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INDEXNo. 14338-
SUPREME COURT - STATE OF NEW YORKIAS TERM PART 11 NASSAU COUNTY
PRESENT:HONORABLE LEONARD B. AUSTIN
Justice
FERRANDINO & SON, INC.
Plaintiff,
- against -
WHEATON BUILDERS, INC. , LLC andHE2 PROJECT DEVELOPMENT, LLC.
Defendants,
WHEATON BUILDERS INC. , LLC
Third Part Plaintiff,
- against -
UTICA MUTUAL INSURANCECOMPANY
Third Part Defendant.
Motion RID:1-05-Submission Date: 1-12-Motion Sequence No. : 002/ MOT D
COUNSEL FOR PLAINTIFFGathman & Bennett, LLP191 New York AvenueHuntington, New York 11743
COUNSEL FOR DEFENDANT/3rdPARTY PLAINTIFF(Wheaton Builders LLC)Herrick, Feinstein LLP2 Park AvenueNew York, New York 10016
(Utica Mutual Insurance Comp.any)Westerman, Hamiltaon , Sheehy,Aydelott & Keenan , LLPGarden City Center100 Quentin Roosevelt Boulevard,
Suite 502Garden City, New York 11530
(HE2 Project Development)Furman;-Korrifeld & Brennan , LLP545 Fifth Avenue, Suite 401New York, New York 10017
5Co.'0
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.
Index No. 14338-ORDER
The following papers were read on Plaintiff's motion for an order of consolidationor joint trial:
Notice of Motion dated December 22 , 2008
Affirmation of John C. Bennett, Esq. , dated December 22 2008
Affidavit of Peter Ferrandino sworn to sworn to December 23, 2008Affirmation of Michael F. Kuzow! Esq. , dated January 5 , 2009
Reply Affirmation of John C. Bennett , Esq. , dated January 9 , 2009
Plaintiff, Ferrandino & Son , Inc. ("Ferrandino ), moves pursuant to CPLR 602 for
an order consolidating or directing a joint trial of the following actions: (1) Ferrandino &
Son, Inc. v. Utica Mutual Insurance Company and Wheaton Builders, Inc. , LLC (Nassau
County Index No. 14887/08) ("Action No. ) and (2) Utica Mutua/Insurance Company
v. Ferrandino Son Inc. , Ferrandino Son Environmental, Inc. , KAF Realty Inc.
Ferrandino &$00 Realty Inc. , Giavanna Realty Inc. , Peter Ferrandino and Karen
Ferrandino (Oneida County Index No. CA2008/2912) ("Action No. ) with this action
("Action No. ), and for a stay of the proceedings in Action NO. 3 pending further order
of this Court.
BACKGROUND
On February 7 , 2007 , Wheaton Builders Inc. , LLC ("Wheaton ), as owner , and
Ferrandino , as contractor, entered into an agreement ("Contract" for Ferrandino
provide superstructure concrete for a new condominium complex to be located at 410
Avenue , Brooklyn , New York ("Project"). The contract amount was $2 523 000.
Ferrandino was to install and construct masonry floors , columns and stairways for two
14-story condominium buildings. HE2 Project Development , LLC ("HE2" ) was the
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.
Index No. 14338-
construction manager for the Project.
The Project required the issuance of a performance bond and a payment bond in
the sum of $2 523 000. A subcontract performance bond , Bond No. SU3980598
Bond"), was issued by Utica Mutual Insurance ("Utica ), as surety, to Ferrandino in
March 2007. A subcontract payment bond, bearing the same bond number and amount
as the Bond , was issued as well.
Prior to the issurance of the bonds , on May 5, 2006, Ferrandino , Ferrandino &
Son Environmental , Inc. ("Environmental"), KAF Realty ("KAF"), Ferrandino & Son
Realty ("Realty ), Giavanna Realty Inc. ("Giavanna ), Peter Ferrandino ("Peter ) and
Karen Ferrandino ("Karen ), as indemnitors , and Utica had entered into a general
agreement of indemnity. According to paragraph two of the Indemnity Agreement , the
, '" ..'
,. I I!q;indemnitors agreed to indemnify and hold Utica harmless from each and every claim
paid by Utica as a consequence of having executed a bond. A similar agreement
Indemnity Agreement") with identical indemnification language was previously
executed on September 9, 2005 by Ferrandino , Environmental , KAF , Realty, Giavanna
Peter and Karen.
