Moskowitz v. Herrmann

DECISION AND ORDER AFTER TRIALINTRODUCTION This is a Small Claims action by Aileen Moskowitz and Stuart Moskowitz (who are referred to collectively as “the Claimants” but are occasionally referred to individually as “Mrs. Moskowitz” and “Mr. Moskowitz”) against William E. Herrmann d/b/a American Envirocheck Systems (“the Defendant”) in which the Claimant is seeking from the Defendant the sum of $5,000.00 for reimbursement of expenses caused by the Defendant’s failure to provide proper services in connection with a house inspection performed by the Defendant at real property known as 165 Hidden Ridge Drive, Monticello, New York (“the Property”). The Claimants appeared pro se; the Defendant appeared with his attorney, Steven N. Mogel, Esq.The Claimants submitted their Application to File Small Claims on June 28, 2018; the Court mailed a notice of this action to the Defendant on July 3, 2018, setting August 3, 2018 as the date for the trial. All parties, as well as Mr. Mogel, appeared in court on August 3, 2018 for the trial. The Claimants and the Defendant testified under oath; the Claimants were highly credible, and the Defendant generally was credible, although he did not clearly remember certain issues regarding the inspection of the Property, or the Property itself. Both the Claimants and the Defendant submitted documentary evidence for the Court’s consideration.PRELIMINARY PROCEEDINGSIn court but prior to the commencement of the trial, the Defendant’s attorney verbally moved to dismiss the action, claiming the contract between the parties required any controversy or claim arising out of the parties’ contractual relationship to be submitted for arbitration in accordance with the rules of the American Arbitration Association.¹ The Court denied the motion at that time, citing the foundational public policy underlying small claims proceedings: the small claims process “is a system noted for its ability to provide, at little cost to the litigant, speedy justice for the citizen who asserts a legal wrong. Complicated procedures are avoided; lawyers for claimants are generally unnecessary.” Weiner v. Tel Aviv Car and Limousine Service, Ltd., 141 Misc 2d 339 (Civ Ct, New York County 1988). In addition, most small claims cases are “disposed of on the first court appearance. Motions typically require at least one adjournment. Cases can be definitively resolved in far less time, if issues are tried on the merits rather than dealt with as pleading questions…. Simply put, motions to dismiss…are rarely, if ever, applicable to small claims cases. They should be dismissed as improperly made without reaching their merits.” Id. at 342-343. See also Selvy v. Albany Police Department, 186 Misc 2d 518, 520 (Albany City Court 2000) (“‘It should be noted at the outset that motion practice is severely discouraged and generally inappropriate in small claims cases…. This is especially true where, as here, the plaintiff is a pro se litigant, “without knowledge of the rules of procedure,” because such litigants are at a substantial disadvantage’ [citation omitted].”)Interestingly, both the Weiner court and the Selvy court acknowledged motions to dismiss could be appropriate in particular situations. For example, Weiner noted one case in which the motion to dismiss addressed “whether the claim was precluded by a union contract which required arbitration;” that issue required disposition before the trial. Weiner at 343. The court in Selvy also acknowledged a motion to dismiss could be appropriate by stating “it is in the interest of judicial economy for the Court to make a pre-trial determination as to whether, assuming the facts alleged by plaintiff to be true, the circumstances would provide him with a legal right to recovery. If such circumstances exist, the matter should proceed to trial; if they do not, the claim should be dismissed.” Selvy at 520. In both Weiner and Selvy, however, the courts denied the claimants’ motions to dismiss.²In this case, following the strong public policy considerations discussed in both Weiner and Selvy, the Court denied the motion to dismiss and determined it was more appropriate to allow the case to proceed immediately to trial and to ascertain the facts as shown by the testimony of the witnesses and evidence presented to the Court to determine whether the Defendant’s position had merit.³FINDINGS OF FACTThe credible evidence at the trial showed the following:The Claimants in the fall of 2017 were seeking to purchase a home they could use primarily during the summer months to spend time with family in New York, since the Claimants spend most of their time in Florida. They were looking for a home that required little work. They identified a townhouse located at 165 Hidden Ridge Drive, Monticello, New York 12701 (“the Property”) for possible purchase and hired the Defendant to do an inspection of the Property.The inspection of the Property occurred on October 6, 2017. On that date, the Claimants gave the Defendant a check in the amount of $425.00 (Claimant’s Exhibit 2, in evidence); of the $425.00 paid, $400.00 was for the house inspection, and $25.00 was for a wood-destroying insect infestation report (commonly known as a “termite inspection”).The scene at the Property on October 6, 2017 was confusing and somewhat hurried. Present at the Property that day were the Claimants, another couple accompanying the Claimants, the Defendant, the seller of the Property, and three realtors. The Claimants were with the Defendant during a portion of the inspection and also were taking measurements at the Property. The Defendant appeared distracted, according to the Claimants, and the Defendant admitted he didn’t remember “who said what to whom.” Although the Defendant stated he didn’t talk much with the Claimants while at the Property, Mrs. Moskowitz remembers the Defendant telling her nothing major was wrong with the Property. He never mentioned there was any problem with the poured concrete foundation; at trial, he claimed he did not notice during the inspection anything structurally compromising the foundation or anything that would cause one of the floors to drop approximately eight inches. He didn’t remember the specifics regarding the foundation and didn’t remember if he observed any cracks or crumbling of the foundation.At some point during the inspection on October 6, 2017, the seller announced to everyone they had to leave. The Defendant tried to print out his inspection report from his computer while he was in the kitchen, but the printer didn’t work and he couldn’t print out the report. He then gave a document containing, in his words, “boilerplate stuff” to the Claimants (Claimants’ Exhibit 4, in evidence), and he emailed the full engineering inspection report to the Claimants on October 11, 2017 (Defendant’s Exhibit A, in evidence).