Olek, Inc. v. Merrick Real Estate Group Inc.

2025 NY Slip Op 31827(U)

• Court: New York Supreme Court, New York County
• Decided: May 19, 2025
• Docket: Index No. 652181/2017
• Status: Unpublished

Opinion

Olek, Inc. v Merrick Real Estate Group Inc. 2025 NY Slip Op 31827(U) May 19, 2025 Supreme Court, New York County Docket Number: Index No. 652181/2017 Judge: Lori S. Sattler Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. FILED: NEW YORK COUNTY CLERK 05/20/2025 04:49 PM INDEX NO. 652181/2017 NYSCEF DOC. NO. 245 RECEIVED NYSCEF: 05/20/2025

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. LORI S. SATTLER PART 02 Justice ---------------------------------------------------------------------------------X INDEX NO. 652181/2017 OLEK, INC.,

Plaintiff,

-v- DECISION AFTER TRIAL MERRICK REAL ESTATE GROUP INC.,12 E 72ND LLC

Defendant. ---------------------------------------------------------------------------------X

Plaintiff Olek, Inc. (“Olek”) commenced this action seeking recovery for breach of

contract and foreclosure on a mechanic’s lien by filing a Summons and Complaint on April 24,

2017. Defendants Merrick Real Estate Group (“Merrick”) and 12 E 72nd LLC (“12 E 72nd”)

(collectively “Defendants”) filed an Answer on June 19, 2017 in which they interposed

counterclaims for breach of contract and willful exaggeration of a mechanic’s lien. The action

was transferred to this Court for trial on March 6, 2024. In a Decision and Order dated August 2,

2024, the Court rescheduled the trial of this action to October 15-18, 2024 (NYSCEF Doc. No.

232). Thereafter, the Court conducted settlement and pretrial conferences.

On the date of the trial, Merrick’s principal, Richard Pesce (“Pesce”), did not appear.

Through counsel, Pesce claimed that he needed to assist his daughter in Florida due to Hurricane

Milton and that he could not attend the trial for “a couple of weeks” (October 15, 2024 Trial

Transcript at 2-4). The Court denied the request of his attorney, also the attorney for Merrick’s

co-defendant 12 E 72nd, for an extension as he provided no valid excuse for his default given the

longstanding date for this trial, his ability to return to New York as Florida airports were no

longer closed at the time, and the age of this case. Merrick’s counsel conceded that “Mr. Pesce

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was a fact witness, but I think I can make out my claim with Mr. Croman as well” (October 15

Trial Transcript at 13).

A three-day bench trial was held on October 15-17, 2024. At the conclusion of

Defendants’ case, the Court dismissed the counterclaims for breach of contract and willful

exaggeration of the mechanic’s lien for the reasons set forth on the record, namely that

Defendants did not demonstrate a breach or an exaggeration of the mechanic’s lien because they

set forth no proof other than the testimony of the owner as to what their damages were or that

there was a willful exaggeration (October 17 Transcript at 18-19).

Two witnesses were called during the trial: Peter Triestman (“Triestman”), Olek’s

president and sole shareholder, and Steven Croman (“Croman”), a principal of 12 E 72nd, which

is the owner of the townhome located at 12-14 East 72nd Street (“the townhome”). Olek called

Triestman, who testified about the nature of Olek’s business, stating that it fabricates and restores

parts for historic buildings, including at Grand Central Station, the United Nations, and New

Jersey Transit Penn Station (October 15 Transcript at 20-21). They have performed work on the

Upper East Side of Manhattan on other occasions (id.).

12 E 72nd retained Merrick as construction manager for work on the townhome

(Plaintiff’s Exhibit 32, “Construction Management Agreement”). Merrick then retained Olek for

work on the townhome pursuant to a subcontract signed on October 15, 2014 (Plaintiff’s Exhibit

0, “Subcontract”). Olek was hired to fabricate the townhome’s front courtyard grills, window

grills, some railings, and three doors, including the double door main entrance to the townhome

(id. 21-22). Merrick issued six change orders to Olek during the job (Plaintiff Ex. 2-6). 12 E

72nd was not a party to the Subcontract or change orders. Olek was initially owed $122,000

under the Subcontract, which increased with additional work performed under the change orders.

