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Breach of An Unsigned Contract and Filing Mechan

Breach of An Unsigned Contract and Filing Mechan

The Supreme Court of New York County recently heard the case of A. Russo Wrecking v. Bullard Purchasing & Sales. This case was interesting because it involved an action to recover under a contract that was never signed. Indeed, the party to be held responsible alleges it never consented to have the work performed in the first place!

Background of the Case

Russo performed demolition work in connection with a collapsed building located at 107 West 144th Street, New York, NY. On February 26th, 2010, the New York City Department of Buildings (DOB) issued an emergency declaration, known as an IDE, based on inspection of the collapsed building. It noted a collapsed roof and several damaged structural elements that collectively caused a very dangerous condition. The recommendation of the IDE was full demolition (presumably to reduce the risk to surrounding buildings and passers-by of a full and uncontrolled collapse).

On the same day, via an intermediary known as Public (an insurance adjuster and also a defendant), Russo provided a proposal to Bullard. Russo quoted a figure of $135,000 for the demolition and the removal of collapsed material from the second floor of the building, but the estimate stated that the price did not include any asbestos removal, if applicable. Entities known as Greenwich and Spiegel, in additional to Public, were all provided with the Demolition Contract, for the work related to demolition and removal of rubble. According to Russo, the contract was presented to the three parties and signature was requested but never obtained. However Russo asserts that the three parties were acting as agents of Bullard, and agreed to the contract orally.

On March 1st, 2010, Russo alleged that it learned that Greenwich was refusing to make the payments under the contract. The reasons are somewhat complex, but stemmed from the fact that asbestos abatement work had to be performed. This work was excluded from the price quoted in the Demolition Contract, and apparently was also excluded from the insurance policy the building owners had. Thus, Bullard bore the responsibility for the asbestos work, and allegedly refused to pay Russo for the work that had already been done. Russo sued for breach of contract, or in the alternative, under quasi-contract for time, materials, labor, etc. already provided. Russo also filed a mechanic’s lien. Bullard counterclaimed, alleging that Russo filed a fraudulent lien. Russo moved to dismiss, thus the court granted every possible favorable inference to Bullard in deciding the following.

Analysis

From a top-level look, there was no doubt that Russo performed the work on the premises and that Bullard in fact owned those premises. This alone suggests that a mechanic’s lien is valid. However the court delved into the issue of consent, since there was no signed contract.

It weighed Russo’s agency argument against Bullard’s argument that there was no privity of contract, and that parties such as Public and Greenwich were only adjusters, not agents. The court agreed that Russo had made a valid point about the somewhat circular reasoning of Bullard’s argument: on one hand claiming not to know about the contract, on the other, claimed a material misrepresentation amounting to fraud, however, in the context of giving every possible inference to the non-movant, the court decided not to dismiss Bullard’s counterclaims and let them go forward to trial.

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