⁴The Claimants were in Florida during the 2017-2018 winter but closed on the purchase of the Property in February 2018. A significant and credible reason they purchased the Property was based on the Defendant’s representation nothing major was wrong with the Property and there wasn’t much they had to take care of. They took possession of the Property on May 1, 2018, after they returned again from Florida. They didn’t have anyone do any repairs on the Property from the time they first saw it or after the closing until after they took possession in May 2018 because the Defendant told Mrs. Moskowitz they didn’t need anybody to do anything on the Property. When they took possession of the Property in May 2018, they went through the house and found when they pulled up the carpeting in a bedroom, the floor actually dropped approximately six to eight inches. That was the first time they were aware of that condition. They sought out contractors to ascertain why that occurred and found the wall of the foundation (behind the wall of the bedroom) was crumbling and full of cracks. Mrs. Moskowitz testified when she touched the outside foundation wall at that point, it crumbled. The concrete wall of the foundation was approximately five feet high, going to four feet high in the corner.⁵The Claimants eventually engaged the services of Frasca Construction from Ellenville, New York after obtaining three estimates for the work (the Claimants did not offer the three estimates into evidence). Frasca Construction reinforced and repaired the back foundation wall (behind the master bedroom wall) at a cost of $5,311.00, which the Claimants paid. Claimants’ Exhibits 2 and 3, in evidence. Mr. Moskowitz took pictures of the foundation before the work was started, during the work, and after the work was completed. Those pictures were accepted into evidence as Claimants’ Exhibit 1. The pictures taken in June 2018 before the work was started showed a crumbling foundation wall with many large and small cracks; one picture in particular showed a large crack through the foundation with evidence of a prior patching job in an apparent attempt to seal it, and the corner area appeared particularly deteriorated.After reviewing the Claimants’ pictures in Exhibit 1, the Defendant stated shrinkage cracks are common in a poured concrete foundation. He also claimed any deterioration of the corner of the foundation was “cosmetic,” and the foundation exhibited signs of “spalling” (according to the Defendant, a slight erosion of the face of the foundation due to lime leaking out of the foundation), which didn’t compromise the condition of the foundation but could lead to some crumbling. He did indicate, however, the large crack in one of the pictures could indicate there was a structural issue with the foundation. He didn’t remember if the foundation showed signs of spalling on the day of the inspection, but he claimed he may not have noticed something he considered normal (such as spalling in the foundation).The Defendant complained the Claimants didn’t give him a chance to return to the Property to reinspect the foundation and did not advise him of the foundation issues prior to starting this action or prior to hiring someone to make repairs. He claimed he only knew about the foundation problem when he received notice of this action. Mrs. Moskowitz’s reason for not contacting him was clear: “why would I call someone for advice if you made a mistake?”⁶The Defendant, both on direct and through cross-examination of Mrs. Moskowitz, referred to page 3 of the inspection report delivered to the Claimants by email on October 11, 2017 (Defendant’s Exhibit A, in evidence), and particularly paragraphs 11, 12, and 13 (although paragraphs 9 through 13 were highlighted in the document submitted to the Court). The Defendant especially pressed Mrs. Moskowitz as to why she didn’t ask the Defendant to do a reinspection and why she didn’t contact the Defendant prior to hiring someone to repair the foundation. As noted above, the Defendant complained that the Claimants never asked him to perform a reinspection and never had notice of a problem with the foundation until the Defendant received notice of this action.Paragraphs 9 through 13 on page 3 of the inspection report state, in full, the following:9. THIS INSPECTION IS NOT INTENDED TO BE USED AS A GUARANTEE OR WARRANTY, EXPRESSED OR IMPLIED, REGARDING THE ADEQUACY, PERFORMANCE, OR CONDITION OF ANY INSPECTED STRUCTURE, ITEM OR SYSTEM. THE INSPECTION AND REPORT ARE NOT INTENDENDED (sic) TO REFLECT THE VALUE OF THE PREMISES, NOT (sic) TO MAKE ANY REPRESENTATION AS TO THE ADVISABILITY OR INADISABILITY (sic) OF PURCHASE OR THE SUITABILITY FOR USE.10. The inspection/report is not a certification of any kind. Company shall not be construed as insuring against any defects or deficiencies not contained in the inspection report and subsequently discovered by the client. This inspection is not an insurance policy.