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The change orders expanded the scope of the job to include things such as a pergola structure for

the roof and hinges for the doors that were fabricated amongst other things. A one-year door

warranty was prepared by Triestman on August 8, 2016 and issued to Merrick (October 15

Transcript at 38-39; Plaintiff’s Ex. 21).

Trietsman credibly testified that Olek was not paid in full (October 15 Transcript at 41).

He stated that Olek had difficulty receiving payment after the initial seven or eight payments (id.

33). Olek submitted a summary all 14 requests for payments, which showed a balance of

$81,534.48 owing as of October 21, 2016 (Plaintiff’s Ex. 23). This calculation included 2%

monthly “finance charges” on overdue balances, as provided by Section 10 of the Subcontract.

Olek filed a mechanic’s lien against the townhome on November 25, 2016 (Plaintiff’s Ex. 26).

Olek also submitted requisition orders to Merrick, which they called “applications for payment”

(Plaintiff’s Ex. 7-20). Triestman testified, and the requisitions confirm, that different portions of

the Subcontract required payment of a 10% deposit, 30% upon approval of shop drawings, 40%

upon completion of fabrication and the last 20% upon installation (October 15 Transcript at 31;

Plaintiff’s Ex. 7-20).

Triestman testified as to the work Olek performed and addressed some of the concerns

about the work raised by Croman, the principal of 12 E 72nd. The Court credits Triestman’s

testimony. He stated that, at the time Olek completed the work, all the townhome’s doors were

functioning properly (October 15 Transcript at 41). He further states that Olek installed

weatherstripping on the doors in August 2016 (id. at 74-75). Prior to that time, he stated that it

was Defendants who did not want weatherstripping, because they wanted to use the doors as a

construction entrance (id. at 40). Triestman testified that the work was performed in conformity

to the plans which had been signed off on with comments from Merrick’s architects (id. at 41).

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He stated that Merrick provided the electric “strike” for the townhome’s double front doors (id.

at 46). Olek prepared the shop drawings which were ultimately marked “final” by Merrick

(Plaintiff Ex. 22). Triestman further testified that Olek completed all the work called for by the

Subcontract and change orders by September 2016 (October 15 Transcript at 31).

On cross-examination, Triestman addressed some of 12 E 72nd’s complaints about the

work. At the time of completion, Olek had not received any complaints about water penetration

through the doors (id. at 57-58). He testified that, although Olek installed the door strike that

purportedly wore out after two years, it had been provided by Merrick and was functional at the

time of completion and credibly opined that the strike was not heavy duty (id. at 63). Triestman

claimed that he only received complaints about the doors “years later” but found no evidence of

them bowing after he inspected them (id. at 64). He claims that any complaints received about

the trellis were fixed “right away” (id. at 69). Complaints about the doors latching properly were

completed in August 2016 when the weatherstripping and the fit of the lock were adjusted (id. at

74). However, Triestman testified that he only learned about an alleged pipe burst in the

townhome caused by cold air infiltrating through the doors into the vestibule in March 2018,

after this action was commenced (id. at 70). He testified that he examined the doors at that time

and observed that they were not bowed, warped, or otherwise defective (id. at 95-96). He further

stated that, during this visit, he noticed that the doors were latching (id. at 96), that the weather

stripping had been replaced by someone else (id. at 86-88), and that the strike was worn out (id.

at 96).

Olek also introduced portions of the deposition transcript of Merrick’s principal, Pesce

(October 16 Transcript at 2). Pesce acknowledged that the weather stripping had been changed

in the winter of 2017 by his own employee. When asked if Merrick had sustained monetary

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damages due to Olek’s alleged faulty work, he indicated that it had not and was not asserting a

counterclaim (id. at 4). Pesce further testified that the owner of the townhome, 12 E 72nd, owed

money to various subcontractors and would be responsible for any unpaid moneys owed to Olek

for its work on the townhome (id. at 5-6). He acknowledged that Merrick was the construction

manager for the project as confirmed in the contract between Merrick and 12 E 72nd (October 16

Transcript at 6-7; Plaintiff Ex. 32).

