS requested it in interrogatories. Interrogatory No. 12 (Eveleigh Affirmation affirmed November 7, 2018 Exhibit 4). The Court ordered that Radha Krishna produce "all documentation evidencing damages as asserted in its counterclaims by June 18, 2018." Revised Preliminary Conference Order dated May 21, (f) (Eveleigh Affirmation Exhibit 9). Counsel for ICPS inquired into it during Naresh Patel's deposition. Patel Deposition at (Eveleigh Affirmation Exhibit 7).1 At this juncture, where it is Radha Krishna's burden to "lay bare its proof," to support its $414, counterclaim, it has failed to do so. The computer-generated revenue reports and tax returns showing decreased revenue, are insufficient to demonstrate lost profits attributable to any 1 Incredibly, despite ICPS having requested "all documentation evidencing damages as asserted in counterclaims," its Radha Krishna claims "at no point did plaintiff specifically request operating expenses." Radha Krishna Memorandum of Law at 7. It is difficult to imagine how Radha Krishna would plan to support its damages without accounting for its operating expenses and such information should have been provided as part of the response for backup of the damages claims requested repeatedly. Page 6 of 8 6 of 8

7 breach by ICPS. Inasmuch as lost revenue is not a proper measure of damages and Radha Krishna has not produced any evidence from which a fact finder could discern what expenses Radha Krishna would have had related to its alleged lost revenue, the court cannot ascertain lost profits with a reasonable degree of certainty. Accordingly, defendant's consequential damages claim must be dismissed. POINT III RADHA KRISHNA IS NOT ENTITLED TO COSTS TO COMPLETE Radha Krishna claims entitlement to $65, in general damages for costs to complete. Radha Krishna was asked to provide all documentation supporting its $65, claim and provided no documentation whatsoever, admitting that it had not, in fact, paid anyone to complete the allegedly unfinished work. ICPS provided counsel's letter indicating that Radha Krishna intended to withdraw that counterclaim. Eveleigh Affirmation Exhibit 10. Having produced no substantiation for the $65, claim during discovery or in compliance with the Court's Revised Preliminary Conference Order (Eveleigh Affirmation Exhibit 8) and having come forward with no proof of that claim in response to ICPS's motion for summary judgment dismissing the counterclaim, Radha Krishna has failed to carry its burden and the counterclaim should be dismissed..conclusion Under these circumstances, without an established and expressly agreed upon time for completion, Radha Krishna is simply not entitled, as a matter of law, to consequential damages for ICPS failing to complete the project by some arbitrary date. Even if consequential damages were appropriate, under no circumstances is Radha Krishna entitled to damages in the amount of lost revenue, and it has failed to provide any materials from which a proper measure of damages could Page 7 of 8 7 of 8

8 be derived. Accordingly, and for the reasons set forth in ICPS's initial motion papers, ICPS respectfully requests that the Court grant summary judgment dismissing Radha Krishna's counterclaims in their entirety. Dated: January 24, 2019 Respectfully submitted, ALARIO & FISCHER, P.C., By: Laurel J. Eveleigh, q. D. Christian Fischer, Esq. Attorneys for Plaintiff 5 Adler Drive, Suite 4 East Syracuse, New York Telephone: (315) TO: THE LAW OFFICE OF FRANCIS E. HUNT, JR., PLLC Francis E. Hunt, Jr., Esq.. Attorneys for Defendant 250 Harrison Street, Suite 503 Syracuse, New York Telephone: (315) Page 8 of 8 8 of 8