Aktas v. JMC Development Co. (877 F. Supp. 2d 1, 2012)

MEMORANDUM-DECISION AND ORDER

MAE A. D’AGOSTINO, District Judge.

INTRODUCTION

Plaintiffs Necdet Aktas and Lisa Filomia-Aktas commenced the within action against defendants alleging various claims arising out of work performed at their home on 223 Mill Creek Road in Adirondack, New York. Presently before the Court are the following motions: (1) defendant JMC Development Co., Inc. and Joseph M. Cantanucci Jr.’s motion for spoliation sanctions against plaintiffs and summary judgment including dismissal of plaintiffs’ fraud claims; (2) defendant James P. Lynch, P.E.’s motion for summary judgment; (3) third-party defendant Michael Terry’s motion for spoliation sanctions against plaintiffs; (4) third-party defendant Northwoods Concrete, Inc. motion for summary judgment and dismissal of the third-party complaint pursuant to Fed.R.Civ.P. 56; and (5) third-party defendant North East Underlayments, LLC motion for summary judgment and dismissal of the third-party complaint pursuant to Fed.R.Civ.P. 56. Plaintiff has submitted opposition to all motions. (Dkt. No. 107). This court has jurisdiction pursuant to 28 U.S.C. § 1332.

BACKGROUND

This matter contains few undisputed facts. In 2000, plaintiffs purchased a vacation home at 228 Mill Creek Road in Adirondack, New York, located in the Town of Horicon. On Labor Day 2008, plaintiffs met Joseph Cantanucci (“Cantanucci”), the sole owner of JMC Development Co., Inc. (“JMC”) and defendant Stephen Jung (“Jung”), an architect, at their vacation home to discuss a renovation project. Cantanucci testified that the plans for the project included two bedrooms over the garage, a playroom in the basement, new placement for the front door, a new deck and a powder room. Plaintiffs testified that the scope of the initial contract also included a new access staircase, a new bedroom with screened in porch to replace a bedroom that was removed and a fire pit below a two story deck. The work was to be performed pursuant to plans, construction documents and specifications prepared by Jung.

On or around October or November 2008, plaintiffs and JMC entered into a contract for the renovation of plaintiffs’ residence at 223 Mill Creek Road. The contract was for additions and renovations to the property pursuant to the drawings prepared by Jung Architecture on October 30, 2008. On November 14, 2008, plaintiffs paid Cantanucci $87,500.00 to start construction pursuant to the contract. Defendant Michael Terry (“Terry”) was hired by JMC to work as a contractor on the site and was paid by the hour by JMC. Cantanucci testified that Terry was hired to supervise construction at the site.

On November 25, 2008, after demolition began, Jung contacted defendant James P. Lynch (“Lynch”), via email. Lynch was retained for the limited purpose of performing structural engineering calculations for six specific beams. Jung provided Lynch with drawings with markings depicting the areas and the specific beams for which Jung wanted Lynch to provide calculations. On December 3, 2008, Lynch provided a report with the requested calculations. There were no further discussions between Lynch and Jung and plaintiffs never met Lynch.

On December 11, 2008, Northwoods Concrete, Inc. (“Northwoods”) sent a proposal to JMC for work at plaintiffs’ home. Northwoods is in the business of pouring residential and commercial foundations and concrete slabs. Craig House, the owner of Northwoods, testified that he became involved with the project because he had previously worked with JMC. The proposal included “specifications and estimates” for footings, interior pier footings, frost walls, retaining wall and 4" concrete slab. The proposal excluded, “footings for desk post; extra additives to concrete forming and pouring on ledge rock; and layout of building corners”. On December 19, 2008, JMC accepted the proposal. Northwoods poured the foundation for a crawl space which was three to four inches thick. Craig House entered into an Indemnification, Hold Harmless and Insurance Agreement with JMC and Cantanucci. The agreement provides:

Northwoods agrees to defend, indemnify, and hold harmless JMC and Cantanucci, ... from and against any and all claims, suits ... arising in whole or in part and in any manner from acts, omissions, breach or default of Subcontractor, in connection with performance of any work by Subcontractor, its officers, directors, agents, employees or subcontractors.

Subcontractor hereby agrees that it will obtain and keep in force an insurance policy or policies to cover its liability hereunder and to defend and save harmless General Contractor and Owner in the minimum amounts of $1,000,000 per occurrence (or another appropriate agreed upon amount) for personal injury, bodily injury, and property damage. Said liability policies shall name General Contractor and Owner as additional insureds and shall be primary to any other insurance policies.

On December 12, 2008 and December 16, 2008, Warren County performed foundation inspections. During these inspections, the inspector observed the footings. The foundation inspections were passed. On January 9, 2009, another foundation inspection was conducted and “approved”. Frank Waite Cowles, code enforcement officer for Warren County, testified that there were no problems with foundation and that it “passed” inspection.

In early 2009, Cantanucci contacted North East Underlayments, LLC. (“North East”) and requested a quote for spray-foam insulation work at plaintiffs’ residence. Douglas Kwazneski, a sales representative for North East, visited plaintiffs’ residence and met Terry. On February 27, 2009, North East prepared a “Revised Letter of Intent” to, “supply and install Icynene Insulation System at 223 Mill Creek Rd, Adirondack, N.Y. Aktas Proj.” Cantanucci executed the Letter of Intent on behalf of JMC.

During 2009, dué to disagreements regarding the completion date and payments for the project', the relationship between plaintiffs and JMC/Cantanueci began to deteriorate. Plaintiffs testified that they were advised, “a few days before Memorial Day” that the house was not liveable. Therefore, they attempted to get a completion date from defendant. Plaintiffs claim that Cantanucci involved his attorney, Paul Wein, in those discussions. On May 26, 2009, JMC’s attorney forwarded a letter to plaintiffs advising, “[w]e have been retained by JMC in reference to outstanding issues relating to a contract of work executed in October 200 regarding renovations of your home”. The letter also provided, “JMC is prepared to commit to a complete date of June 26, 2009” with some conditions that were outlined in the letter. The letter was executed by Cantanucci and Lisa Aktas.

On June 26, 2009, plaintiffs entered into a contract with George Villar (“Villar”) and Atelier Consulting, LLC for owner’s representation services for 223 Mill Creek Road, New York. Plaintiffs claim that they retained Villar to “get JMC to keep its promises concerning completion of the job”. At that time, Villar was aware that JMC had retained an attorney. Within 60 days of executing the contract with plaintiffs, Villar visited plaintiffs’ home on two or three occasions. During those visits, Villar took photographs and prepared a “punch list”. Villar testified that he deemed the workmanship to be “poor” and had concerns about the safety of the construction. Villar also testified that he thought there were code violations.

