[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] ALLAN B. WEISS, J.
Plaintiff George Ma entered into a written contract with Peters Construction Group Inc., for residential home improvements at his property located at 75-35 195th Street, Fresh Meadows, New York. Mr. Ma filed a complaint with the New York City Department of Consumer Affairs (DCA) on September 7, 2008 against Peters Construction Group, Inc., alleging the performance of defective and incomplete work. A notice of hearing dated February 27, 2009 was issued by the DCA naming George Ma and the DCA as complainants, and Peters Construction Group Inc., and Robert Peters, individually and as president, as respondents-licensees. The notice of hearing charged the respondents with violations of the provisions of New York City Administrative Code, known as the License Enforcement Law, the Home Improvement Business Law and the Consumer Protection Law, and with violations of the corresponding provisions set forth in the Rules of the City of New York. The DCA demanded in said notice that an order be issued suspending or revoking the respondents' licenses; finding that respondent and its principal are unfit to hold future DCA licenses; imposing maximum fines on respondents for each and every charge; and awarding restitution to the complainant.
The DCA has conducted a hearing on at least 10 dates, and the matter is still pending before the agency. Mr. Ma is self-represented at proceeding before the DCA, and Peters Construction Group Inc., and Robert Peter are represented by Robert M. Steckman of the Law Office of Robert M. Steckman, LLC.
On March 10, 2010, plaintiff commenced the within action against Peters Construction Group Inc., Robert Peters, individually and as President/Principal Executive Officer and Toni Peters, individually and as Chief Executive Officer, and seeks to recover damages for fraudulent inducement to enter into a contract; violations of state law; and for breach of contract.
Defendants served a verified answer, dated May 5, 2010 and interposed sixteen affirmative defenses and four counterclaims. Defendants thereafter served a third party summons, and an amended answer which interposes sixteen affirmative defenses and four counterclaims, and also asserts a third party complaint against Iqbal Raza, d/b/a Broad Waterproofing. The amended pleadings are dated May 25, 2010. There is no evidence that the defendants served the third party summons and amended pleadings on Mr. Raza, or that third party index number was purchased. Therefore, contrary to plaintiff's assertions, defendants were not required to serve the within motion papers on the third party defendant, as he has not yet appeared in this action (CPLR 2103[e]).
Defendants served the within motion on May 28, 2010, noticed it for June 18, 2010, and demanded that plaintiff serve answering affidavits at least 7 days before the return date, defendants' motion was administratively rescheduled for July 28, 2010. Plaintiff served his cross motion on July 20, 2010, and the motions were adjourned until August 11, 2010. Although service of plaintiff's cross motion was not timely, the failure to comply with CPLR 2215 or 2214, may be excused in the absence of prejudice ( see, Walker v Metro-North Commuter R.R., 11 AD3d 339, 340, [2004]; Dinnocenzo v Jordache Enters., 213 AD2d 219, [1995]; Flannery v Goldsmith, 268 AD2d 267, [2000]). Here defendants' motion was administratively rescheduled and then adjourned, and as they were given ample time in which to respond to the cross motion and have served opposition papers, no prejudice exists. Therefore, plaintiff's cross motion shall be considered on its merits.
Mr. Steckman in his affirmation in support of the defendants' motion to dismiss, asserts that as Mr. Ma will need to be in regular communications with him in the DCA proceeding, this will place him in the position of violating Rule 4.2 of the New York Code of Professional Responsibility. Defendants therefore asserts that the court should dismiss the DCA proceeding. Plaintiff's counsel, in response to this portion of Mr. Steckmen's affirmation, requested that Mr. Steckman withdraw as counsel to the defendants. Defendants now cross moved to disqualify Mr. Steckman in this action on the grounds that his continued representation of the defendants in this action is the "recipient of knowledge and facts within the administrative proceeding that could be significantly harmful'" to Mr. Ma, that he could be a potential witness in this action, and asserts that where doubts exist as to a conflict of interest should be resolved in favor of disqualification.
The Disciplinary Rules have been replaced by the Rules of Professional Conduct, and provide, in pertinent part, at 22 NYCRR § 1200 as follows:
"Rule 4.2. Communication With Person Represented by Counsel (a) In representing a client, a lawyer shall not communicate or cause another to communicate about the subject of the representation with a party the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the prior consent of the other lawyer or is authorized to do so by law.
(b) Notwithstanding the prohibitions of paragraph (a), and unless otherwise prohibited by law, a lawyer may cause a client to communicate with a represented person unless the represented person is not legally competent, and may counsel the client with respect to those communications, provided the lawyer gives reasonable advance notice to the represented person's counsel that such communications will be taking place."
"Rule 4.3 Communicating With Unrepresented Persons In communicating on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer's role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding. The lawyer shall not give legal advice to an unrepresented person other than the advice to secure counsel if the lawyer knows or reasonably should know that the interests of such person are or have a reasonable possibility of being in conflict with the interests of the client".