Defendants called Croman as their only witness and presented no documentary evidence

to the Court. Croman stated that the townhome was “showcase” quality (October 16 Transcript

at 26). He testified that he was familiar with Olek but claimed that Merrick had retained Olek

for the work and had negotiated its Subcontract (id. at 27). Much of Croman’s testimony

centered on his complaints about the work performed by Olek, such as: cold air going through

the front doors which he claims “fly open all the time,” rust on a railing, and that he thought the

pergola “didn’t look good” (id. at 28-31). Croman claims he made non-stop requests for Olek to

repair the putative defects (id. at 31). However, he also testified that, despite his many

complaints, he has not changed any of Olek’s work in the past eight years (id. at 35-36). Other

than Croman’s testimony, Olek presented no videos or photos to document his complaints or

presented any bills or documentary evidence or any expert testimony as to his damages.

There was no evidence presented at trial that disputed the validity of the Subcontract

between Olek and Merrick, an issue which had previously been raised in motion practice. For

this reason, and as stated on the record, the Court dismissed Olek’s quantum meruit claim against

Merrick at the close of trial (October 17 Transcript at 33). As to Olek’s quantum meriut claim

against 12 E 72nd, the law is clear with respect to such a claim in the absence of a question of the

validity of the Subcontract: generally, parties may not recover in quantum meruit if they have a

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valid, enforceable contract that governs the same subject matter as the quantum meruit claim (see

Clark-Fitzpatrick, Inc. v Long Island R. Co., 70 NY2d 382 [1987]; Ellis v Abbey & Ellis, 294

AD2d 168 [1st Dept. 2002]; Cooper, Bamundo, Hecht & Longworth, LLP v Kuczinski, 14 AD3d

644 [2d Dept. 2005]). Quasi-contract claims against non-contracting parties such as 12 E 72nd

are precluded where there is a valid and enforceable contract governing the same subject matter

(see Feigen v Advance Capital Mgt. Corp., 150 AD2d 281, 283 [1st Dept. 1989]). Consequently.

Olek cannot maintain its quantum meruit claim against 12 E 72nd, as its subcontract with

Merrick is valid, enforceable, and governs the same subject matter. Olek’s quantum meruit

cause of action is therefore dismissed as against 12 E 72nd.

12 E 72nd argues that Olek cannot recover against it under its breach of contract cause of

action as there was no privity between them. A subcontractor hired by a construction manager is

not in privity of contract with a property owner (Superb Gen. Contr. Co. v City of New York, 70

AD3d 517, 518 [1st Dept 2010]). Here, the Subcontract and all of the change orders were

between Olek and Merrick only. Olek is therefore not in privity with 12 E 72nd Street and

cannot recover against it under the breach of contract cause of action.

Olek can, however, recover against Merrick under the Subcontract. The evidence

adduced at trial shows that $81,534.48 was owed under the Subcontract as of October 31, 2016

and that no payment were made to Olek since that date. The Subcontract further provides that

overdue balances were to accrue finance charges of 2% per month and that Olek is entitled to the

“legal costs of collection” (Subcontract § 10). Accordingly, Olek is entitled to a judgment in its

favor against Merrick in the amount of $81,534.48 plus interest from October 31, 2016, and this

matter will be set down for a hearing on attorneys’ fees owed under the Subcontract.

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Olek also seeks to foreclose under its mechanic’s lien against 12 E 72nd. The parties

dispute whether Merrick was a construction manager or general contractor for purposes of the

mechanic’s lien and each offered testimony about the nature of Merrick and 12 E 72nd’s

relationship. Defendants argue that Olek cannot foreclose on its mechanic’s lien against 12 E

72nd because Merrick was the general contractor responsible for paying the subcontractors on

the project and that it was paid in full by 12 E 72nd under their agreement (October 17 Transcript

at 30-31). Defendants further argue that Olek failed to establish how much money, if any, 12 E

72nd owed Merrick under their agreement (id. at 22). Olek argues that Merrick was merely a

construction manager and that the fact that it was fully compensated by 12 E 72nd is not relevant

(id. at 31). Olek maintains that Merrick was merely paying it and the other contractors with the

owner, 12 E 72nd’s, money that it was separately forwarded for this purpose, and that this was

therefore “not the classic General Contractor situation” (id. at 32-33, quoting Construction

Management Agreement § 9.6).