Plaintiffs testified that between June 26, 2009 and July 4, 2009, Villar visited the site with Richard Mullady (“Mullady”), president of Recony Construction. At that time, Mullady observed what he deemed to be, “safety issues with respect to the deck, fire pit and fire place.”

On July 4, 2009, Cantanucci visited the site for the last time. Cantanucci testified that at that time, the project was “90% complete”. From July 4, 2009 until July 19, 2009, JMC did not work on the house. Cantanucci testified that at approximately the same time, he received a telephone call from Villar:

A. ... he asked me to get him a copy of the approved drawings from Warren County and some other documentation along with some stuff he requested from the architect, and told me if I was to send them to him, that he would pay me for my shipping cost and three percent for my time. So we spent the week of July 4th, I believe it was, gathering and sending him all of the documentation.

On July 12, 2009, Cantanucci forwarded an email to Villar with an outline of his “outstanding debts”. Cantanucci concluded the email, “[pjlease send a copy of all correspondence to myself, and Paul Wein, at p.wein@wyflklaw.com, so I know how to proceed”.

Cantanucci testified regarding his subsequent conversations with Villar:

A.....[h]e gave me his phone numbers and told me he was again a mediator hired by a mutual friend John Poulin, and he was in this to make sure everyone was treated fairly. We talked about moneys owed. He agreed that we were very close according to his calculations on what I was owed, and that he would have a commitment from the Aktases by a certain date, and when he didn’t return my calls at that date, I called him and he told me the Aktases were out of the country and he only had communication via his Blackberry phone.

Q. Did there come a point in time when Mr. Villar told you that either he or the Aktases were dissatisfied with your work or the time for completion of the project?

A. The only time that I got any information from him in that respect was an email that he sent me stating that — well, could I back up a moment please?

A. Right. Mr. Villar contacted me and said that he was going to change the locks that’s [sic] on the house. Because of those beer cans that we found in the yard, he was under the impression that there were kids in the neighborhood coming to the house and drinking. So I assumed he was going to give me a new set of keys because we had just put three new locks on the house. Well, when I called him to get the lock set, or the new keys, he didn’t return my calls but I received an email from him, and I’m sure you have a copy of it, that they installed security cameras, I’m no longer allowed on the job, and to not violate that. And he installed security cameras at that date and to please contact him to get my equipment off the job which was locked at this point in the house.

Cantanucci testified that the aforementioned communication took place after July 4th. During their last conversation, Cantanucci and Villar arranged a meeting so that Cantanucci could retrieve JMC’s equipment. Cantanucci could not recall when that conversation took place. Cantanucci testified that, “[h]e made it a point with us to come let us in and never showed. We came the next day and he threw all our equipment out on the lawn. And that was the last I heard from him until they gutted the house”.

Shortly thereafter, Villar recommended that plaintiffs retain Kevin Archer (“Archer”) and William B. Fink, Jr. (“Fink”). On July 16, 2009, Archer received an email from Villar. Archer testified that the email “indicate[d] remediation”. Archer testified that he took notes from his first telephone conversation with Villar regarding Archer’s involvement. Archer testified that he and Villar had some conversation about potential litigation in the matter. Archer testified that he knew that there was “an attorney on board”.

On July 19, 2009, plaintiffs “stopped the [construction] process” by changing the locks on the house effectively precluding JMC from continuing to work on the project. Plaintiffs made the decision due to the lack of progress and “some quality issues”. Plaintiffs testified that no one from JMC including Cantanucci was on the property after July 19, 2009.

Villar testified that in “June or July of '09”, “all the sheetrock” was removed so that “the engineer come and look at the framing”. He also testified, “a few weeks later more drywall was removed to look at not just the vertical, but also the horizontal framing”.

On July 27, 2009, Archer visited the site with Villar and Mullady and took photographs. Archer was at the site for roughly four hours. On August 15, 2009, Fink visited the site with Villar. On August 19, 2009, Fink issued a report entitled “Preliminary Engineering Review — 223 Mill Creek Road, Adirondack, New York”. The review was, “limited to the mechanical and electrical systems”. In the report, Fink outlines forty-eight items that he opines are “deficient, incomplete or non-existent” with respect to heating, ventilating, air conditioning, plumbing and - electrical work.

Villar testified that he recommended that plaintiffs terminate their relationship with JMC. On September 4, 2009, at plaintiffs’ direction, Villar wrote a letter to Cantanucci and JMC and stated:

... over the last few weeks, several independent evaluations of the Property and the work done by you or your subcontractors thereat were performed. These evaluations revealed that said work was performed in an inadequate, negligent and un-professional manner that did not meet industry standards or applicable building codes. It has been revealed that it will be necessary, at best, to completely remedy the work performed by you due to the gross defects, and, at worst, demolish and rebuild the currently uninhabitable property.

... please cease and desist any involvement with any aspect of the Property, immediately turn over all documents in your possession pertaining thereto, and consider yourself on notice to refrain from entering the Property and/or damaging the Property in any way.

The letter further provided:

Lastly, consider yourself on notice that a claim will be made by the Aktas’ for the damages sustained by them due to your performance, or better yet lack thereof, at the Property. Accordingly, please notify me in writing of the identity and policy limits of your insurance carrier and refrain from attempting to disburse and/or waste any of your corporate or personal assets.

Villar continued:

NOTICE: ANY PERSON(S) THAT IS FOUND ON THE PROPERTY WILL BE TRESSPASSING [SIC] AND THE AUTHORITIES WILL BE NOTIFIED. UNDER ABSOLUTELY NO CIRCUMSTANCES IS ANYONE GIVEN PERMISSION OR AUTHORIZATION TO VISIT THE HOUSE OR PROPERTY UNTIL FURTHER NOTICE.

On Septémber 4, 2009, Archer prepared a Structural Inspection Report for the residence based upon his July 27, 2009 inspection. Archer stated, “[t]he inspection was undertaken to provide a general review of the structure of the house with reference to the 2007 New York State Residential Building Code and good standards of construction”. Archer noted, “[t]he inspection was limited to visual review of the as-built conditions with some probes made through finish materials to gain better view of the structure”.