On March 21 2008 , Wheaton notified Utica and Ferrandino that iLwas
considering defaulting Ferrandino and requested a meeting to resolve the matter. A
meeting was held in April 2008 and Ferrandino continued performing pursuant to the
Contract. Prior to the conference , Utica retained Beacon Consulting Group Inc.
Beacon ) to investigate Wheaton s claim that Ferrandino s work was defective and
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.
Index No. 14338-
delayed. When the meeting occurred between Wheaton , Utica and Ferrandino on April
, 2008 , Wheaton opted not to default Ferrandino.
By letter, dated June 25 , 2008 , Wheaton terminated Ferrandino for cause
effective July 2 , 2008 pursuant to 911.2 of the Contract. Wheaton stated that after
review of Ferrandino s work and in concurrence with the project architect and structural
engineer, it believed that Ferrandino was incapable of performing its work in accordance
with the Contract. As examples of the basis for its decision , Wheaton cited to, inter alia
Ferrandino s notice , dated May 15 , 2008, that it would not complete its work in
compliance with the project specifications , its failure to maintain the Project's progress
schedule , its failure to provide consistent quality workmanship, its failure to supply a
sufficient amount of properly skilled workers , its use of substandard and/or non-
specified materials , its violation of Exhibit F to the Contract which required compliance
with OSHA regulations and NYC Building Department Codes and its failure to pay its
subcontractors.
A copy of the termination letter was sent to Utica , as Ferrandino s surety. In the
termination letter, Wheaton made a demand upon Utica to complete the balance of
Ferrandino s work under the Bond. Utica, with Beacon s assistance, then conducted an
investigation of Wheaton s claim. Utica denied Wheaton s claim on August 25 , 2008
based on Ferrandino s assurances that Wheaton s claim lacked merit and Wheaton
failure to comply with the Bond' s notice provision.
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.
Index No. 14338-
Action NO.
On August 1 , 2008 , Ferrandino commenced Action NO. 1 against Wheaton and
HE2 in Nassau County alleging breach of contract , account stated for $838 735,
damage to business reputation due to the termination , conspiracy and fraud. In Action
No. , Ferrandino alleges that Wheaton failed to provide timely access to the Project,
failed to tender payment due for labor performed and materials furnished , failed to allow
Ferandino to complete performance pursuant to the terms of the Contract and failed to
compensate it for accelerating job performance not yet due pursuant to the Contract.
Thereafter, Wheaton commenced a third-party action against Utica for its bad
faith breach of the surety performance and payment bonds and breach of the covenant
of good faith and fair dealing, in addition to asserting counterclaims against Ferrandino
for breach of contract. Wheaton alleges that Utica willfully and intentionally acted in bad
faith by misrepresenting to Wheaton that Ferrandino was able to complete its work, by
misrepresenting that it would pay the cost to complete Ferrandino s work and by failing
to conduct a proper investigation of Wheaton s claim under the Bond and denying
Wheaton s claim without a valid basis. Wheaton also seeks a declaration that the Bond
is in full force and effect, in addition to seeking consequential and punitive damages -
against Utica.
FERRANDINO & SON , INC. v. WHEATON BUILDERS, INC.Index No. 14338-
Action NO.
Ferrandino commenced Action NO. 2 in Nassau County on August 11 , 2008. In
this suit , Ferrandino sued Utica and Wheaton. Utica asserted a cross-claim against
Wheaton.
Ferrandino alleges that following Utica s investigation of the claims raised in
Wheaton s letter of termination , Ferrandino sent a letter, dated August 4 , 2008 , to Utica
demanding that it take no action on the Bond claim submitted by Wheaton due to
Wheaton s failure to fulfill certai conditions precedent prior to Utica s obligations
ripening. Ferrandino alleges that despite its demand letter, Utica "has declined to honor
the demand letter" and "has purported to conduct certain handling of the bond claim.
(Action No. , Complaint 12).
It is Ferrandino s position,.that, pursuant to Section 6. 1 of the Contract , all
timeframes delineated in its contract with Wheaton are to be of the. essence. Thus
Wheaton s approval of Ferrandino s payment application number 7 , dated May 21
2008 , for $328 000 on June 19, 2008 mandated payment by June 30, 2008. Thus
Wheaton s subsequent refusal to remit such payment in light of its termination letter
issued on July 3 , 2008 violates Section 4. 1 of the Contract which required progress
payments to be made on a monthly basis at 10% retainage to be held for an additional
15 days after completion of Ferrandino s work.