It is well-established that a subcontractor may enforce a mechanic’s lien against an owner

with whom it is not in privity if the subcontractor “provides a basis for its claim against the

owner for trust violations under article 3-A of the Lien Law” (Rebar Lathing Corp. Century

Maxim Construction Corp, 104 AD3d 406 [1st Dept 2013], citing Lien Law § 71[3][a]). A

subcontractor can foreclose on its mechanic’s lien against an owner where the owner has not

fully paid the general contractor; such outstanding payments are the statutory trust funds to

which the lien can attach (see M & V Concrete Contr. Corp. v Modica, 76 AD3d 614, 616 [2d

Dept 2010]). However, a subcontractor cannot recover from an owner who has fully paid the

general contractor, as there are no statutory trust funds remaining in that case (see West-Fair

Elec. Contrs. v Aeta Cas. & Sur. Co., 87 NY2d 148, 157-158 [1995] [“in the event the general

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contractor fails to pay a subcontractor with the sums the owner has already paid, the Lien Law

protects owners from paying more than the value of the improvements, or the contract price”]).

The distinction between a general contractor and construction manager is significant in

this case because it is determinative as to the source of statutory trust funds to which Olek seeks

to attach its mechanic’s lien. If Merrick is a general contractor in the “classic sense”

encompassed by the Lien Law’s definition of “contractor” (see Lien Law § 2[9]), then the

moneys paid to Merrick by 12 E 72nd are the statutory trust funds and Olek cannot recover

against 12 E 72nd if Merrick was paid in full. On the other hand, if Merrick’s responsibilities

were limited to those of a construction manager, then there remains a statutory trust consisting of

the payments not made to Olek and its mechanic’s lien can attach to these funds. When

determining whether a party is a “contractor” as defined by Lien Law § 2(9), the Court not only

looks at the terms used by the parties but at all of the facts of their relationship (see Burns

Electric Co. v. Walton St. Assoc., 136 AD2d 291, 295 [4th Dept 1988]).

The Court finds that Defendants’ assertion that Merrick was the general contractor is not

supported by the record. Although the Subcontract refers to Merrick as the “general contractor,”

this is not dispositive. Merrick was designated as construction manager in its agreement with 12

E 72nd (see generally Construction Management Agreement) and both Pesce, in his deposition,

and Croman, in his trial testimony, referred to Merrick as the construction manager (October 16

Transcript at 25). The Construction Management Agreement provided that Merrick was to pay

contractors such as Olek out of amounts paid to it by 12 E 72nd “on account of such Contractor’s

portion of the Work . . .” (Construction Management Agreement § 9.6). In his deposition, Pesce

testified that any unpaid funds to Olek would be owed by the owner, 12 E 72nd (October 16

Transcript at 6). When discussing payments to Olek other subcontractors, Croman testified that

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their requisitions “would have to be approved by the construction manager [Merrick] who we

hired for their expertise” and, if approved, the subcontractor requisitions “would be submitted to

our [12 E 72nd] bookkeeper, our accounting office, and given to me to sign” (id. at 43-44).

Croman further testified that he had personally signed one check paid to Olek (id. at 45).

The weight of the evidence in the record and adduced at trial indicates that Merrick was

not acting as a general contractor for the work on the townhome but was rather the construction

manager. The outstanding payments owed to Olek are therefore attachable lien funds and Olek

is entitled to foreclose on its mechanic’s lien against 12 E 72nd.

Accordingly, it is hereby:

ORDERED AND ADJUDGED that Olek, Inc. has a good, valid and enforceable

mechanic’s lien upon the premises located at 12-14 East 72nd Street, New York, New York

Block No. 1386, Lot No. 62, in the amount of $81,534.48 with interest from October 31, 2016;

and it is further

ORDERED AND ADJUDGED that plaintiff Olek, Inc. is granted a money judgment and

against defendants Merrick Real Estate Group and 12 E 72nd LLC in the amount of $81,534.48

with prejudgment interest of 2 percent per month from October 31, 2016, and post judgment

interest of 9 percent, and it is further

ORDERED that a hearing shall be held as to attorneys’ fees owed by defendant Merrick

Real Estate Group to plaintiff Olek, Inc. on September 17, 2025 at 9:30 a.m., in person at 60

Centre Street, Room 212.

5/19/2025 $SIG$ DATE LORI S. SATTLER, J.S.C. CHECK ONE: X CASE DISPOSED NON-FINAL DISPOSITION

□ GRANTED DENIED GRANTED IN PART X OTHER

APPLICATION: SETTLE ORDER SUBMIT ORDER

□ CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE

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