Teller v. Bill Hayes, Ltd.

213 A.D.2d 141, 630 N.Y.S.2d 769, 1995 N.Y. App. Div. LEXIS 8843
Appellate Division of the Supreme Court of the State of New York·Decided August 21, 1995·Published·Cited by 89 cases

Opinion

OPINION OF THE COURT

Miller, J.

The central question to be answered on this appeal is whether the defendant corporation and its principal, a home [143] improvement contractor who allegedly misled the plaintiff and overcharged her for improvements to her home, are liable for damages pursuant to the consumer fraud provisions of General Business Law § 349, in addition to the other remedies available to the plaintiff. Under the circumstances of this case we hold that the corporate and individual defendants have demonstrated their entitlement to judgment as a matter of law dismissing the plaintiffs consumer fraud causes of action.

The facts underlying this appeal may be stated as follows. The plaintiff owned a home in East Hampton. While walking her dog one day, she happened upon the individual defendant general contractor performing renovations on a nearby house. After lengthy negotiations, the plaintiff hired the defendants to undertake significant renovations on her home. The plaintiff contends, inter alia, that the defendants performed their contractual obligations in a substandard manner, overbilled for work done, billed for work not done and, in essence, engaged in a course of fraudulent conduct which resulted in her allegedly paying the defendants approximately $1,250,000 for work the defendants estimated could be done for $350,000.

The plaintiffs complaint alleged seven causes of action against the corporate defendant Bill Hayes, Ltd., and six against Bill Hayes in his individual capacity. On the parties’ prior appeal (see, Teller v Bill Hayes, Ltd., 172 AD2d 604), we sustained the dismissal of the first two causes of action sounding in fraud. This Court also reversed the dismissal of the plaintiffs third cause of action alleging a violation of General Business Law § 349, concluding that the plaintiff had stated a cause of action.

By the instant motion, the defendants sought to dismiss the plaintiffs sixth cause of action sounding in negligence pursuant to CPLR 3211 (a), and summary judgment on the third cause of action asserting claims of consumer fraud in violation of General Business Law § 349. The Supreme Court denied this relief finding that it was precluded from considering these issues. The court held that these issues had been previously litigated and was of the opinion that this Court’s prior order reversing the earlier dismissal of the General Business Law cause of action precluded an order awarding the defendants summary judgment thereon. Procedurally, we disagree with the court’s reasoning that the defendants’ motion is barred by the law of the case or any other variety of res judicata since the issues raised by the instant motion were never raised on [144] any prior applications revealed in the record. On the merits, we find that the defendants’ motion should be granted.

The defendants contend that dismissal of the sixth cause of action alleging theories of negligence was appropriate since the prior motion did not seek to dismiss this cause of action and therefore the prior order and appellate determinations were not law of the case as to this issue. On the merits it is clear that the defendants are correct. The plaintiffs claims are grounded in the breach of a construction contract and as a general rule, the breach of a contract does not give rise to tort liability unless a legal duty independent of the contract itself has been violated. This legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be connected with and dependent upon the contract (see, Clark-Fitzpatrick, Inc. v Long Is. R. R. Co., 70 NY2d 382, 389; Rich v New York Cent. & Hudson Riv. R. R. Co., 87 NY 382; 431 Conklin Corp. v Rice, 181 AD2d 716, 717). In this case, the plaintiff has not established the existence of any breach of an independent duty so as to give rise to a negligence cause of action and to warrant a departure from the general rule. Therefore, on the merits, the sixth cause of action should be dismissed.*

The more significant issue presented by this appeal concerns the defendants’ motion for summary judgment on the plaintiff’s consumer fraud causes of action under the General Business Law. On the parties’ prior appeal, we reinstated the plaintiff’s third cause of action alleging a violation of General Business Law § 349, "[according the complaint every fair and reasonable intendment” (Teller v Bill Hayes, Ltd., 172 AD2d, supra, at 605). Contrary to the Supreme [145] Court’s conclusion, however, the fact that a cause of action was found to have been stated does not preclude a subsequent finding that the defendant is entitled to summary judgment thereon (see, Mindel v Village of Thomaston, 150 AD2d 653; Tenzer, Greenblatt, Fallon & Kaplan v Capri Jewelry, 128 AD2d 467; Fink v Horn Constr. Co., 58 AD2d 574).

Once again, reaching the merits of an issue not reached by the Supreme Court, we find that the defendants have demonstrated their entitlement to judgment as a matter of law. The third cause of action alleged that the defendants committed acts of "consumer fraud”. General Business Law § 349 (a) proscribes "[deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state”. While at first blush one might conclude that the defendants deceived the plaintiff regarding the costs of the renovation of her home, section 349 of the General Business Law has generally been construed so as to be inapplicable to private contract disputes of this kind.

Section 349 of the General Business Law was intended to be a consumer protection statute. As stated by the court in Genesco Entertainment v Koch (593 F Supp 743, 751), "Section 349 wears its purpose on its face; it is entitled 'Consumer Protection From Deceptive Acts and Practices’ ”. In fact, prior to 1980, only the Attorney-General could prosecute an action pursuant to General Business Law § 349 (L 1980, ch 346; see, Givens, Practice Commentaries, McKinney’s Cons Laws of NY, Book 19, General Business Law § 349, at 566). Thus, the Court of Appeals, in Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank (85 NY2d 20, 25), stated that a plaintiff under General Business Law § 349 must charge conduct that is consumer-oriented. It is generally agreed that "consumer-oriented” conduct must have a broader impact on consumers at large (Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank, supra, at 25). In other words, the deceptive act or practice may not be limited to just the parties. While the statute does not require the plaintiff to prove a repetition or pattern of deceptive behavior (Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank, supra), it does require a showing of potential impact on consumers at large, a showing conspicuously absent in this case.

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Teller v. Bill Hayes, Ltd., 213 A.D.2d 141, 630 N.Y.S.2d 769, 1995 N.Y. App. Div. LEXIS 8843 (N.Y. Ct. App. 1995).

213 A.D.2d 141 (Teller v. Bill Hayes, Ltd.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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