1 Ferrandino requested $400 000 in payment application number 7; howeverWheaton only approved payment of $328,000.
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.
Index No. 14338-
Ferrandino asserts that the Bond requires that Wheaton establish the absence of
construction manager default" before the surety s obligations are triggered. Since
Wheaton did not pay Ferrandinq $328 000 on June 30 2008 in compliance with the
Contract, Ferrandino seeks a declaration that Wheaton , as construction manager , has
failed to comply with a condition precedent pursuant to the terms of the Bond; that Utica
owes no duty to act pursuant to the terms of the Bond and that Wheaton s failure to pay
pursuant to the Contract terms has discharged Utica from any obligations under the
Bond.
Utica cross-claimed against Wheaton for a declaration that Utica has been
discharged and relieved of its obligations under the Bond due to the acts and omissions
of Wheaton.
Utica asserts that after receiving a letter , dated March 21 2008 , from Wheaton
that it was considering defaulting Ferrandino, Utica attended a meeting in April 2008
with Ferrandino and Wheaton to resolve the issues raised in Wheaton s March 21 2008
correspondence. Subsequent to that meeting, Ferrandino continued to perform under
the Contract. Upon receiving Wheaton s June 25, 2008 termination letter, Utica
obtained a consultant to commence an investigation into Wheaton s claim and the cost
to finish the Contract. Utica alleges that, on July 16, 2008 , for the first time , Wheaton
agreed to pay Utica the balance of the Contract amount in accordance with the terms of
the Contract as required by Paragraph 3. 3 of the Bond.
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
By email , dated July 25 , 2008 , Wheaton advised Utica that it would deem Utica in
default on the Bond on July 28 , 2008. This email was sent only 10 days after Wheaton
tendered the Contract balance as required by Paragraph 3. 3 of the Bond and while
Utica was in the process of investigating Wheaton s claim. Utica alleges that three days
notice by email does not comply with paragraph 5 of the Bond which states that Utica
will only be considered to be in default ten days after it receives additional written notice
from Wheaton demanding that Utica perform its obligations under the Bond. Paragraph
10 of the Bond defines notice as written notice mailed or delivered to the address shown
on the signature page of the Bond.
Utica believes that , before it gave notice to Utica of its alleged default, Wheaton
entered into a contract with Rigid Concrete , of Belleville , New Jersey, on July 23 , 2008
to complete the remainder of Ferrandino s work , including the remediation of the
allegedly defective work completed by Ferrandino , and that Rigid actually commenced
performance of this work on July 18 , 2008. Thus , Utica asserts that Wheaton s entering
into a contract with Rigid to complete Ferrandino s work and its failure to provide proper
notice to Utica of its alleged default deprived Utica of its rights , remedies and options
under the Bond.
Action NO.
Utica commenced an action against Ferrandino , Environmental , KAF , Realty,
Giavanna , Peter and Karen ("Oneida County Defendants ) for specific performance of
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
the Indemnity Agreement and breach of contract. This action was filed on September
2008.
Utica seeks damages against the Oneida County Defendants for an alleged
breach of the Indemnity Agreement , dated September 9 , 2005. The complaint asserts
that under the Indemnity Agreement , the Oneida County Defendants were jointly and
severally obligated to indemnify Utica for all losses incurred by it as a result of its
suretyship of Ferrandino and that the Oneida County Defendants were obligated to
provide Utica with collateral security equal to the amount of any reserve established by
Utica relating to the claims brought under surety bonds issued on Ferrandino s behalf.
Utica asserts that the Bond it issued related to the Contract between Ferrandino
and Wheaton regarding work to be performed at the Project. The complaint notes that
Wheaton terminated the Contract and asserted a claim against Utica under the Bond.
Utica then established a reserve in the amount of $1 , 210 000 in connection with
Wheaton s claim and , on September 5 , 2008 , demanded a collateral security deposit
from the Oneida County Defendants for that amount and indemnification.