⁷11. The parties agree that the maximum liability for COMPANY, its employees and agents, is limited to an amount not to exceed the fee paid for the inspection service. COMPANY will not be held liable for any claims if repairs, replacements are made or money is spent without notifying the company in writing so it can re-inspect.12. The client is immediately to put in writing to company problems with the service. Communications must be consistent in that the party originally accompanying the inspector will be the party resolving the problem.13. Any controversy or claim arising out of or related to this contract, or any breach thereof, shall be settled by arbitration in accordance with the rules of The American Arbitration Association, and judgment upon award rendered by the arbitrators may be entered in any court having jurisdiction. Disputes settled without favor to the client will mandate a payment of re-inspection time, fees, including but not limited to reasonable attorney’s fees and arbitration costs [capitalization and emphasis in original].Other information contained on page 3 of the inspection report is also of interest:in paragraph 1, the report states, in part, the inspection addresses readily accessible areas of the building and includes drainage and the foundation;in paragraph 2, the report states the inspection and report “will be performed in a manner consistent with the standards of The American Society of Home Inspectors and The National Association of Home Inspectors. The inspection is completed on site and all information will be conveyed to you or your representative at that time.” Paragraph 2 also notes the “contract and inspection are subject to the limitations noted in the report and the exclusions noted in the above standards” (emphasis in original);in paragraph 6, it states the inspector is not required to move carpeting and that “[m]ajor deficiencies and defects which are latent or concealed are excluded from the inspection” (emphasis in original); andin paragraph 15, it states, in part, “[t]he items contained in this report are based on our opinion on this day. This agreement represents the entire agreement between the parties.”At the bottom of page 3 this statement appears: “THE ABOVE IS UNDERSTOOD AND AGREED TO, AND IS ONLY TO BE USED IN ITS ENTIRETY, WHETHER SIGNED OR NOT, AS THE REPORT IS ISSUED ONLY UNDER THESE CONDITIONS. OUR WEBSITE PROVIDES MORE INFORMATION TO SUPPORT THIS REPORT” [capitalization in original]. The Defendant signed at the bottom of page 3 as President of American Envirocheck Inc.,⁸ but the area to be signed by and noted as “CLIENT” never was signed by either Mr. Moskowitz or Mrs. Moskowitz.The Defendant admitted he never discussed the arbitration clause with the Claimants.Mrs. Moskowitz denied that page 3 was part of her inspection report. In fact, what she offered into evidence as her inspection report and labeled Claimants’ Exhibit 4 was the copy of the document given to her by the Defendant at the Property on October 6, 2017; that document, as confirmed by the Defendant, only contained the “boilerplate stuff,” did not contain the actual inspection report, and did not contain page 3.⁹ When asked, on cross-examination, to read certain portions from page 3 of the inspection report from Claimants’ Exhibit 4, she noted there was no page 3; in fact, Claimants’ Exhibit 4 contained no page 3.The actual inspection report from the Defendant, emailed to the Claimants on October 11, 2017, sheds little light on the condition of the foundation. Page 41 of the report (found in Defendant’s Exhibit A but not in Claimants’ Exhibit 4) states the following: “The foundation is constructed of_ concrete _ and appears to be in serviceable ____condition. Recommendations are:__. Remember; Always keep your drainage “positive’ which means, sloping away from the foundation. A good rule is that the slope, from the foundation, should drop 6 inches, 10 feet away from the house. Keep the leaders on your gutters” [underscores, capitalization, and punctuation in original]. That page also notes the floors are “Wood Frame” and are in “Serviceable” condition.Page 42 contains this statement: “signs of water penetration into the building or signs of abnormal or harmful condensation on building components. Findings: None seen.” Page 42, however, also contains this statement: “Vegetation, grading, drainage, driveways, patios, walkways and retaining walls with respect to their effect on the condition of the building. Vegetation See below Exterior Grading Poor,…General recommendations for all homes: · Any negative exterior drainage must be corrected to encourage water away from the building. A minimum pitch of 6″ drop from level in 10 feet away from house is recommended. 1″ per foot is better!”On page 48 of the inspection report, the Defendant listed “a summary of facts, concerns and deficiencies which you need to consider before purchasing this home.” He then listed the following: “Hall light switches not working Skylight seals damaged Plastic skylight cracked in sunroom Age of heat pump and air handler is a concern, air handler duct disconnected excessive rust in air handler condensate pan [with pictures inserted above and below that statement] No carbon monoxide detector Tree very close to house, mostly dead Fireplace is surrounded with wood. There is no clearance, and the UL rating may allow for it, or not.” Interestingly, the Defendant did not mention the poor exterior grading that “must be corrected to encourage water away from the building,” as noted on page 42.Both Claimants’ Exhibit 4 (the “boilerplate stuff”) and the actual inspection report (Defendant’s Exhibit A, containing the boilerplate language as well as pages 1, 3, and 41 through 49 that were missing from Claimants’ Exhibit 4) contain statements that are relevant to this action. For example, Section 197-4.2 (a)-Fundamental Rules of the Code of Ethics and Regulations for Home Inspectors (found on page 6 of both Claimants’ Exhibit 4 and Defendant’s Exhibit A and taken from Title 19, NYCRR, Chapter V, Subchapter J, Subpart 197-4) states: “Prior to performing a home inspection, home inspectors shall provide a client with a written pre-inspection agreement that clearly and fully describes the scope of service to be provided and the cost associated with that service.” Section 197-5.1 of the Standards of Practice for Home Inspectors (found on pages 8 through 10 of both Claimants’ Exhibit 4 and Defendant’s Exhibit A) provides a detailed list of defined terms that might be included in a home inspection report.