On September 14, 2009, Mullady returned to the site with Archer and Fink. There is conflicting testimony regarding the condition of the house at that time. As noted previously, Villar testified that “all of the sheetrock” was removed in June or July. Fink testified that during the September visit, “basically the drywall or sheetrock had been removed for most of the building”. Conversely, Mullady testified that, during the September visit, he made four or five small openings in the walls, at Villar’s direction, for the experts and a few weeks later, “bigger openings” were made but by the Fall of 2009, all sheetrock was “down”. Archer testified that during that visit, “sheetrock was removed in certain portions of the house so I could see the structure better”. Lisa Aktas testified that “demolition” began in September 2009 which included, “[rjemoving existing sheetrock walls and ceilings, need to purchase hot water heater, connecting water to house system to test waste and septic systems and vents”.

On September 22, 2009, Archer prepared Structural Inspection Report 2 after a “follow-up” inspection on September 14, 2009. Archer stated, “[t]his follow-up inspection was undertaken to review additional exposed portions of the structure of the house following the removal of areas of sheetrock and insulation”.

In the Spring of 2010, Recony began construction on plaintiffs’ home. Mullady testified that he did not salvage the sheet-rock because it was “impossible” because it was painted and had holes. Plaintiffs testified that the materials were “carted away” and “thrown out”.

Procedural History and Pleadings

On November 5, 2009, plaintiffs filed a lawsuit in the Southern District of New York against defendants. On November 24, 2009, JMC filed a mechanic’s lien with the Warren County Clerk against the 223 Mill Creek Road Property. On December 22, 2009, the federal complaint was dismissed for improper venue.

On December 24, 2009, plaintiffs filed the within action in this court. Defendants filed a motion to dismiss for lack of subject matter jurisdiction and plaintiffs’ cross moved to amend the complaint. In support of the motion to amend, plaintiffs disclosed reports from Archer and Fink. On June 15, 2010, Chief United States District Court Judge Gary L. Sharpe issued a decision granting plaintiffs’ motion to amend and denying defendant JMC’s motion to dismiss.

On June 21, 2010, plaintiffs filed an amended complaint. Plaintiffs asserted several causes of action against JMC and Cantanucci including breach of contract, breach of warranty, negligence, fraud, personal liability and cancellation of mechanics’ lien. Plaintiffs also asserted causes of action for breach of contract and negligence against Jung, Lynch, Granville Granite, Brady’s Wood Floors and Hamilton Plumbing. Plaintiffs also seek punitive damages.

On November 23, 2010, JMC filed a third-party summons and complaint alleging that JMC is entitled to common law and contractual indemnification and/or apportionment of fault amount and between third-party defendants pursuant to its hold harmless and insurance agreements. JMC also claims that third-party defendants failed to name JMC as an additional insured on its insurance policies and that JMC is entitled to a defense.

DISCUSSION

I. JMC/CANTANUCCFS MOTION FOR SPOLIATION SANCTIONS

Defendants move for spoliation sanctions and argue that plaintiffs failed to allow JMC access to the premises and destroyed all relevant evidence of JMC’s purported defective work. Based upon the circumstances, defendants argue that dismissal is the appropriate remedy.

“Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation”. West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999) (the sanction should “serve the prophylactic, punitive and remedial rationales underlying the doctrine”). The district court is vested with wide discretion in determining the appropriate sanction. Reilly v. NatWest Mkts. Group, Inc., 181 F.3d 253, 267 (2d Cir.1999). “The right to impose sanctions for spoliation arises from a court’s inherent power to control the judicial process and litigation, but the power is limited to that necessary to redress conduct which abuses the judicial process”. Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir.2002).

To secure spoliation sanctions based on the destruction or delayed production of evidence, a moving party must prove that: (1) the party having control over the evidence had an obligation to preserve or timely produce it; (2) the party that destroyed or failed to produce the evidence in a timely manner had a “culpable state of mind”; and (3) the missing evidence is “relevant” to the moving party’s claim or defense, “such that a reasonable trier of fact could find that it would support that claim or defense.” Id. If a party has an obligation to preserve evidence, the degree of the party’s culpability and the amount of prejudice caused by its actions will determine the severity of the sanctions to be imposed. Henkel Corp. v. Polyglass USA, Inc., 194 F.R.D. 454, 456 (E.D.N.Y.2000) (citations omitted). “[A] court should never impose spoliation sanctions of any sort unless there has been a showing — inferential or otherwise — that the movant has suffered prejudice.” Gen-On Mid-Atlantic, LLC v. Stone & Webster, Inc., 282 F.R.D. 346, 353 (S.D.N.Y.2012) (citing Orbit One Commc’ns, Inc. v. Numerex Corp., 271 F.R.D. 429, 441 (S.D.N.Y.2010) (“[i]t is difficult to see why even a party who destroys information purposefully or is grossly negligent should be sanctioned where there has been no showing that the information was at least minimally relevant.”)).

A. Obligation to preserve

A party has a duty to preserve evidence when it has “notice that the evidence is relevant to litigation, or should have known that the evidence might be relevant to future litigation”. Fujitsu v. Fed. Exp. Corp., 247 F.3d 423, 426 (2d Cir.2001). The duty to preserve extends to “any documents or tangible things (as defined by Rule 34(a)) ... ‘likely to have discoverable information that the disclosing party may use to support its claims or defenses’ ”. Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212, 217 (S.D.N.Y.2003) (citations omitted) (the parties “must not destroy unique, relevant evidence that might be useful to an adversary”). Where a party attempts to document damage through photographs and reports and brings in counsel and experts to assess the damage, that party has a duty to preserve the evidence. Wade v. Tiffin Motorhomes, Inc., 686 F.Supp.2d 174, 194 (N.D.N.Y.2009).

Here, the record establishes that plaintiffs-recognized that litigation was imminent. Thus, plaintiffs had a duty to preserve the evidence, specifically, defendants’ work product. This evidence was not only unique, but solely within plaintiffs’ control. As early as May 2009, plaintiffs were aware that JMC/Cantanucci was represented by counsel. Plaintiffs negotiated with defendants’ attorney in an effort to complete the project by June 26, 2009. On June 26, 2009, plaintiffs began the process of documenting all of the alleged defective construction in anticipation of litigation. To wit, plaintiffs retained Villar, Mullady, Archer and Fink. These individuals inspected the site, photographed the evidence and prepared reports. Moreover, in September 2009, plaintiff clearly notified defendants that they intend to make a “claim”. Based upon the record, plaintiffs knew that litigation was “likely to be commenced” and thus, had an obligation to preserve the subject evidence.

