SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

1261 

CA 16-00545 

PRESENT: CENTRA, J.P., PERADOTTO, LINDLEY, NEMOYER, AND SCUDDER, JJ.

 

THE PIKE COMPANY, INC., PLAINTIFF-RESPONDENT, 

 

V MEMORANDUM AND ORDER

JERSEN CONSTRUCTION GROUP, LLC, AND WESTERN

SURETY COMPANY, DEFENDANTS-APPELLANTS.

(ACTION NO. 1.)

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JERSEN CONSTRUCTION GROUP, LLC, 

PLAINTIFF-APPELLANT,

V

THE PIKE COMPANY, INC. AND FIDELITY AND 

DEPOSIT COMPANY OF MARYLAND, 

DEFENDANTS-RESPONDENTS.

(ACTION NO. 2.)

-------------------------------------------------

JERSEN CONSTRUCTION GROUP, LLC, 

PLAINTIFF-APPELLANT,

V

FIDELITY AND DEPOSIT COMPANY OF MARYLAND, 

DEFENDANTS-RESPONDENTS, 

ET AL., DEFENDANTS.

(ACTION NO. 3.) 

 

MASTROPIETRO LAW GROUP, PLLC, SARATOGA SPRINGS (ERIC W. GENTINO OF

COUNSEL), FOR DEFENDANTS-APPELLANTS AND PLAINTIFF-APPELLANT. 

PHILLIPS LYTLE LLP, ROCHESTER (MARK J. MORETTI OF COUNSEL), FOR

PLAINTIFF-RESPONDENT AND DEFENDANTS-RESPONDENTS. 

 

Appeal from an order of the Supreme Court, Monroe County (Matthew

A. Rosenbaum, J.), entered October 27, 2015. The order granted the

motion of The Pike Company, Inc. and Fidelity and Deposit Company of

Maryland to dismiss the counterclaim for fraud against The Pike

Company, Inc. in action No. 1. 

It is hereby ORDERED that the order so appealed from is

unanimously reversed on the law without costs, the motion is denied

and the fifth counterclaim of Jersen Construction Group, LLC in action

No. 1 is reinstated. 
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CA 16-00545 

Memorandum: In these three consolidated actions, Jersen

Construction Group, LLC (Jersen), a defendant in action No. 1 and the

plaintiff in action Nos. 2 and 3, and Western Surety Company

(Western), a defendant in action No. 1, appeal from an order that

granted the CPLR 3211 motion of The Pike Company, Inc. (Pike), the

plaintiff in action No. 1 and a defendant in action No. 2, and

Fidelity and Deposit Company of Maryland (Fidelity), a defendant in

action Nos. 2 and 3, seeking dismissal of Jersen’s counterclaim for

fraud against Pike in action No. 1. We agree with Jersen and Western

that Supreme Court erred in granting the motion, and we therefore

reverse the order, deny the motion, and reinstate that counterclaim.

Pursuant to a contract with the State University Construction

Fund, Pike was the general contractor for a construction project at

the State University College at Plattsburgh. In its second amended

complaint in action No. 3, Jersen alleged that Pike entered into a

subcontract with Jersen pursuant to which Jersen would perform masonry

work after the “concrete foundations were installed, structural steel

was in place, metal framing was erected and the concrete floors had

been poured.” 

After the actions were consolidated by stipulation, Jersen filed

a third amended answer with counterclaims in action No. 1, which

realleged its four original causes of action from action Nos. 2 and 3

as counterclaims and added a fifth counterclaim, for fraud. The fraud

counterclaim is the sole focus of this appeal. In that counterclaim,

Jersen alleged that, before it began work on the project, Pike was

informed by at least one of its other subcontractors that its

substrate work was not “accurate, flat or level,” i.e., was deficient. 

Nevertheless, Pike represented to Jersen that the substrate work “had

been erected in accordance with the contract requirements and was

plumb, level, and true and that [Pike] had performed a professional

survey of the structural steel to confirm the same.” Jersen alleged

that Pike’s representations to Jersen “were false,” and that Pike

“concealed and recklessly withheld from Jersen knowledge that the

substrate was not dimensionally accurate, flat or level.” 

Additionally, Jersen alleged that Pike made those false

representations “in order to deceive Jersen and induce Jersen to

commence installation upon the substrate.” Jersen further alleged

that it relied on Pike’s representations and would not have commenced

installation of the masonry work had Pike not misrepresented to 

Jersen that the substrate had been installed in accordance with the

contract requirements. According to Jersen, it suffered damages as a

result of its reliance on Pike’s false representations.

