Opinion
# 2016-028-504 Claim No. 119834-A Motion No. M-85611
02-29-2016
C & L ELECTRIC, INC. and METRO POINT ELECTRIC, INC., d/b/a C & L ELECTRIC/METRO POINT ELECTRIC, JV v. THE CITY UNIVERSITY OF NEW YORK
LAWRENCE VAN DYKE, ESQ. HON. ERIC T. SCHNEIDERMAN, ATTORNEY GENERAL BY: Cornelia Mogor, Esq. Assistant Attorney General
Synopsis
Motion for summary judgment by defendant in a public improvement construction contract claim. Project involved installation of a fire alarm system at a CUNY college. Motion denied based on issues of fact as to whether parties by course of conduct waived compliance with notice provisions of the contract.
Case information
| UID: | 2016-028-504 |
| Claimant(s): | C & L ELECTRIC, INC. and METRO POINT ELECTRIC, INC., d/b/a C & L ELECTRIC/METRO POINT ELECTRIC, JV |
| Claimant short name: | C&L ELECTRIC |
| Footnote (claimant name) : | |
| Defendant(s): | THE CITY UNIVERSITY OF NEW YORK |
| Footnote (defendant name) : | |
| Third-party claimant(s): | |
| Third-party defendant(s): | |
| Claim number(s): | 119834-A |
| Motion number(s): | M-85611 |
| Cross-motion number(s): | |
| Judge: | RICHARD E. SISE |
| Claimant's attorney: | LAWRENCE VAN DYKE, ESQ. |
| Defendant's attorney: | HON. ERIC T. SCHNEIDERMAN, ATTORNEY GENERAL BY: Cornelia Mogor, Esq. Assistant Attorney General |
| Third-party defendant's attorney: | |
| Signature date: | February 29, 2016 |
| City: | Albany |
| Comments: | |
| Official citation: | |
| Appellate results: | |
| See also (multicaptioned case) |
Decision
The following papers were read on Defendant's motion for summary judgment pursuant to CPLR 3212.
1. Notice of Motion dated August 29, 2014;
2. Affirmation of Cornelia Mogor dated August 29, 2014;
3. Affidavit of Max L. Pizer dated August 29, 2014 with Exhibits A-H annexed;
4. Affidavit of Steven Levenson dated January 12, 2015 with Exhibits 1-45 annexed;
5. Affirmation of Lawrence Van Dyke dated January 12, 2015;
6. Reply Affirmation of Cornelia Mogor dated March 9, 2015.
Filed papers: Second Amended Claim and Verified Answer to Second Amended Claim.
This action was brought to recover damages arising from alleged breaches of a construction contract. The contract involved the installation of a fire alarm system throughout four buildings on the campus of New York City Technical College, a part of the City University of New York (CUNY), in Brooklyn. The claim seeks damages for the balance due for work performed under the contract, extra work and delay damages and lost profits. Defendant has moved for summary judgment dismissing all three causes of action.
"To prevail on a summary judgment motion, it is incumbent upon the moving party to tender evidentiary proof in admissible form sufficient to warrant the direction of summary judgment in [its] favor (see, CPLR 3212 [b]). Once this requirement is satisfied, the opposing party must then submit proof in admissible form sufficient to create an arguable question of fact requiring a trial" (Vielhauer v Dick Corp., 224 AD2d 792 [3d Dept 1996]). The evidence produced by the movant must be viewed "in a light most favorable to the nonmoving party and accord that party the benefit of every reasonable inference from the record proof, without making any credibility determinations" (Black v Kohl's Dept. Stores, Inc., 80 AD3d 958, 959 [3d Dept 2011] [citations omitted]).
FIRST CAUSE OF ACTION - CONTRACT BALANCE
In the first cause of action claimant alleges that defendant breached the contract by failing to make payments with interest within 30 days after such payments were due. According to claimant, the original contract price of $924,580.00 was increased to $936,135.07 by the addition of an approved change order in the amount of $11,555.07. Of the total contract amount, claimant was paid $857,572.86 leaving a difference of $78,562.21. Claimant maintains that after deducting $26,741.94, the amount needed to complete the work after claimant was removed from the contract, they are owed $51,820.27.
In support of the application for summary judgment as to the first cause of action defendant points to a clause in the contract that allows CUNY to withhold payments for the purpose of set-off against any amounts due and owing to CUNY with regard to the contract. Defendant then argues that it is undisputed that claimant did not complete the work, that CUNY terminated claimant's contract and that CUNY incurred substantial costs in completing and correcting claimant's work. Defendant is correct that claimant failed to complete the contract and that CUNY terminated the contract. However, defendant's right to set-off, in this instance, is dependent on CUNY being owed money under the contract. Defendant, however, has not provided evidentiary proof that it acted within its rights in terminating the contract, a condition precedent to its right to a set-off. Moreover, defendant has not made a prima facie showing that the legitimate costs of completing the work exceeded the amount owed to claimant. Inasmuch as proof of both elements is needed for CUNY to invoke its right to set-off, defendant has failed to establish as a matter of law its right to summary judgment on the first cause of action.