Utica alleges that , despite its demand , the Oneida County Defendants have
breached their obligations under the Indemnity Agreement by failing to provide a
collateral security deposit and by failing to indemnify Utica. It seeks an order directing
the Oneida County Defendants to comply with the collateral requirement of the
Indemnity Agreement and deposit $1 210 000 with Utica , in addition to an award for
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
damages , in an amount not less than $121 037. , relating to the failure of the Oneida
County Defendants to indemnify Utica.
Venue in Oneida County is based upon Utica s principal office located in New
Hartord , New York. All of the Oneida County Defendants are domiciled on Long Island.
The Oneida County Defendants answered the complaint and interposed
counterclaims. In their first counterclaim , they incorporate by reference the allegations
set forth in the complaint in Action NO. 1 in which Wheaton commenced a third-party
action against Utica and asserted counterclaims against Ferrandino. In its third-party
action , Wheaton makes allegations of negligence, bad faith and intentional conduct as
against Utica. The Oneida County Defendants assert that, in the event that Wheaton
proves its allegations , Ferrandino would be exposed to increased damages by the
actions of Utica and , thus , woulc; be entitled to indemnification and contribution from
. Utica.
With respect to the second counterclaim , the Oneida County Defendants allege
that , in April 2008 , Ferrandino , at Utica s recommendation , agreed to revise certain
schedules which had been set pursuant to the Contract. They allege that , if there was a
breach of the underlying revised schedule , such revision would constitute arevision to
the Contract. The Oneida County Defendants maintain that they were not aware of any
revision to the Contract and would not have consented to remain as guarantors. Thus
they maintain that they should be discharged from liability under the terms of the
Indemnity Agreement.
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
In the third counterclaim , the Oneida County Defendants allege that , in April
2008 , Utica advised Wheaton to not pay Ferrandino if Wheaton intended to declare a
default. Thereafter, despite previously approving a payment application from
Ferrandino , Wheaton defaulted Ferrandino and failed to pay Ferrandino on the
previously approved payment application. The Oneida County Defendants assert to the
extent that such act was predicated on the advice , suggestion or directive of Utica , an
unauthorized modification to the Bond , Indemnity Agreement and Contract occurred
without their consent which discharges them from liability under the Bond and Indemnity
Agreement to Utica.
In December 2008 , Utica moved for partial summary judgment in Action NO. 3 to
enforce the collateral security clause of the Indemnity Agreement and for a judgment in
the amount of $137 392. 56. Utica also seeks an Order dismissing the counterclaims
and affirmative defenses of the Oneida County Defendants and retaining jurisdiction in
Oneida County. Utica s motion has been adjourned by the Hon. Samuel D. Hester
Justice presiding, pending resolution of this motion.
This Motion
Ferrandino now moves for an-order directing consolidation , or a joint trial , of all
three actions and the transfer of Action NO. 3 to Nassau County. Ferrandino argues
that consolidation is proper since the counterclaims and affirmative defenses interposed
by the Oneida County Defendants in Action No. , which Utica seeks to dismiss in its
motion , relate to the question of whether Utica acted reasonably and in good faith
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
setting its reserve and in handling Wheaton s claim. In addition , Ferrandino maintains
that it bears upon whether there; has been an oral modification of the Indemnity
Agreement , whether Utica encouraged Wheaton to stop payments to Ferrandino which
would constitute an alteration to the Contract thereby discharging the Oneida County
Defendants of any further responsibility under the Bond and Indemnity Agreement and
whether Wheaton s acts rise to the level of construction manager default , which is the
subject of the litigation in Action NO.
Ferrandino argues that all three actions share common questions of law or fact.
Ferrandino asserts that the Bond at issue in Action Nos. 1 and 2 is directly related to
claims made by Utica in Action NO. 3. Most significantly, Ferrandino asserts that
whether Utica - - despite the language of the Bond concerning construction manager
default - - nevertheless directed Wheaton to not pay Ferrandino thereby creating such
a default. Ferrandino argues that , if construction manager default resulted from Utica
directive for Wheaton to stop paying Ferrandino , Ferrandino argues that the indemnitors
and the guarantors would be discharged from liabilty if Wheaton acted in reliance
Utica s directive. This would bear upon Utica s entitlement to attorney s fees or expert
consulting costs since such fees and costs may have been incurred as a result of
- --- -
Utica s advising Wheaton to breach the Contract. Ferrandino raises the question of
whether Utica acted in bad faith or was negligent in its involvement with the Project and
since the indemnification agreement between Ferrandino and Utica cannot be
interpreted to entitle Utica to indemnification for its own bad faith or negligence
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
consolidation or a joint trial is appropriate because all three matters are intertined.