We agree with Jersen and Western that the court erred in relying

on the disclaimer clause found in section 1.8 of the subcontract in

granting the motion to dismiss the fraud counterclaim pursuant to CPLR

3211 (a) (1). Section 1.8 of the subcontract discusses site

inspection visits, and provides that “[Jersen] accepts responsibility

for the inspection of conditions that could affect the Subcontract

Work at the Project site, and based on that inspection, and not in

reliance upon any opinions or representations of [Pike], its officers,

agents or employees, acknowledges its responsibility to satisfactorily
-3- 1261 

CA 16-00545 

perform the Subcontract Work without additional expense to [Pike].” 

Jersen and Western contend that section 1.8 is a typical site

investigation disclaimer, which “attempts to place the risk of changed

conditions on the [sub]contractor by requiring it to investigate the

site before bidding and to familiarize itself with all conditions

under which the job will be performed” (Biser, Rubin & Brown, New York

Construction Law Manual § 5.8 [2d ed 33 West’s NY Prac Series 2016]). 

Thus, they contend that the disclaimer applies only to site

inspections and representations that occurred before execution of the

subcontract, and not to any representations occurring after execution

of the subcontract. That contention is buttressed by the fact that

the remainder of section 1.8 is written in the past tense and concerns

conditions of the site, rather than referring to conditions of the

work performed by others.

Generally, “[a] claim for fraud is barred by the existence of a

specific disclaimer and failure to exercise reasonable diligence”

(Steinhardt Group v Citicorp, 272 AD2d 255, 256), and a disclaimer

clause will preclude a fraud claim only where the clause “specifically

disclaims representations concerning the very matter to which the

fraud claim relates” (Agristor Leasing-II v Pangburn, 162 AD2d 960,

961; see Basis Yield Alpha Fund [Master] v Goldman Sachs Group, Inc.,

115 AD3d 128, 137; see generally Danann Realty Corp. v Harris, 5 NY2d

317, 320-321). 

We conclude that the subcontract is ambiguous whether the

disclaimer clause in section 1.8 precludes Jersen from relying on any

opinions or representations concerning work performed by others after

Jersen executed the subcontract, and thus that section 1.8 does not

“conclusively establish[ ] a defense” to the counterclaim for fraud

(Leon v Martinez, 84 NY2d 83, 88). Although Pike and Fidelity contend

that various other contractual provisions required Jersen to inspect

the site and work of other trades, those provisions do not contain

disclaimer clauses that would bar the fraud counterclaim (see

generally Steinhardt Group, 272 AD2d at 256).

We also agree with Jersen and Western that Jersen’s fraud

counterclaim is not duplicative of its counterclaim for breach of

contract. Construing the fraud counterclaim liberally and affording

every favorable inference to the facts alleged in that counterclaim

(see Held v Kaufman, 91 NY2d 425, 432), we conclude that it is “based

upon representations that [Pike] made that are separate and distinct

from [Pike’s] obligations under the [subcontract]” (Forty Cent. Park

S., Inc. v Anza, 130 AD3d 491, 492; cf. Niagara Foods, Inc. v Ferguson

Elec. Serv. Co., Inc., 86 AD3d 919, 919; see generally Deerfield

Communications Corp. v Chesebrough-Ponds, Inc., 68 NY2d 954, 956). 

Pike’s denial of the allegations in the fraud counterclaim merely

raises issues of fact that cannot be resolved on the instant motion

(see Basis Yield Alpha Fund [Master], 115 AD3d at 139).

Finally, we agree with Jersen and Western that the fraud

counterclaim was pleaded with sufficient particularity (see CPLR 3016

[b]; Pludeman v Northern Leasing Sys., Inc., 10 NY3d 486, 491-492). 

Upon considering the affidavits submitted in opposition to the motion
-4- 1261 

CA 16-00545 

“to remedy pleading problems” (Sargiss v Magarelli, 12 NY3d 527, 531),

we conclude that Jersen alleged therein that Pike “(1) made a

representation to a material fact; (2) the representation was false;

(3) [Pike] intended to deceive [Jersen]; (4) [Jersen] believed and

justifiably relied on the statement and in accordance with the

statement engaged in a certain course of conduct; and (5) as a result

of the reliance, [Jersen] sustained damages” (Heckl v Walsh [appeal

No. 2], 122 AD3d 1252, 1255; see Eurycleia Partners, LP v Seward &

Kissel, LLP, 12 NY3d 553, 559). Based on our resolution of this

issue, we do not reach the alternative request of Jersen and Western

for leave to amend the counterclaim. 

Entered: February 10, 2017 Frances E. Cafarell

Clerk of the Court