B. Culpability

While plaintiffs clearly had a duty to preserve the evidence, the Court recognizes that the obligation to preserve evidence does not continue indefinitely. Allstate Ins. Co. v. Hamilton Beach/Proctor Silex, Inc., 473 F.3d 450, 458 (2d Cir.2007). The duty to preserve evidence may be extinguished by providing the opposing party with an adequate and meaningful opportunity to inspect. Gaffield v. Wal-Mart Stores East, L.P., 616 F.Supp.2d 329, 337 (N.D.N.Y.2009); see also Cedar Petrochemicals, Inc. v. Dongbu Hannong Chemical Co., Ltd., 769 F.Supp.2d 269, 291 (S.D.N.Y.2011) (spoliation sanctions are not warranted when the movant has had an opportunity to inspect the evidence pri- or to its destruction). When a party fails to request an inspection of the evidence after being notified of its existence, spoliation sanctions are not appropriate. Fujitsu Ltd., 247 F.3d at 435; see also Townes v. Cove Haven, Inc., 2003 WL 22861921, at *4 (S.D.N.Y.2003) (citation omitted) (spoliation sanctions inappropriate where the defendant reconstructed a pool two years after the incident and over one year after a complaint because the opposing party was afforded a reasonable opportunity to avail themselves of the evidence); see also Sterbenz v. Attina, 205 F.Supp.2d 65, 73 (E.D.N.Y.2002) (the defendant waited nearly three months to dispose of the vehicle after the plaintiffs counsel admittedly was notified of the vehicle’s location and therefore provided the defendant with adequate and meaningful opportunity to inspect the evidence).

The Second Circuit has held that thé “culpable state of mind” factor is satisfied by a showing that the evidence was destroyed “knowingly, even if without intent to (breach a duty to preserve it), or negligently”. Pastorello v. City of New York, 2003 WL 1740606, at *10 (S.D.N.Y.2003) (citing Bymie v. Town of Cromwell, Bd. of Educ., 243 F.3d 93, 109 (2d Cir.2001)). Simple or ordinary negligence is, “a sufficiently culpable ‘state of mind’ for the purposes of spoliation”. Wade, 686 F.Supp.2d at 194 (the plaintiffs expert had thirty years of experience as a fire investigator and should have known that other experts would be inspecting the RV). A party acts with negligence when he makes diligent efforts to document damage in anticipation of a lawsuit but fails to take reasonable precautions to preserve the evidence. Id. at 195. Nevertheless, a property owner is not required to retain property that is in a negligent condition for an indefinite period of time. Townes, 2003 WL 22861921, at *4.

To determine whether plaintiffs were culpable, the Court examines when and to what extent defendants’ work was demolished and removed from the site. The parties testified that Recony Construction was responsible for the initial demolition and remedial work. The record contains no competent or admissible evidence regarding plaintiffs’ working relationship with Recony. Without contracts or documentary evidence, there is no record establishing when Recony performed the work. Accordingly, the Court must rely upon the parties’ and witness deposition testimony regarding when the demolition/remedial work began. In this regard, the record is conflicting.

Villar testified that “most of the sheet-rock was removed” in June or July 2009. Fink and Archer testified that during the September 14, 2009 inspection, “most of the sheet rock” had been removed. Mullady testified that he made “four or five small openings” in the walls in September 2009 and that “all of the sheetrock” was removed by Fall 2009. Plaintiffs claim that demolition work did not begin until September 2009. Despite these inconsistencies, the record clearly establishes that plaintiffs and Villar knew that JMC was represented by counsel when the destruction commenced. Villar testified that he was aware that JMC had retained an attorney and admits that he did not notify JMC or JMC’s attorney about the demolition. Villar testified that he made no effort to contact the attorney and made no effort to allow defendant on the premises:

' Q. At any time did you notify JMC or his attorney that this destruction was occurring and the property was being removed?

A. No.

Q. Okay. So, you were aware back then that Mr. Cantanucci had an attorney?

A. Okay. Yes.

Q. At any time during the deconstruction process did you make any effort to contact my office to advise me about the deconstruction?

A. No.

Q. During the last break that we had what conversation did you have with Mr. Steck outside?

A. We discussed Mr. Wein’s request of how come I didn’t contact him, you know, as the attorney, when, in fact, he did get — I’m sure through JMC — a letter that we sent FedEx explaining that JMC is not to enter the property and that corrective work would happen. So I am sure his client gave him a copy of that.

Q. Was there any effort to give Mr. Wein or JMC or any of the other folks that were involved in the original construction an opportunity to go in and look at the things that you were claiming were done incorrectly before those things were remediated or taken down?

A. No.

The record demonstrates that plaintiffs knowingly destroyed evidence. However, defendants have not persuaded this Court that plaintiffs acted with “bad faith”. See Great N. Ins. Co., 2007 WL 2687666, at *10 (the plaintiff offered the defendant minimal opportunity to observe the turbine’s disassembly and therefore, did not act with bad faith to warrant dismissal). Defendants claim that the Court should “infer” bad faith based upon Villar’s relationship with Recony. During depositions, Villar was questioned extensively regarding his relationship with Recony including the location of Recony’s office and Villar’s prior consulting work performed on behalf of Recony. Villar maintained that he was not an owner, employee, nor did he have any interest in Recony. Plaintiffs fail to cite to any caselaw to support this proposition and the Court is not persuaded by the conclusory claim. Defendants also allege that bad faith should be assumed based upon Villar’s criminal history. The record establishes that Villar was convicted of grand larceny in the second degree and larceny and scheming to defraud in the first degree. Villar served 37 months in prison and was ordered to pay restitution in the amount of $914,560.80. Moreover, Villar has eleven prior criminal convictions dating back to 1990. While Villar’s criminal history is part of the record herein, defendants fail to cite to any caselaw to support the contention that this history warrants a finding of bad faith per se on this issue.

The Court finds that plaintiffs were grossly negligent and knowingly altered and destroyed defendants’ work. Plaintiffs made diligent efforts to document the evidence in anticipation of litigation before “locking out” defendants. Moreover, plaintiffs retained experts who photographed the scene and prepared reports before Villar sent the September 2009 correspondence notifying defendants that plaintiffs would file a claim. Plaintiffs have failed to establish that they were forced or compelled to destroy any evidence for any reason including, but not limited to, code violations or any other safety concerns. Moreover, even assuming that remediation was necessary, the record contains no evidence demonstrating that defendants were aware of such urgency. Thus, defendants have established that plaintiffs acted with a degree of culpability sufficient to permit the imposition of sanctions by this Court. See Residential Funding, 306 F.3d at 108.