In opposition to the motion , Utica argues that the Court should not consolidate
Action NO. 3 into the two Nassau County actions , Action Nos. 1 and 2 since there are no
common questions of law or fact. Utica asserts that it commenced Action NO. 3 to
compel the Oneida County Defendants as indemnitors to immediately deposit with Utica
210, 000 as collateral security since that is the amount of the reserve currently set by
Utica in response to Wheaton s claims. Utica notes that paragraph 3 of the Indemnity
Agreement requires this deposit to be held and utilized by Utica until Utica is discharged
by a court of competent jurisdiction of liability under the bonds. Utica also seeks a
money judgment representing the costs and expenses it has incurred and paid as a
result of its position as surety. It is Utica s position that the fees and costs it paid as a
result of Wheaton s default of Ferrandino have already been incurred and are not at
issue in either Action NO. 1 or 2.
Utica contrasts Action Nos. 1 and 2 with Action NO. 3 as cases pertaining to the
Contract and the Bond as opposed to involving the Indemnity Agreement. Utica states
that whether Wheaton was in default is immaterial to its right to indemnification under
the Indemnity Agreement.
Utica notes that in addition to the three actions discussed in this motion , two
actions were commenced in Kings County related to the Project under Index No.
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
32068/08 in which Utica is a thira-party defendant and under Index No. 26462/08
which Utica is named as a defendant. Utica questions why Ferrandino is not seeking to
consolidate the Kings County action concerning its mechanic s lien.
Moreover, Utica argues that consolidation and a joint trial will cause jury
confusion and prejudice Utica s right to a fair trial since Utica will be both defendant and
plaintiff, in addition to being aligned with Ferrandino of some issues and opposed to
Ferrandino on others , during the same trial.
In reply, Ferrandino maintains that, since all three actions arise out of the same
set of facts and circumstances and involve common questions of fact , judicial economy
requires that only one court preside over all three matters and that Utica has failed to
establish that it wil be substantially prejudiced by consolidation or a joint trial. It notes
that Utica h'as not been required to expend any funds to conclude the Project, in which
the concrete superstructure work was completed in October 2008, under the Bond or
required to pay any money under the Bond. Thus , Action No. 3 seeks recovery of the
reserve amount only in addition to and expert fees.
- - - . . .__.__.,
2 Utica provided the Court with index number 26462/08 as a related matter
related to the Project. That index matter is assigned to a matter entitled Petrina Rizzo v.Bay Ridge Medical Imaging Pc. It appears that the matter Utica is referring to is IndexNo. 26662/08 , entitled NY Rebar Installation Inc. v. Ferrandino Son Inc, Wheaton/MWFourth Avenue Limited Partnership, Utica Mutual Ins Co and "John Doe (1- 10).According to Utica , this action , commenced September 23 2008 by one of Ferrandinomaterials supplier which was seeking $72 134. , has been settled.
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
DISCUSSION
CPLR 602(a) permits that "when actions involving a common question of law or
fact are pending before a court , the court, upon motion , may order a joint trial of any or
all the matters in issue, may order the actions consolidated , and may make such other
orders concerning proceedings therein as may tend to avoid unnecessary costs or
delay.
Consolidation or a joint trial should be ordered when the actions involve common
questions of law and fact so as to avoid unnecessary duplication of trials , save
unnecessary costs and to avoid the possibility of inconsistent decisions based upon the
same facts. Viafax Corp. v. Citicorp Leasing. Inc. , 54 AD. 3d 846 (2 Dept. 2008);and
Gutman v. Klein , 26 AD. 3d 464 (2 Dept. 2006). See also Padula v. City of New York
52 AD. 3d 795 (2 Dept. 2008). Consolidation rests within the sound discretion of the
trial court. Mattia v. Food Emporium. Inc. , 259 AD.2d 527 (2 Dept. 1999).
The party seeking consolidation must establish the existence of common
questions of law or fact. Beerman v. Morhaim , 17 AD. 3d 302 (2 Dept. 2005). Once
the movant has established the existence of common questions of law or fact , the party
opposing consolidation must demonstrate that it will suffer prejudiceJQ a substantial
right if consolidation is granted. Mattia v. Food Emporium. Inc. supra. Absent that
showing, consolidation or a joint trial will be ordered if the movant meets its burden. Id.