¹⁰ Sections 197-5.4 and 197-5.5 of the Standards of Practice for Home Inspectors (found on pages 11 and 12 of both Claimants’ Exhibit 4 and Defendant’s Exhibit A) require home inspectors to observe and report on “[t]he building perimeter for land grade and water drainage directly adjacent to the foundation” and [a]ny deteriorated and/or damaged structural component including the building foundation,” among other things.Another significant statement contained in Claimants’ Exhibit 4 and in Defendant’s A is found on page 2: “The following pages are filled with the details of your inspection and some useful information about homes in general…. The inspection is a statement of the condition of the home on the day it is inspected. The purpose of the inspection is to allow you to evaluate whether there are too many deficiencies for you to take on. You should walk away from the inspection with a clear picture of the condition of your home” (emphasis supplied).DISCUSSION1. Defendant’s motion to dismiss-arbitration as sole remedyAs noted above, the Defendant’s attorney, prior to the commencement of the trial, verbally moved to dismiss the action, claiming the contract between the parties required any controversy or claim arising out of the parties’ contractual relationship to be submitted for arbitration in accordance with the rules of the American Arbitration Association. The Court denied the motion for the reasons discussed above and determined it was more appropriate to allow the case to proceed immediately to trial and to ascertain the facts as shown by the testimony of the witnesses and evidence presented to the Court to determine whether the Defendant’s position had merit. After such testimony and the production of evidence, it is clear the Defendant’s position had no merit.In making his motion to dismiss, the Defendant relied on paragraph 13 found on page 3 of the inspection report and claimed that paragraph was part of the contract between the Claimants and the Defendant. Paragraph 13 stated the following:13. Any controversy or claim arising out of or related to this contract, or any breach thereof, shall be settled by arbitration in accordance with the rules of The American Arbitration Association, and judgment upon award rendered by the arbitrators may be entered in any court having jurisdiction. Disputes settled without favor to the client will mandate a payment of re-inspection time, fees, including but not limited to reasonable attorney’s fees and arbitration costs.Page 3 of the inspection report also contained the following at the bottom of page 3: “THE ABOVE IS UNDERSTOOD AND AGREED TO, AND IS ONLY TO BE USED IN ITS ENTIRETY, WHETHER SIGNED OR NOT, AS THE REPORT IS ISSUED ONLY UNDER THESE CONDITIONS. OUR WEBSITE PROVIDES MORE INFORMATION TO SUPPORT THIS REPORT” [capitalization in original; emphasis added].The problem with the Defendant’s argument is this: the Claimants never agreed to the terms and conditions contained in paragraph 13 or to the language at the bottom of page 3. In fact, the Claimants never agreed to any of the terms and conditions contained in any of the paragraphs found on page 3 of the inspection report. The credible facts show the following: the Claimants hired the Defendant to inspect the house (and no evidence was offered by either party to show how, when, or through whom the Claimants hired the Defendant, and there was no evidence the parties reduced their agreement to writing); the Claimants paid the Defendant his fee of $425.00 on October 6, 2017, when the parties (and others) went to the Property for the inspection; the Defendant verbally advised the Claimants on October 6, 2017 there were no major problems with the Property; the Defendant tried, and failed, to print out the inspection report while at the Property on October 6, 2017; the Defendant handed the Claimants the “boilerplate stuff” found in Claimants’ Exhibit 4 (which did not contain page 3 with all of its terms and conditions); the Claimants did not sign Claimants’ Exhibit 4; and the Defendant emailed the actual inspection report on October 11, 2017 to the Claimants. Only on October 11, 2017, by emailing the inspection report with the pages missing from Claimants’ Exhibit 4, did the Defendant attempt to force on the Claimants the terms and conditions found on page 3, after the Claimants paid the Defendant and after the Defendant completed the inspection and verbally advised the Claimants of the results. While the Defendant signed the bottom of page 3, the Claimants never did. There was no evidence the parties discussed the contents of page 3, there was no evidence the Defendant ever advised the Claimants of the terms and conditions found on page 3, and there was no evidence the Claimants agreed to the terms and conditions found on page 3.The Defendant even admitted he never discussed the arbitration clause with the Claimants.Because the Claimants never agreed to the terms and conditions found on page 3, the entire contents of that page never were part of the contract between the Claimants and the Defendant. Since the arbitration requirement-paragraph 13-was found on page 3, the Claimants were not bound by that requirement. The Defendant cannot bind the Claimants to the arbitration clause, and the requirement that the report is issued only under the page 3 conditions “WHETHER SIGNED OR NOT,” by unilaterally imposing the page 3 conditions.If both parties to a written, signed contract affirmatively agree to submit any disputes to arbitration rather than litigate in a court, that agreement would bind the parties (God’s Battalion of Prayer Pentecostal Church, Inc. v. Miele Associates, LLP, 6 NY3d 371, 373 [2006]; see also CPLR §7501; 23 Carmody-Wait 2d §141.21.). Even if one or both parties do not sign a written contract containing an arbitration requirement, such requirement could be binding on the parties if their conduct and the evidence shows “the parties intended to be bound by the contract” (God’s Battalion of Prayer Pentecostal Church, Inc. at 373; see also 23 Carmody-Wait 2d §141.21 and cases cited therein).In this case, the credible evidence clearly shows the Defendant signed page 3 of the inspection report, but the Claimants did not. There was no evidence the Claimants signed any contract or document with the Defendant requiring the parties to submit any disputes to arbitration, rather than to a court. In addition, there was no evidence showing the parties intended to be bound by the arbitration clause found in paragraph 13 of page 3 of the inspection report, and the