C. Relevance

Relevant evidence is evidence that a reasonable trier of fact would find that supports the party’s claim or defense. Residential Funding, 306 F.3d at 107. “When a party destroys evidence in bad faith, the bad faith alone is sufficient circumstantial evidence from which a reasonable fact finder could conclude that the missing evidence was unfavorable to that party”. Id. at 109. If a party destroyed evidence through negligence then there must be extrinsic evidence to demonstrate that the destroyed evidence was relevant and would have been unfavorable to the destroying party. Great N. Ins. Co., 2007 WL 2687666 at *11 (citation omitted). Typically, deposition testimony is used to establish relevance. Id. However, circumstantial evidence may support the inference that the destroyed evidence contained information supporting the movant’s claims. Kronisch v. U.S., 150 F.3d 112, 128 (2d Cir.1998). The party seeking the sanctions must adduce sufficient evidence from which a reasonable trier of fact could infer that “the destroyed [or unavailable] evidence would have been of the nature alleged by the party affected by its destruction”. Id. at 127. “Courts must not hold the prejudiced party to too strict a standard of proof regarding the likely contents of the destroyed evidence, because doing so would allow parties who have destroyed evidence to profit from that destruction.” Cedar Petrochemicals, Inc., 769 F.Supp.2d at 290 (citations omitted).

Defendants claim that all of their work was destroyed and as a result, their experts are unable to provide opinions. JMC’s work product is at issue in this case. To establish relevance, defendants provided an affidavit from Conrad Hoffman, P.E. Mr. Hoffman is a professional engineer retained by defendants to provide, “opinions and conclusions regarding work performed by defendants”. On January 28, 2011, Mr. Hoffman inspected plaintiffs’ home at 223 Mill Creek Road. Mr Hoffman opines, “I was unable to inspect any of the work that JMC performed. It was wholly and completely destroyed, according to my review of [] documents and my site inspection”. Mr. Hoffman stated:

My inspection revealed that a reconstruction of the premises that was wholly and completely different from the work performed under the Jung design and JMC contract. The scope of work was significantly different. This was not a remediation under any definition of the word. It was a remodel of a completely different and far more expansive design.

Moreover, Mr. Hoffman stated:

I did, in fact, review photographs exchanged during the discovery process including ones allegedly taken by George Villar, however, there is absolutely no method to determine what these, photographs depict.

According to plaintiffs, the demolition included the roof, sheetrock, Icynene (spray foam insulation), the decking, the patios, the flooring and carpeting, siding and fireplace. Defendants have presented sufficient evidence to establish that they suffered prejudice from the destruction of evidence. The best evidence of defendants alleged liability was destroyed at plaintiffs’ direction. Without any evidence of defendants’ work, defendants’ experts are unable to inspect the property and offer an opinion regarding whether defendant’s work was defective.

D. Appropriate Sanction

Destruction of evidence occurs, “along a continuum of fault ranging from innocence through the degree of negligence to intentionality. The resulting penalties vary accordingly”. Pirrello v. Gateway Marina, 2011 WL 4592689, at *4 (E.D.N.Y.2011). The Court must determine the appropriate sanction based on: (1) the fault of the litigant against whom sanctions are sought; and (2) the degree of prejudice suffered by the movant due to the destruction or loss of the evidence at issue. Townes, 2003 WL 22861921, at *3 (citation omitted). Traditional sanctions for spoliation include preclusion, monetary sanctions, or an adverse inference instruction. Residential Funding, 306 F.3d at 101. Sanctions may include dismissal of a suit however, dismissal should only be imposed in extraordinary circumstances. John B. Hull, Inc. v. Waterbury Petroleum Prods., Inc., 845 F.2d 1172, 1176 (2d Cir.1988). There are alternative sanctions that would “level the evidentiary playing field”, such as adverse inference or preclusion sanctions. See id. These sanctions are severe and are reserved for egregious conduct or situations in which the loss of the relevant evidence has so prejudiced the moving party that preclusion or the adverse inference is necessary to restore the moving party to its pre-loss position. Residential Funding, 306 F.3d at 112. An adverse inference instruction is available when a party knowingly or negligently destroys evidence. Id. at *10 (the adverse inference was not appropriate as the defendant failed to demonstrate that the inspection of the destroyed part would have supported its defense). One of the purposes of an adverse inference is to restore the prejudiced party to the same position he would have been in absent the wrongful destruction of evidence by the opposing party. Kronisch, 150 F.3d at 126. An instruction to the jury “that the [destroyed] evidence would have been unfavorable to the party responsible for its destruction, serves to restor[e] the prejudiced party to the same position he would have been in absent the wrongful destruction of evidence.” Id. (alteration in original).

In this instance, in opposition to the motion, plaintiffs cite to Calpine Corp. v. AP & M Field Seros., Inc., 2008 WL 5159775 (S.D.N.Y.2008). The Calpine case involved the failure of .a turbine engine used by the plaintiff to deliver power to JFK International Airport. The. plaintiff claimed that the defendant was liable for failing to maintain the turbine. Within a few days of the incident, the parties were aware that litigation was possible and lawyers became involved. A few days later, the defendant’s employees arrived to examine the turbine but were not able to adequately do so at the plaintiffs premises. The next day, the defendant advised the plaintiff that it would not repair the turbine. A few weeks later, the plaintiff notified the defendant that it intended to have an expert examine the turbine. During the inspection, the engine was disassembled, repaired and various damaged parts were discarded. On the defendant’s motion for sanctions, the evidence established that the plaintiff never advised the defendant of the inspection and never gave the defendant an opportunity to have an expert present. Id. at *3. Conversely, the defendant did not seek an opportunity to complete it’s testing of the subject engine until three and a half months after the failure. Id. at *4. The court concluded that, “neither party behaved as might ideally have been expected”. The evidence established that the defendant was aware that repairs were in progress and that the plaintiff needed to complete the repairs expeditiously. The Court concluded:

It is somewhat disingenuous of AP & M to blame Calpine for failing to notify it that an inspection would be performed, when it did not for its own part timely demand the opportunity to inspect the turbine fully, to be present for any testing performed by Calpine, or at least to examine any defective or damaged part. A party cannot sleep on its rights while an adversary predictably conducts its own expert examinations in diligent preparation for litigation, and then complain that it was not invited to participate.

Id. at *3-4.