The Home Improvement Business Law (Administrative Code of City of NY, tit 20, ch 2, subchapter 22) is a consumer protection statute whose intent is to safeguard and protect consumers against fraudulent practices and inferior work by persons and businesses claiming to be home improvement contractors (Administrative Code § 20-385; see B F Bldg. Corp. v Liebig, 76 NY2d 689, 692, [1990]). The Administrative Code provides that those who conduct home improvement contractor businesses must be licensed (§ 20-387 [a]) and strict compliance with this licensing requirement is mandatory ( Matter of Harmon v. Ivy Walk Inc. , 48 AD3d 344 , [2008]; Hanjo Contrs. v Wick, 155 AD2d 304, [1989]). The DCA is responsible for licensing all contractors and salespersons engaged in the home improvement business in New York City (Administrative Code of the City of New York § 20-387), and has the power "upon due notice and hearing" to revoke any license it issued and to impose fines and civil penalties (Administrative Code of the City of New York § 20-104 [e]).
In the proceeding before the DCA, although Mr. Ma is named as complainant, he is essentially the complaining witness, as the administrative agency is prosecuting the action. Neither Mr. Steckman nor Mr. Ma have articulated the nature of any of their alleged communications which would constitute a violation of Rule 4.2 or 4.3. Rather, it appears that Mr. Steckman claims that such a violation exists solely to support the defendants' request to stay the administrative proceeding, and plaintiff likewise claims such a violation exists in order to disqualify counsel, in an attempt to deprive defendants of counsel of their choice, and place defendants at a disadvantage.
The court finds that neither party have propounded any reason for Mr. Steckman to communicate with Mr. Ma, with respect to the subject matter of this action, or the subject matter of the DCA proceeding, during the course of said proceeding. Mr. Steckman clearly can refrain from engaging in informal conversations with Mr. Ma with respect to the substance of the claims. However, neither Rule 4.2 nor Rule 4.3 prohibits Mr. Steckman from communicating with Mr. Ma with respect to hearing dates, adjournments, or the exchange of documents. Mr. Ma may retain counsel to represent him at the DCA hearing should he so desire.
The court further finds that plaintiff's counsel has not established any basis for her assertion that defendants' counsel may be called as a "potential" witness in this action. Finally, plaintiff's counsel's claims regarding a conflict of interest are unfounded as Mr. Steckman has not represented Mr. Ma at any time with respect to the DCA proceeding or this action. Plaintiff's cross motion to disqualify defendants' counsel, therefore is denied.
Turning now to defendants' motion, the court finds that no violation of Rule 4.2 or 4.3 exists which would require the dismissal of the DCA proceeding. Moreover, the DCA is not a party to this action and the court lacks jurisdiction to dismiss said proceeding.
That branch of defendants' motion which seeks to dismiss the complaint on the grounds that plaintiff has failed to exhaust his administrative remedies, is denied. Defendants have not asserted this affirmative defense in its answer. Furthermore, this defense is not available here, as a person is only required to exhaust his or her administrative remedies, when they are seeking judicial review of the acts of an administrative agency ( Watergate II Apts. v Buffalo Sewer Auth., 46 NY2d 52, 57, [1978]).
That branch of defendants' motion which seeks to dismiss the complaint on the grounds of collateral estoppel and res judicata is denied. Defendants, having failed to raise these affirmative defenses in a pre-answer motion or in their answer, have waived these defenses(CPLR 3212[e]). Furthermore, these defenses are unavailable here, as they only apply where there has been a prior adjudication on the merits. Clearly there has been no such prior adjudication in defendants favor, as defendants concede that the administrative proceeding is still pending before the DCA.
To the extent that defendants appear to be raising the doctrine of election of remedies, defendants have failed to set forth any provision of the Administrative Code which prohibits a consumer from maintaining a complaint before the DCA, while also maintaining an action for compensatory and punitive damages. Indeed, Section 203-96 (b) of the Administrative Code provides that "[a]ny person who is induced to contract for home improvements in reliance on false or fraudulent representations or statements knowingly made, may sue and recover from such home improvement contractor or solicitor a penalty of five hundred dollars in addition to any damages sustained by him or her by reason of such statements or representations made by the contractor or by his or her agents or employees".
The court further notes that the claims and remedies sought in the DCA proceeding and in the within action are not identical, although they arise out of the same home improvement contract. In the DCA proceeding, Peters Construction Group Inc., and Mr. Peters are charged with multiple violations of the licensing law, the consumer protection law, and the home improvement law, and with violation of the governing rules and regulations. The DCA in that proceeding seeks the revocation of the respondents' licenses, the imposition of penalties and an order directing that they make restitution to Mr. Ma. Here, Mr. Ma seeks to recover compensatory and punitive damages for fraudulent inducement to enter a contract; for violations of state law; and for breach of contract. Restitution permits a consumer to recover the amount paid for work that was either defective or not performed, while an action for damages is more expansive and permits a plaintiff, if successful, to recover the actual costs of repairing the alleged defective work. The court notes that to the extent that plaintiff herein may be asserting a claim under the state consumer protection statute(General Business Law § 349), said statute permits the recovery of attorney's fees, costs and punitive damages.
In view of the foregoing, defendants' motion to dismiss the complaint is denied in its entirety, and plaintiff's cross motion to disqualify defendants' counsel is denied.
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