New York Kitchen & Bathroom

A Manhattan appeals court threw out a $1.35 million verdict on Thursday, saying a trial judge committed reversible error when she decided from the bench that a breach of contract occurred, thereby stripping the issue from the jury.

An Appellate Division, First Department, panel ordered a new trial in McCarthy v. New York Kitchen & Bathroom, 651959/11, after rejecting a judgment by Manhattan Supreme Court Justice Margaret Chan, who had presided over a nine-day trial in which a jury found in favor of a couple who had sued over a home renovation project.

“A verdict may be directed only if the court finds that, upon the evidence presented, there is no rational process by which the fact trier could base a finding in favor of the nonmoving party,” the panel wrote, citing Noor v. City of New York, 130 AD3d 536. “Such was not the case here. Questions of fact … existed as to whether plaintiffs prevented [defendant New York Kitchen & Bathroom Corp.] from performing under the contracts.”

Earlier this month, Chan had issued a decision and order denying New York Kitchen & Bathroom’s motion to set aside the verdict.

The lawsuit was filed in 2011 by husband and wife Jason and Newsha McCarthy. It alleged that New York Kitchen & Bathroom breached a nearly $1 million Manhattan apartment renovation project by failing to substantially complete the work and by completing what little work had been done in a “negligent and shoddy manner.”

According to a 34-page complaint filed by the McCarthys, the couple had paid the entire contract price up front. Yet one year after the work-start date, even “initial demolition work” had yet to commence, and the couple was forced to hire other contractors.

After years of discovery and motions, a jury trial was held in early 2016. In addition to the breach-of-contract/substantial completion issue, the trial also featured the question of whether Frank Catanzarite, a New York Kitchen & Bathroom officer, was acting as an agent for the company when he entered into related renovation contracts at the McCarthy home in 2010 using his other business, Frank Catanzarite Construction Co.

The panel, consisting of Justices John Sweeny, Angela Mazzarelli, Richard Andrias, Karla Moskowitz and Judith Gische, pointed out that during trial, the jury was only tasked with deliberating over two questions presented on a verdict sheet: whether Catanzarite was an officer of New York Kitchen & Bathroom and, if so, whether he had bound the company to agreements he made privately with the plaintiffs.

The panel wrote in its unsigned ruling that Chan had wrongly usurped the jury’s role when she ruled from the bench, before deliberations, that New York Kitchen & Bathroom had not substantially performed its contracts with the McCarthys.

The justices noted that New York Kitchen & Bathroom’s president testified at trial about “numerous delays outside of NYKB’s control, including a delay in getting the necessary work permit to begin construction, and submitted evidence that plaintiffs were still requesting additional work less than two weeks before termination of the contract.” They also noted that the “open issues” related to breach of contract, which the jury should have been allowed to consider, would have affected how damages were calculated.

C. Jaye Berger, a Manhattan attorney specializing in real estate and construction law who represented New York Kitchen & Bathroom, said in an interview Thursday that she felt vindicated.

“The [First Department] decision acknowledges all of the points that I’ve been making all along. The judge took the case away from the jury,” she said. “The judge looked at videotape [of work performed by New York Kitchen & Bathroom] herself and herself determined what she thought about the [contracted-for] work when she was not an expert witness in the case.”

Scott Himes, a partner at Kishner & Miller, which represented the McCarthys, said Thursday that his team would consider whether to appeal but also would prepare for a retrial.

“We disagree with the appellate court ruling, but the court directed a new trial and we’ll try the case again, and we expect to prevail again,” he said.

Neither lawyer would speak publicly Thursday about what appeared to be a factual inconsistency in how Chan described, in her recent June 9 decision, what the jury was allowed to consider in deliberations, versus what the First Department panel described in its ruling Thursday.

According to Chan’s June 9 decision denying a set-aside of the verdict, “The jury was asked whether there was a breach of contract and whether plaintiffs prevented NYK&B from fully performing it[s] contracts.”