The Court denied the defendant’s motion for spoliation and held that the jury must resolve these issues:

Calpine has essentially opened the door to adverse jury fact-finding, which it could easily have prevented by a more cautious and responsible course of action, including inviting AP & M to be present for expert testing and retaining the damaged parts after repairs were completed. AP & M is entitled to put these matters to the jury ...

Calpine, 2008 WL 5159775, at *5.

Calpine is distinguishable from the facts at hand. Here, plaintiffs did not take the steps that Calpine took to notify defendants of the impending destruction of the evidence. Moreover, in Calpine, the defendant was aware, for at least three months, of the plaintiffs immediate need to remediate and failed to act. Here, there is no evidence that plaintiffs were compelled to remediate the property for any reason or farther, there is no evidence that defendants were aware of any such immediate need or urgency to remediate the property.

The Eastern District case of Henkel Corp. v. Polyglass USA Inc., 194 F.R.D. 454, 456 (E.D.N.Y.2000) is instructive. In Henkel, the plaintiff repaired a leak in a roof using the defendant’s polyester membrane. The evening after the repair, a fire originated in “combustible material”. Id. at 455. On March 28, 1996, two days after the fire, the plaintiff hired an expert to inspect the scene and take photographs. The plaintiff also hired a company to inspect the building and to perform any necessary demolition work. Three weeks after the fire, demolition work began and the fire debris was removed. Id. The project was completed on May 8, 1996. On December 3, 1996, defendant received a summons and complaint. The defendant hired an expert to evaluate all available evidence including deposition transcripts, photographs, and discovery. The defense expert issued an affidavit and stated that by clearing the fire debris, the defendant was precluded from having an opportunity to perform a similar investigation of the fire scene. Moreover, the photographs, “did not contain sufficient detail to provide reasonable assistance in determining the cause and origin of the fire”. The defendant’s expert stated that it was impossible for him or any other qualified expert to reach a conclusion regarding the cause of the fire. The defendant moved for spoliation sanctions. The Court held that while the plaintiff did not act with “bad faith”, the plaintiff was “highly culpable” for failing to notify the defendant of the destruction of the evidence. Moreover, the defendant’s inability to inspect the fire scene was highly prejudicial. The Court held:

Because plaintiff has had the opportunity to have its fire expert inspect the fire scene and defendant has not been afforded the opportunity either to inspect the scene or any actual fire debris, the evidentiary playing field between the • two parties is clearly not level. Because plaintiff is responsible for this evidentiary- disparity, some form of .sanction is appropriate.

Id. at 457.

The Court granted the defendant’s motion and concluded that the appropriate remedy was “an adverse inference charge instructing the jury that it may infer from plaintiffs removal of the fire debris that the evidence from the fire scene would have been unfavorable to the plaintiff.” The Court reasoned, “the plaintiff is free at trial to proffer an explanation as to why it removed the fire debris and why it failed to notify defendant of the removal”. Id.

In this matter, plaintiffs argue that sanctions are not appropriate because defendants have been provided with photographs and expert reports. This Court adopts the reasoning of the Eastern District in the Henkel case and rejects this argument. Defendants’ inability to inspect the evidence resulted in significant prejudice to defendants. Moreover, the Court will not compel defendants to rely on plaintiffs’ expert review and photographs. Henkel, 194 F.R.D. at 455-56. As Magistrate Judge Treece stated in Allstate v. Gonyo, “[i]f [the] claim of spoliation is true, then the evidentiary playing field is decidedly tilted in favor of [the plaintiff], notwithstanding the presence of another competing expert report and photographs”. Allstate Ins. Co. ex rel. Lothridge v. Gonyo, 2009 WL 962698, at *9 (N.D.N.Y.2009).

A district court and trial judge has wide discretion-in sanctioning parties and this Court has considered the conduct of the parties in determining the appropriate sanction. Despite plaintiffs’ “gross negligence”, the Court finds that dismissal is too drastic a remedy. See Allstate v. Gonyo, 2009 WL 1924769, at *3 (N.D.N.Y.2009) (the subject cabin was razed or substantially renovated before the defendant was aware that he was a potential litigant). While Villar admittedly failed to notify defendants of the impending destruction, the record clearly establishes that even after receiving Villar’s letter, defendants did not pursue a site inspection. During Cantanucci’s deposition, he testified regarding Villar’s September 2009 letter:

Q. When you received that letter, did you contact your counsel?

A. I did.

Q. And what did you do with respect to the property? Did you undertake any efforts to return to the property and ascertain its condition?

A. Never.

Q. Let’s look at page P193 on there. “It has been revealed that it will be necessary at best to completely remedy the work performed by you and at worse demolish and rebuilt [sic] the currently uninhabitable property”. Did you see that?

A. I did.

Q. Was that notice to you that for good or for ill, whether they were right or wrong, if their intention was to do it over again, right?

A. Yes.

Q. Did you take any steps to investigate what in fact was occurring at the property?

A. No.

Q. Did you contact Mr. Villar or the Aktases or anyone else and asked to inspect the property?

A. I believe we did.

Q. When?

A. I don’t know when, but certainly—

Q. Did you?

A. Did I?

Q. Yes.

A. Did I contact? Did you read this letter? It says not to contact anyone, not to do it, not to liquidate your assets.

Q. Okay. Did you take any steps?

A. What steps? I don’t understand the question.

Q. Any steps? The answer is maybe you didn’t because you didn’t think you had—

A. I don’t know what steps could be taken. I’m asking you.

Q. All right. Did you do anything—

A. I contacted my attorney.

Q. And after that, you didn’t do anything? You left it in the hands of your counsel, is that right?

A. I believe so.

Q. Excluding any conversations with your counsel, did you obtain any knowledge from any source, other than your attorneys, as to what efforts might have been made to inspect the property on your behalf?

A. Efforts to inspect? I really don’t understand the question.

Q. Are you aware of any efforts to inspect the property?

A. That I tried to inspect the property?

Q. Right. Or anybody else acting on your behalf?

A. Not acting on my behalf, no.

Defendants have not established that anyone on behalf of JMC requested, and was denied, an inspection of the subject property. Indeed, none of the parties expressed any sense of urgency with respect to this issue until nearly six months after plaintiffs filed their amended complaint. On December 1, 2010, the parties discussed this issue with United States Magistrate Judge David R. Homer. Judge Homer issued an order permitting defendants and their experts to conduct a site inspection on December 14, 2010 or December 29, 2010. (Dkt No: 61).