See also Viafax Corp. v. Citicorp Leasing. Inc. supra; and Mas-Edwards v. Ultimate
Services, Inc. , 45 AD. 3d 540 (2 Dept. 2007). Delay of trial is not a sufficient basis to
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
warrant denial of a motion for a joint trial or consolidation. Perini Corp. v. WDF. Inc. , 33
AD. 3d 605 (2 Dept. 2006).
When actions are pending in different counties , it is appropriate to move venue to
the county where the first action was filed. Mas-Edwards v. Ultimate Services. Inc.
supra; Moor v. Moor, 39 A.D. 3d 507 , 508 (2 Dept. 2007); and Mattia v. Food
Emporium. Inc. supra. This rule is to be followed unless special circumstances are
present and in that instance , it is left to the discretion of the trial court to make a
determination as to which venue is appropriate. Mas-Edwards v. Ultimate Services.
Inc. supra; Moor v. Moor supra; and Matta v. Food Emporium. Inc. supra.
Where the plaintiffs are different , it is more appropriate to direct a joint trial rather
than to consolidate the two actions. Mas-Edwards v. Ultimate Services. Inc. supra
541; and Perini Corp. v. WDF, Inc. supra at 606.
All three actions stem from Wheaton and Ferrandino s Contract relating to the
Project. Action NO. 1 relates to Ferrandino s claims for payment by Wheaton and
Wheaton s counterclaims for breach of contract against Ferrandino. It also involves
Wheaton s third-party action against Utica relating to the bonds issued by Utica to
Ferrandino ensuring performance and payment. Action NO. 2 was commenced by
Ferrandino seeking a declaration that Utica has no duty to act pursuant to the bonds
and that Wheaton s failure to pay Ferrandino discharges Utica from performing pursuant
to the bonds. Utica then cross-claimed against Wheaton for a declaration that it has
been discharged of its obligations under the Bond. Thereafter, Utica brought suit
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
regarding the Indemnity Agreement and the Oneida County Defendants ' obligations
under that Agreement relating t the issuance of the bonds by Utica to Ferrandino. The
Oneida County Defendants ' counterclaims relate back to the facts and claims asserted
in Action Nos. 1 and 2. Thus, it is apparent to this Court that all three actions share
common questions of law and fact which are so interrelated that they must be tried
jointly. Consequently, Ferrandir)o , as movant, has met its burden.
In opposition to Ferrandino s motion , Utica fails to raise a sufficient argument that
it will suffer prejudice to a substantial right if this Court grants Ferrandino s motion.
Utica argues that:
Despite being contractually obligated , the (OneidaCounty Defendants) have failed and refused toprovide the collateral security deposit. Both NewYork State and Federal courts , applying New YorkLaw, have consistently upheld the validity of collateralsecurity provisions in indemnity agreements evenwhen the surety s loss has yet to be finalized.(Kuzow Affirmation , p. 8).
Utica goes on to further argue that the amount sought for the costs and expenses
Utica incurred and paid as a result of it being Ferrandino s surety, are damages which
Utica has already incurred and are not at issue in either Action NO. 1 or 2. In a similar
vein , in arguing that the three aqtions do not share common questions of law or fact
Utica argues that
, "
(a) determination of whether a contractor was actually in default on
the guaranteed contract is immaterial to the surety s right to indemnification. (Id. at p.
20). These arguments are appropriate to support Utica s motion for summary judgment
in Action NO. 3 but do not establ.ish prejudice to a substantial right.
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
Utica s only argument with respect to prejudice to a substantial right is that if the
actions are consolidated , during trial Utica would be placed in the role of both defendant
and plaintiff and it would be aligned with Ferrandino on certain issues and adverse to
Ferrandino on others. Utica argues that "(t)his could result in jury confusion and
prejudice Utica Mutual's right to fair trial , which can be avoided by keeping these
respective actions separate.(Id. at p. 22). Thereafter, Utica asserts that Ferrandino is
seeking to consolidate all three actions in order to delay Action NO. 3 and for its own
convenience.