Claimants’ actions and conduct certainly do not provide any evidence they agreed to be bound by the arbitration clause (God’s Battalion of Prayer Pentecostal Church, Inc. at 373; see also Harris v. Borghese, 47 Misc.3d 145[A], 2015 NY Slip Op 50696[U], *1 [App Term 2d Dept 2015]). As a result, the purported arbitration requirement contained in paragraph 13 on page 3 of the inspection report has no force and effect and did not prevent the Claimants from bringing this action in this Court.2. Defendant’s claim that his liability is limited to cost of inspection and he has no liability if Defendant denied opportunity to reinspectDuring cross-examination of Mrs. Moskowitz, the Defendant pointed out paragraph 11 from page 3 of the inspection report, which states the following:11. The parties agree that the maximum liability for COMPANY, its employees and agents, is limited to an amount not to exceed the fee paid for the inspection service. COMPANY will not be held liable for any claims if repairs, replacements are made or money is spent without notifying the company in writing so it can re-inspect [emphasis in original].In questioning Mrs. Moskowitz, the Defendant claimed the contract (that is, paragraph 11 on page 3 of the inspection report, which the Claimants never received until after the Defendant completed the inspection) limited the Defendant’s liability to the fee paid for the inspection (which was $400.00; the total fee was $425.00, but $25.00 was attributed to the termite inspection).The Defendant, on cross-examination and during direct testimony, also made much of the fact the Complainants did not call him to reinspect the Property after the Claimants became aware of the foundation problem and prior to hiring anyone to remedy the situation and did not advise him of the problems with the foundation. In doing so, the Defendant apparently was relying on paragraph 12 found on page 3 of the inspection report (again, found on the page the Claimants never received until after the Defendant completed the inspection); paragraph 12 states the following:12. The client is immediately to put in writing to company problems with the service. Communications must be consistent in that the party originally accompanying the inspector will be the party resolving the problem [emphasis in original].The Defendant’s claim that his liability is limited to the cost of inspection, and his claim that he cannot be liable for any repairs unless he is notified in writing prior to the repairs being made, both fail for the same reasons the Defendant’s arbitration argument fails: paragraphs 11 and 12 never were part of the contract between the Claimants and the Defendant.A clearly specified contractual provision limiting contract damages can be enforceable (Schietinger v. Tauscher Cronacher Professional Engineers, P.C., 40 AD3d 954, 955 [2d Dept 2007]). In the Schietinger case, the plaintiffs hired the defendant to conduct an inspection of a home the plaintiffs wanted to purchase. The plaintiffs paid the defendant $1,705.00 for the inspection services. In the agreement between the parties, the defendant’s liability for any damages arising out of the defendant’s inspection and report were limited to the fee paid by the plaintiffs. The plaintiffs sued the defendant for damages, claiming the defendant negligently performed its inspection because it failed to disclose the roof on the house was in such poor condition that it needed replacement. The defendant moved for partial summary judgment limiting its liability to $1,705.00. The Supreme Court granted the motion, the plaintiffs appealed, and the Second Department affirmed the decision.On appeal, the court stated the following: “A clear contractual provision limiting damages is enforceable absent a special relationship between the parties, a statutory prohibition, or an overriding public policy [citations omitted], none of which was demonstrated here. Moreover, while a party may not limit its liability for damages caused by its own grossly negligent conduct [citations omitted], the defendant’s alleged failure to properly conduct its inspection does not rise to the level of gross negligence. Accordingly, the provision limiting the defendant’s liability is enforceable.” Id. at 955-956.Significantly, the Schietinger court observed that, while only one, and not both, of the plaintiffs signed the contract, at least one did. Signing of the contract by one of the plaintiffs was enough to bind both plaintiffs. Id. at 956.In another case involving a home inspection, the court in Peluso v. Tauscher Cronacher Professional Engineers, P.C. (270 AD2d 325 [2d Dept 2000]) also addressed a contractual limitation of liability provision. The plaintiffs sued the defendant for negligently conducting the home inspection and failing to disclose the roof was in such poor condition that it required replacement. The court observed that “[u]nder the terms of the agreement between the parties, if the defendant was found liable to the plaintiffs for any loss or damage arising out of the inspection and report, its liability would be limited to the fee paid for these services, which was $445.” Peluso at 325. The Supreme Court granted the defendant’s motion for partial summary judgment limiting its liability to the inspection fee of $445. On appeal, the Second Department affirmed and stated the following: “A contractual provision which limits damages is enforceable unless the special relationship between the parties, a statute, or public policy imposes liability [citations omitted]. Here, there is no special relationship between the parties, no pertinent statutory provision, and no overriding public interest which demands that this contract provision, voluntarily entered into by competent parties, should be rendered ineffectual [citations omitted].” As a result, the Second Department found the provision limiting the defendant’s liability to be enforceable, and also found the defendant’s failure to perform the inspection in a proper manner was not gross negligence. Peluso at 325-326. Accord Colnaghi, U.S.A., Ltd. v. Jewelers Protection Services, Ltd., 81 NY2d 821, 823-824 [1993] [contract exonerated the defendant from liability for negligence; plaintiff alleged the