Nevertheless, based upon the entire record, any request by defendants to inspect the premises, upon receipt of Villar’s September 2009 letter, would have been futile. It is undisputed that plaintiffs changed the locks on the site in July 2009. However, the “lock out” did not provide defendants with notice that the evidence would be destroyed. Indeed, Cantanucci and Villar testified that, at that time, they were working towards resolving the issue in a manner that was favorable to all parties. However, Villar also testified that most of the sheetrock was removed as early as June or July 2009 and plaintiffs’ experts and plaintiffs testified that a significant portion of JMC’s work was removed in early September 2009. Therefore, even if defendants requested an opportunity to inspect the property immediately upon receipt of Villar’s September 2009, the property was already in a different condition as defendants’ work was altered and/or destroyed. Based upon the record, plaintiffs failed to afford defendants sufficient notice and a reasonable opportunity to inspect the site prior to destroying the evidence.

E. Plaintiffs’ Claims Regarding Design Defect

In opposition to the motion, plaintiffs claim that spoliation “is inapplicable as a matter of law” because plaintiffs were forced to remediate due to design defects as well as construction errors. Plaintiffs’ misinterpret and misapply the law. The proposition that plaintiffs cite is relevant in product liability actions and thus, has no application to the facts herein. “[I]f a product was manufactured defectively, its defect is likely to be particular to the individual product. Consequently, a party’s examination of that product may be critical to ascertaining, among other things, the presence of the defect.” Collazo-Santiago v. Toyota Motor Corp., 149 F.3d 23, 29 (1st Cir.1998). “In design defect cases, a party’s examination of the individual product at issue may be of lesser importance as the design defect alleged can be seen in other samples of the product.” Id. A “defective design claim arguably does not require evidence of the product which actually failed, since all of the same type of product are uniformly defective”. Beers v. Gen. Motors Corp., 1999 WL 325378, at *6, n. 12 (N.D.N.Y.1999); see also Harley v. Makita USA, Inc., 1998 WL 156973, at *11 (E.D.Pa.1998) (citations omitted) (the court refused to apply spoliation in a product liability claim based on a design defect).

In support of this argument, plaintiffs cite to one case, Green v. Ford Motor Co., 2008 WL 5070489 (S.D.Ind.2008) (the plaintiff alleged only defective design of his automobile and the Court found “[t]he allegedly defective design of the Explorer was not destroyed” with the plaintiffs Explorer). The Court has thoroughly reviewed the Green case and finds it readily distinguishable from the facts at hand and thus, not controlling herein. In Green, the plaintiff did not, as plaintiffs herein have, alleged a manufacturing or construction defect. Here, plaintiffs’ claims are based both on construction and design defects that are unique to plaintiffs’ home. Therefore, without an opportunity to examine the components of their work that were allegedly defective, defendants cannot properly defend the action. See Travelers Prop. Cas. Co. of Am. v. Cooper CrouseHinds, LLG, 2007 WL 2571450, at *5, n. 31 (E.D.Pa.2007).

F. Conclusion/Remedy

In light of plaintiffs’ actions regarding the preservation of critical evidence and the prejudice that defendants have suffered at the loss of the evidence, the Court finds that an adverse inference charge is appropriate. After considering plaintiffs’ actions, Villar’s involvement, the negligence in destroying relevant and necessary evidence, the Court will issue an adverse inference charge that permits the jury to infer that the missing evidence was favorable to defendants. The Court will fashion the exact language of the charge at trial and the parties will be permitted to submit proposed instructions in this regard. Accordingly, defendants’ motion for spoliation sanctions is denied in part and granted in part.

II. JMC’S MOTION FOR SUMMARY JUDGMENT AND DISMISSAL OF PLAINTIFFS’ FRAUD CLAIMS

A. Standard on Motion for Summary Judgment

Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). Substantive law determines which facts are material; that is, which facts might affect the outcome of the suit under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 258, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A party moving for summary judgment bears the initial burden of demonstrating that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; see Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the Court, viewing the evidence in the light most favorable to the nonmovant, determines that the movant has satisfied this burden, the burden then shifts to the nonmovant to adduce evidence establishing the existence of a disputed issue of material fact requiring a trial. See id. If the nonmovant fails to carry this burden, summary judgment is appropriate. See id.

Summary judgment pursuant to Federal Rule of Civil Procedure 56 is only appropriate where admissible evidence in the form of affidavits, deposition transcripts, or other documentation demonstrates the absence of a genuine issue of material fact, and one party’s entitlement to judgment as a matter of law. See Viola v. Philips Med. Sys. of N. Am., 42 F.3d 712, 716 (2d Cir.1994). No genuinely triable factual issue exists when the moving party demonstrates, on the basis of the pleadings and submitted evidence, and after drawing all inferences and resolving all ambiguities in favor of the non-movant, that no rational jury could find in the non-movant’s favor. Chertkova v. Conn. Gen’l Life Ins. Co., 92 F.3d 81, 86 (2d Cir.1996) (citing Fed.R.Civ.P. 56(c)). In applying this standard, the court should not weigh evidence or assess the credibility of witnesses. Hayes v. New York City Dep’t of Corr., 84 F.3d 614, 619 (2d Cir.1996) (citation omitted). These determinations are within the sole province of the jury.. Id.

B. Proof of Damages

In JMC/Cantanucci’s reply memorandum of law, defendants vaguely asserts that plaintiffs should be precluded from offering proof of damages as they have provided no opinion as to the cost of repairs and have submitted no proof as to what their actual alleged damages are as a result of defendants’ conduct. Defendants argue that the spreadsheet prepared by Mullady is inadequate as it does not include any amounts for remediation. Counsel’s vague and unsupported arguments are insufficient to establish a prima facie case of entitlement to judgment as a matter of law. The issue of damages is an issue to be resolved by the jury.

C. Fraud Claims

Count IV of the Amended Complaint is entitled “Fraud” and alleges as follows:

Defendants JMC and Cantanucci concealed workmanship that it knew was defective by hiding same so that it could not be reasonably detected by plaintiffs or their owner’s representative.

Plaintiffs’ engineers and representatives were able to discover the concealed defects in the premises through invasive probing after defendants JMC and Cantanucci had left the job.

JMC and Cantanucci both knew of all the numerous structural defects and dangerous conditions that existed at the Premises some of which were revealed through the inspections by the Warren County Buildings Department.

Instead of disclosing the code violations, structural defects, and dangerous conditions, JMC and Cantanucci routinely informed plaintiffs that all inspections had been passed and that the next payment was due, leading the Aktas’ to believe that all inspections were successful and did not reveal any defects.