This is not a case where the issues and applicable legal principles are so
dissimilar that the joint trial of the three actions wil be unwieldy creating jury confusion
and depriving the parties of their right to a fair trial. See e. Abreau v. American
Bankers Ins. Co. of Florida , 261 A.D.2d 501 (2 Dept. 1999)(consolidation of an action
for insurance proceeds following decedent's accidental death 'due to a chemical spil
and separate action for wrongful death stemming from physician s alleged negligence
was improper). All three actions revolve around the parties ' claims in light of the
impending and eventual default of Ferrandino by Wheaton and the impact of that default
upon the parties ' rights and duties pursuantto the Contract , Bond and Indemnity
Agreement. Consequently, it cannot be said that consolidation or joint trial will lead to
prejudice to a substantial right of Utica. Thus , Ferrandino s motion for a joint trial must
be granted.
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
Given the fact that Utica is a third-party defendant in Action No. , a defendant in
Action NO. 2 and plaintiff in Action No. , it is appropriate to order a joint trial of the three
actions as opposed to consolidating them Siegel New York Practice 4 , 9127.
Furthermore , since the first two actions were filed in Nassau County and Utica has not
set forth any special circumstances requiring that the matters be moved to Oneida
County, venue of all three actions will be in Nassau County.
Since Justice Hester has adjourned Utica s summary judgment motion pending
the resolution of the instant motion to consolidate or for a joint trial , it is unnecessary for
this Court to address Ferrandino s motion for a stay as it appears to be academic.
Accordingly, it is
ORDERED that the motion of Ferrandino & Son , Inc. is granted to the extent
that the following actions Ferrandino Son, Inc. v. Wheaton Builders, Inc. , LLC and
HE2 Project Development LLC and related third-party action (Nassau County Index No.
14338/08), Ferrandino Son, Inc. v. Utica Mutual Insurance Company and Wheaton
Builders, Inc. , LLC (Nassau Co Jnty Index No. 14887/08) and Utica Mutual Insurance
Company v. Ferrandino Son Inc. , Ferrandino Son Environmental, Inc. , KAF Realty
/nc. , Ferrandino Son Realty Inc. , Giavanna Realty Inc. ' Peter Ferrandino and Karen
.,--
Ferrandino (Oneida County Index No. CA2008/2912) are hereby joined for trial; and it is
further
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
ORDERED that the Clerk of the Oneida County Supreme Court is directed to
transfer the file pertaining to Utica Mutual Insurance Company v. Ferrandino Son Inc.
Ferrandino Son Environmental, Inc. , KAF Realty Inc. , Ferrandino Son Realty Inc.
Giavanna Realty Inc. , Peter Ferrandino and Karen Ferrandino (Oneida County Index
No. CA2008/2912) to the Clerk of the Nassau County Supreme Court; and it is further
ORDERED that the new caption will be as follows:
SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NASSAU
FERRANDINO & SON, INC. Action No.
Index No. 14338-Plaintiff
- against -
WHEATON BUILDERS , INC., LLC andHE2 PROJECT DEVELOPMENT , LLC.
Defendant------------------------------------------------------------------------xWHEATON BUILDERS INC. , LLC
Third-Part Plaintiff
. -
against -
UTICA MUTUAL INSURANCE COMPANY
- - .--
Third-Part Defendant
FERRANDINO & SON , INC. v. WHEATON BUILDERS , INC.Index No. 14338-
FERRANDINO & SON , INC. Action No.
Index No. 14887-
Plaintiff
- against -
UTICA MUTUAL INSURANCE CO. andWHEATON BUILDERS INC. , LLC,
Defendants
SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF ONEIDA
UTICA MUTUAL INSURANCE CO. Action No.
Index No. CA2008/2912Plaintiff
- against -
FERRANDINO_ &. SON, INC.,FERRANDINO &" SON ENVIRONMENTAL,INC. , KAF REALTY, INC .,FERRANDINO & SON REALTY, INC.GIAVANNA REALTY, INC. , PETERFERRANDINO , AND KARENFERRANDINO, '
Defendants.x; and it is further
ORDERED, that counsel for the respective parties shall appear for a conference
---
to reschedule the Oneida summary judgment motion for submission to this Court on
April 14 , 2009 at 9:30 a.
This constitutes the decision and Order of th
fS- lTEREDTIN , J.
MA 1 1 2Q
NASSAU COUNTYOUNTV CLERK'S OFICE
Dated: Mineo/a , NYMarch 12 , 2009