defendant was guilty of gross negligence; the court noted the plaintiff's allegations against the defendant do not rise to the level of gross negligence, which the court, for this case, stated would be "conduct that evinces a reckless disregard for the rights of others or 'smacks' of intentional wrongdoing;" the court further observed that "New York law generally enforces contractual provisions absolving a party from its own negligence"]. See also Glen Banks, 28 New York Practice Series-New York Contract Law §24.1 (July 2018 update) (online treatise) (generally discussing contractual provisions limiting liability).A contractual limitation of liability, however, cannot be “so obscured…as to make it probable that it would escape the plaintiffs’ attention” (Florence v. Merchants Central Alarm Co., Inc., 51 NY2d 793, 795 [1980]). In Florence, the contract was between the plaintiffs and the defendant alarm company, both of whom were commercial parties, and the contract limited the defendant’s liability to $50.00. The court noted the contract was uniform in size, contained entirely on the face of one piece of paper, and contained no misleading headings or subtitles; as a result, and because the contract involved businesses, “there is no necessity to ‘resort to a magnifying glass and lexicon’ [citation omitted]” to understand the liability limitation. Id.The rule to be gleaned from Schietinger, Peluso, Florence and similar cases is this: if a contract between parties contains a clear, unobscured, definite, and agreed-upon provision limiting liability of one of the parties, there is no special relationship between the parties prohibiting a liability limitation, and the provision only limits liability for negligence, then the limitation of liability is enforceable.In this case, the Defendant relies on paragraphs 11 and 12 contained on page 3 of the inspection report to limit the Defendant’s liability to the inspection fee paid by the Claimants (which was $400.00, without including the termite inspection report). The Defendant maintains those paragraphs are part of the contract between the parties. Paragraphs 11 and 12, when taken together, purport to limit the Defendant’s liability in two ways: 1) the Defendant claims his maximum liability, if any, to the Claimants would be “limited to an amount not to exceed the fee paid for the inspection service” (emphasis in the original paragraph 11); and 2) the Defendant would not be liable at all if the Claimants failed to give notice to the Defendant before the Claimants spent money repairing or replacing items missed or improperly examined by the Defendant and failed to give the Defendant an opportunity to reinspect.When placing the Defendant’s claims under the light of the Schietinger, Peluso, and Florence rule, the Defendant’s claims fail. Paragraphs 11 and 12 were never submitted to the Claimants prior to the Claimants entering into a contract with the Defendant, prior to the Claimants paying the Defendant his inspection fee, prior to the Defendant performing the inspection, and prior to the Defendant verbally advising the Claimants there was nothing major wrong with the Property and they didn’t need to have anyone do any work on the Property. Those paragraphs were only submitted to the Claimants after the contract between the parties was finalized and paid for. The Defendant cannot unilaterally impose those provisions ex post facto on the Claimants. In addition, paragraphs 11 and 12 are obscured, in contradiction to the requirement contained in Florence, because paragraphs 11 and 12, like all the paragraphs on page 3 sent to the Claimants after the fact, are printed in extremely small type and crunched together in a way that makes those paragraphs very difficult to read, especially for consumers such as the Claimants who are relying on the Defendant to provide to them professional and specific services prior to purchasing a home.Finally, the Claimants never signed page 3 to indicate they agreed to be bound to the provisions contained on that page as part of the contract. It is unreasonable for the Defendant to expect to have committed the Claimants to all the provisions on page 3 simply by sending it to them after all the work was done and paid for, without their written consent.Even though a written contract is unsigned, “an unsigned contract may be enforceable, provided there is objective evidence establishing that the parties intended to be bound” (Flores v. Lower East Side Service Center, Inc., 4 NY3d 363, 369 [2005]; see also Matter of Municipal Consultants & Publishers, Inc. v. Town of Ramapo, 47 NY2d 144, 149 [1979] [the evidence showed all terms of the contract were negotiated and agreed upon, even though the contract was not signed by a Town representative]; Geha v. 55 Orchard Street, LLC, 29 AD3d 735, 736 [2d Dept 2006] [party attempted to enforce an indemnification provision contained in an unsigned contract; the court, in reversing summary judgment, quoted Flores in noting that an unsigned contract can be enforced if objective evidence showed the parties intended to be bound by the unsigned agreement]; Glen Banks, 28 New York Practice Series-New York Contract Law §2.8 [July 2018 update] [online treatise]).In this case, however, there is absolutely no evidence-objective or otherwise-indicating the Claimants intended or agreed to be bound to any of the provisions contained on page 3, including paragraphs 11 and 12. In fact, there is absolutely no evidence-objective or otherwiseindicating the parties had any written contract outlining the terms of their agreement.