To induce plaintiffs to make further payments to defendants JMC and Cantanucci, defendants fraudulently concealed dangerous and defective conditions on the site and misrepresented to plaintiffs the status and findings of Warren County’s inspections of the premises.

Plaintiffs justifiably relied on the fraudulent misrepresentations and continued to transmit additional payments to JMC and Cantanucci. To induce plaintiffs to make further payments to defendants JMC and Cantanucci, defendants intentionally sabotaged work done at the premises so that plaintiffs would not be able to occupy the premises until further work was complete and further payments made.

Defendants JMC and Cantanucci were further so grossly negligent and reckless in their methods for constructing the premises that their actions may be considered fraudulent as to plaintiffs.

In the prior Memorandum-Decision and Order, Chief Judge Sharpe discussed plaintiffs’ fraud claims and held:

Having reviewed the Aktases’ proposed amendments regarding their claim of fraud against JMC and Cantanucci, the court concludes that they sufficiently allege a viable fraud claim. In essence, the Aktases allege that on several occasions, after receiving the County’s inspection reports, JMC and Cantanucci failed to disclose the full extent of the inspections and affirmatively misrepresented the results of the inspections in order to induce the Aktases to make the next payment. In addition, the Aktases allege that JMC and Cantanucci knowingly concealed dangerous and defective conditions and intentionally sabotaged the work done on the site to prolong the construction period and receive further payments. Therefore, at this juncture, the court concludes that these allegations are specific enough and sufficiently distinct from their breach of contract claim to withstand JMC’s motion to dismiss.

Aktas v. JMC Dev: Co., Inc., et. al, Dkt. No. 31, at pp. 16-17.

To prove fraud under New York law, “a plaintiff must show that: (1) the defendant made a material false representation, (2) the defendant intended to defraud the plaintiff thereby, (3) the plaintiff reasonably relied upon the representation, and (4) the plaintiff suffered damage as a result of such reliance.” Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13, 19 (2d Cir.1996) (citing Banque Arabe et Internationale D’Investissement v. Maryland Nat'l Bank, 57 F.3d 146, 153 (2d Cir.1995)). “Federal courts will dismiss fraud claims predicated on allegations that defendants did not intend to meet their contractual obligations.” LCO Destiny v. Michaels Stores, Inc., 543 F.Supp.2d 129, 131 (N.D.N.Y.2008) (citing Marriott Int’l, Inc. v. Downtown Athletic Club of New York City, Inc., 2003 WL 21314056, at *6 (S.D.N.Y.2003)). To maintain a claim of fraud in such a situation, a plaintiff must either: “(i) demonstrate a legal duty separate from the duty to perform under the contract; or (ii) demonstrate a fraudulent misrepresentation collateral or extraneous to the contract; or (iii) seek special damages that are caused by the misrepresentation and unrecoverable as contract damages.” Maxim Group LLC v. Life Partners Holdings, Inc., 690 F.Supp.2d 293, 307 (S.D.N.Y.2010) (citing Bridgestone/Firestone, Inc., 98 F.3d at 20) (collecting cases). Where alleged mispresentations are squarely addressed in the contract, they do not give rise to a duty apart from the underlying agreement and therefore, are insufficient to sustain a cause of action for fraud. MacQuesten Gen. Contracting, Inc. v. HCE, Inc., 191 F.Supp.2d 407, 410 (S.D.N.Y.2002) (the plaintiffs allegation that the defendant made fraudulent statements regarding payment to laborers and vendors working towards the completion of the subcontract was not extraneous to the contract but firmly rooted in the subcontract agreement). Moreover, to succeed on a fraud claim, plaintiff must allege “special damages” that were .caused by the misrepresentation and unrecoverable as contract damages. Bridgestone/Firestone, 98 F.3d at 20.

Here, plaintiffs asserted fraud claims based upon four theories: (1) fraudulent inducement based upon the Warren County inspections; (2) fraudulent concealment; (3) gross negligence and recklessness in the construction; and (4) sabotaged work done at the premises. The Court will address each claim separately.

1. Fraudulent Inducement

Plaintiffs contend that defendants fraudulently represented that the property passed inspection. This allegation cannot support a separate fraud action because the alleged fraudulent representation involved a matter that was not extraneous to the contract. See Lovely Peoples Fashion, Inc. v. Magna Fabrics, Inc., 1998 WL 422482, at *9 (S.D.N.Y.1998) (“[t]he failure or inability to deliver the proper quantity of conforming goods goes to the heart of defendants’ contractual obligations”); see also Pesca v. Barbera Homes, Inc., 35 Misc.3d 747, 942 N.Y.S.2d 313, 321 (Sup. Ct.2012) (the fraud claims were subject to dismissal because the alleged misrepresentations regarding the grading of the lot prior to closing related to the defendants obligation to complete the work in compliance with all relevant laws and regulations); see also Brine v. 65th St. Townhouse LLC, 20 Misc.3d 1138(A), 2008 WL 3915784 (Sup.Ct.2008) (the defendants alleged failure to obtain a temporary certificate of occupancy, pay contractors or perform work within the agreed upon time did not form the basis of a claim for fraud). Moreover, even assuming the alleged misrepresentations were not merely redundant of the breach of contract claim, the Warren County inspections were matters of public record. See Pesca, 942 N.Y.S.2d at 322 (allegations of fraud dismissed because the claims were based upon public records that are available to the plaintiff).

2. Fraudulent Concealment

Plaintiffs allege that, “the house was sealed up concealing wires without covering, unconnected plumbing, and nails which had been driven into the heating ducts making it impossible for the heating system to function effectively”. On a claim for fraudulent concealment, plaintiffs must establish the elements of fraudulent misrepresentation, i.e., that the fraud is extraneous to the contract, but are also required to set forth that the defendant had a duty to disclose material information. Swersky v. Dreyer and Traub, 219 A.D.2d 321, 326, 643 N.Y.S.2d 33 (1996); see also P.T. Bank Cent. Asia, New York Branch v. ABN AMRO Bank, N.V., 301 A.D.2d 373, 754 N.Y.S.2d 245 (1st Dep’t 2003). Here, plaintiffs have not sustained that burden. Plaintiffs claims are based on defendants’ duties that arise from the contract and not from any legal duty independent of that agreement. Moreover, plaintiffs make conclusory allegations and cite to Paragraph 51 of Fink’s August 2009 report. However, Fink’s report does not contain a paragraph enumerated “51” and moreover, there is no reference to any such alleged concealment anywhere in Fink’s report.

3. Gross Negligence or Reckless Conduct

Plaintif