¹¹ The best that can be determined from the credible evidence is this: the Claimants verbally hired the Defendant to do an inspection of the Property; the Defendant, in some unspecified manner, advised them the total fee was $425.00; the Claimants paid the $425.00 fee to the Defendant by check on October 6, 2017, just prior to the inspection of the Property; and the Defendant, pursuant to the parties’ verbal agreement, went to the Property on October 6, 2017 and verbally advised the Claimants, after his inspection, that there was nothing major for them to do on or to the Property, and they didn’t need anyone to do any work at the Property. Only after the verbal contract was performed did the Defendant complete his end of the agreement by sending a written inspection report to the Claimants, on October 11, 2017.To the extent the Defendant sent any purported contract provisions to the Claimants as contained on page 3 of the inspection report sent on October 11, 2017, those provisions are given no force and effect. The Defendant never proved the Claimants agreed to be bound by those provisions. As noted in Glen Banks, 28 New York Practice Series-New York Contract Law §2.8 (July 2018 update) (online treatise), “[u]nsigned writings prepared by a [party], however, standing alone, generally are insufficient to bind the [other party] to an agreement…. The party seeking to enforce the unsigned writing must prove the [other party] intended to be bound by the terms of that writing. The party has the burden of establishing that the parties, by their words or deeds, manifested an intent to be bound by the terms of the document [footnotes omitted]“. The Defendant has failed, completely, to satisfy his burden.Because the Defendant has failed to satisfy his burden to prove the Claimants agreed to any or all of the provisions contained on page 3 of the inspection report sent to the Claimants on October 11, 2017, the Claimants are not bound by the purported limitation of liability claimed by the Defendant, and the Claimants are not bound by the Defendant’s attempt to impose on the Claimants an opportunity to allow the Defendant to reinspect the Property prior to the Claimants expending any money to repair or replace damaged aspects of the Property, such as the foundation.3. Defendant’s liability for Claimants’ cost to repair foundationThe final point to consider is whether the Defendant failed to satisfy his contractual burden to advise the Claimants about the true condition of the foundation, and in doing so, breached his obligation to provide the Claimants with sufficient information to decide whether or not they should purchase the Property. If the Defendant failed to satisfy his contractual burden-in other words, breached his contract with the Claimants, then it is necessary to determine the amount of damage suffered by the Claimants, if any, as a result of the Defendant’s breach.It is clear the Claimants wanted to purchase a house that required little work. It is also clear they hired the Defendant to inspect the Property to advise them whether the Property satisfied their criteria, and it also is clear the Defendant knew the Claimants would rely on his advice. This is validated by the Defendant’s own words as stated on page 2 in Claimants’ Exhibit 4 (the “boilerplate stuff” given to the Claimants at the inspection of the Property on October 6, 2017) and in Defendant’s A is found on page 2: “The following pages are filled with the details of your inspection and some useful information about homes in general…. The inspection is a statement of the condition of the home on the day it is inspected. The purpose of the inspection is to allow you to evaluate whether there are too many deficiencies for you to take on. You should walk away from the inspection with a clear picture of the condition of your home” (emphasis supplied).¹²With respect to the Property in general, what did the Defendant report to the Claimants? He reported to them nothing major was wrong with the Property and there wasn’t much they had to take care of. In essence, the credible evidence showed he told them they didn’t need anybody to do anything on the Property. There was no evidence the Claimants inspected the foundation themselves. The Defendant knew the Claimants would rely on his inspection and advice. The Claimants in fact did rely on his advice.Notwithstanding his verbal representations to the Claimants, it is apparent he either missed glaring problems with the foundation or he incorrectly claimed there was nothing wrong with the foundation. For example, the inspection report, on page 41, noted the following: “The foundation is constructed of_ concrete _ and appears to be in serviceable¹³ ____condition. Recommendations are:__. Remember; Always keep your drainage “positive’ which means, sloping away from the foundation. A good rule is that the slope, from the foundation, should drop 6 inches, 10 feet away from the house. Keep the leaders on your gutters” [underscores, capitalization, and punctuation in original]. Page 42 contains this statement: “signs of water penetration into the building or signs of abnormal or harmful condensation on building components. Findings: None seen.” He told them this despite the fact his inspection report, on page 42, contradicted those representations by noting the following about the condition of the ground near the foundation: “Vegetation, grading, drainage, driveways, patios, walkways and retaining walls with respect to their effect on the condition of the building. Vegetation See below Exterior Grading Poor,…General recommendations for all homes: · Any negative exterior drainage must be corrected to encourage water away from the building. A minimum pitch of 6″ drop from level in 10 feet away from house is recommended. 1″ per foot is better [emphasis supplied]!” If the grading was poor, as he observed and noted, and if such poor grading tends to bring water toward the building, then it is illogical for the Defendant to have concluded there was no danger to the foundation.The Claimants, when they returned to the Property in May 2018, credibly described the deterioration and crumbling of the foundation that was evident, particularly when Mrs. Moskowitz described how it crumbled when she touched it. The Claimants’ pictures in Exhibit 1, taken before the corrective repairs, showed many small and large cracks in the foundation, a very deteriorated corner condition, and evidence of severe crumbling, which the Defendant described as “spalling.” The Defendant may have neglected to observe signs of spalling and cracks in the foundation on the day of the inspection because, as he described it, he believed shrinkage cracks are common in a poured concrete foundation. He also claimed any deterioration of the corner of the foundation was “cosmetic,” and the spalling in the foundation was merely a slight erosion of the face of the foundation due to lime leaking out of the foundation which didn’t compromise the condition of the foundation but could lead to some crumbling. He admitted, however, the large crack in one of the pictures could indicate there was a structural issue with the foundation (and the picture clearly showed someone, at some time, had attempted to repair that large crack by patching it, but the crack became larger after the patching). He didn’t remember if the foundation showed signs of spalling on the day of the inspection, but he claimed he may not have noticed something he considered normal (such as spalling in the foundation).It is incredible to believe that the deteriorating conditions in the foundation occurred only between October 6, 2017-the date of the inspection-and early May 2018, when the Claimants returned to the Property.Despite the Defendant’s comments that spalling is merely a cosmetic problem, others take a significantly different view. Numerous websites devoted to concrete installation, maintenance, and repair, of which the Court is taking judicial notice, indicate that spalling typically is due to rusting of steel reinforcement bars embedded within installed concrete, causing expansion and pressure from within on the surrounding concrete. As a result, concrete can cracks, spall and break off, decreasing the concrete’s ability to carry loads safely. See Concrete Spalling, https://www.robsonforensic.co (last accessed Sept. 6, 2018); see also Spalling of Concrete-Causes, Prevention & Repair, https://civildigital.com/spalling-concrete-causes-prevention-repair/ (“Concrete spalling commonly known as (concrete cancer) is an eye-sore and has the potential to be an extreme hazard. Left untreated and exposed to the elements will cause extensive structural damage and may cause it to break away from the façade, potentially injuring the public and damaging property. Spalling, at a low level, is mainly a cosmetic problem but it can lead to structural damage if not dealt with immediately. If left untreated, damage can occur to the reinforcing bars within the concrete.”) (last accessed Sept. 6, 2018); Spalling Concrete, https://www.hdb.gov.sg/cs/infoweb/reside (“If [spalling is] attended to immediately, the building’s structural integrity will not be affected…. However, if the spalling concrete is left unattended over a long period, it will spread to a bigger area and weaken the building structure.”) (last accessed Sept. 6, 2018); Concrete Spalling: Causes, Effects and Repair (January 28, 2017), https://cp-tech.co.uk/news/causes-effects-and-repair-of-concrete-spalling (“If left unchecked then spalling will tend to accelerate and spread so that, eventually, the structure could become unstable.”); A Simple Guide on the Causes and Prevention of Concrete Spalling (last updated Feb. 28, 2018) (Spalling “has the potential to wreak havoc on a concrete structure. So, protecting the concrete early can avoid the dangers and also avoid having to replace it later…. One of the main reasons of spalling concrete is a natural process called carbonation. Water seeps into the concrete and causes the reinforcement bars and other elements embedded in the concrete to corrode, thereby creating cracks and bulges in the concrete surface.”); The Definition of Spalling and How to Identify It (last updated July 11, 2018), https://www.thebalance.com/what-is-spalling-1798631 (“Spalling happens in concrete because of moisture in the concrete…. Spalling can eventually cause crumbling and destruction of a structure.”).Because of the deteriorating condition of the foundation, the Claimants, after obtaining three estimates for the work, hired Frasca Construction from Ellenville, New York to repair the foundation and correct the deteriorating conditions. Frasca Construction reinforced and repaired the back foundation wall (behind the master bedroom wall) at a cost of $5,311.00, which the Claimants paid, as shown by Claimants’ Exhibits 2 and 3, in evidence and as allowed under UCCA §1804.If the Defendant properly performed the inspection and advised the Claimants of the very real danger to the Property structure unless the foundation was repaired, it is likely-based on the credible testimony of the Claimants-the Claimants would not have purchased the Property (or, at least, would have been able to attempt to negotiate a different price to account for the needed repairs). The Defendant, in failing to advise the Claimants of the failing foundation, breached his contractual obligation to the Claimants. Alternatively, on an estoppel theory,¹⁴ the Defendant also would be liable to the Claimants in that he made a promise or representation to them (nothing major was wrong with the Property and there wasn’t much they had to take care of) knowing they would rely on his recommendation; they did in fact rely on his promise or representation; and they suffered damage acting in reliance on his promise or representation.The Claimants incurred an actual cost of $5,311.00 to have the foundation repaired. The jurisdictional limit of small claims actions in this Court is $5,000.00. Therefore, substantial justice would be served by awarding judgment to the Claimants against the Defendant in the amount of $5,000.00.DECISION AND ORDERAfter hearing the testimony at the trial, giving appropriate weight to the testimony of the witnesses and reviewing all documentary evidence produced by the parties at the trial, considering the applicable laws governing this action, and following the reasoning behind various New York cases considering similar issues, it isORDERED, that the Claimants’ claim against the Defendant seeking damages for failure to properly inspect and advise Claimants of the damaged foundation at the Claimants’ property prior to their purchase of the property is granted, and it is furtherORDERED, that the Claimants recover from the Defendant the sum of $5,000.00 incurred by the Claimants in correcting the damaged foundation at the Claimants’ property, and it is furtherORDERED, that judgment shall issue for the Claimants against the Defendant in the amount of $5,000.00, plus costs.The foregoing constitutes the Decision and Order of this Court.Dated: September 6, 2018Middletown, New York