SECOND CAUSE OF ACTION: EXTRA WORK AND DELAY DAMAGES
Damages sought in the second cause of action are grouped in two amounts. The first, for $66,362.66, includes increased labor costs caused by delay in the start of the project; work involved in checking door holders; and work involving the HVAC system. The second amount is $133,402.04 which includes profit and overhead related to the delay of the start of the project; the reprogramming of pull station devices; additional insurance costs; increased labor costs for delays occurring in 2005; FICA payments related to increased labor costs caused by delay in the start of the project and 2005 delays; and FICA payments not included in claims for alleged extra work. The nine categories of damage listed above were submitted as claims to defendant in nine separate change orders. Defendant contends that it is entitled to summary judgment on this cause of action because the contract bars any claim for delay damages. In addition, defendant maintains that claimant waived its right to assert delay and extra work claims by failing to comply with conditions precedent in the contract involving record keeping and notice.
The contract provision addressed to delay, Part VIII, Article D, Section 14, allows that an extension of time "shall be deemed full compensation" to the contractor for delays caused by CUNY, DASNY, the City of New York, the State, other contractors or unexpected conditions beyond the control of either party. "As a general rule, contract clauses exculpating the contractee from liability to the contractor for damages resulting from delays in performance of the contract work are valid and enforceable" (Tougher Indus., Inc. v Dormitory Auth. of the State of N.Y. , 130 AD3d 1393, 1393 [3d Dept 2015] citations and internal quotations omitted ). Nonetheless, "even with such a clause, damages may be recovered for: (1) delays caused by the contractee's bad faith or its willful, malicious, or grossly negligent conduct, (2) uncontemplated delays, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee, and (4) delays resulting from the contractee's breach of a fundamental obligation of the contract" (Corinno Civetta Constr. Corp. v City of New York, 67 NY2d 297, 309 [1986]). In instances such as this where a defendant seeks summary judgment dismissing a claim for delay damages, that party "bears the initial burden of demonstrating prima facie that none of the exceptions to the damages for delay clause are present" (Tougher Indus., Inc. at 1394, citations and internal quotations omitted). Even assuming that defendant has met that burden, claimant has submitted an affidavit by Steven Levenson, President of C & L Electric, in which he asserts that the circumstances surrounding the delays are sufficient to bring the claims within the exceptions. According to Levenson, there were three uncontemplated delays caused by periods where CUNY was not making payments. Claimant maintains that in each instance they could not afford to carry the costs of continuing with the work and were forced to remove their labor force from the job. Levenson also contends that other events that occurred during the time claimant was on the job evince intentional sabotage of the project by CUNY personnel. Here, Levenson points to multiple delays in processing pay requisitions, missing work drawings, others moving claimant's tools and equipment from a long used storage area and numerous instances of failing to provide access to work areas. These allegations are sufficient to raise an issue of fact as to whether one or more of the exceptions to the 'no damage for delay' provision exists.
Defendant offers another basis for arguing that delay damages, and damages for extra work, are not available to claimant. Under the 'delay' provisions of the contract, claimant is required to provide CUNY written notice of any condition causing delay. The contract further recites that failure to provide such notice is deemed a waiver of any right to claim damages for delay. Where, as here, the contract explicitly provides for strict compliance with a notification provision, thus creating a condition precedent to suit, the condition must be literally performed and no claim for breach of contract lies where the party seeking to enforce the contract has failed to perform the condition (Phoenix Signal & Elec. Corp. v New York State Thruway Auth., 90 AD3d 1394, 1396-1397 [3d Dept 2011], citations and quotations omitted). In that regard defendant has submitted an affidavit by Max Pizer, Assistant Director of the Department of Design, Construction & Management at CUNY, and the person responsible for supervising the fire alarm contract. In his affidavit Pizer maintains that claimant never submitted timely written notice of claims for delay. Moreover, Pizer sent a letter to claimant on June 15, 2007 offering the opportunity to provide evidence of any proper notice of its claims and according to Pizer, claimant failed to do so.
In determining whether any portion of the second cause of action is barred by claimant's failure to provide notice, the first question is which items of damage in the cause of action come under the notice requirement relied on by defendant. The contract requires the notice be provided "of any condition which is causing or may cause delay in the completion of the work". By that standard claimant was required to provide notice with respect to claims for increased labor costs, including associated FICA payments, profit and overhead and increased insurance costs related to delay of the start of the project. Defendant, citing Jaffie Contr. Co. v Board of Educ. of City of N.Y. , 90 AD2d 163, 165 (1st Dept 1982) argues that any delay in the start of the project cannot be the basis of a claim for delay damages because any such delay occurred prior to the contract's existence. Nonetheless, the parties dealings show a course of conduct in which the claim of increased costs related to this delay were treated as delay damages. In his affidavit Levenson explains that after claimant's bid, CUNY requested a 45-day extension of the bid price which claimant granted on August 9, 2001. According to Levenson, there was a long delay even after the extension. In a letter to CUNY dated May 3, 2002, claimant noted the continued long delay and reserved its right to claim delay damages. In May 2007 claimant submitted a request for an extension of time from April 7, 2004 to December 31, 2007 and attached a document showing its damages-to-date including the amounts claimed to arise from the delay in the start of the project. In a letter dated May 24, 2007 defendant approved the extension. The letter also indicated that CUNY was in the process of evaluating change order requests and would respond shortly. However, Levenson had been told by Norman Becker, the CUNY project manager, shortly after an April 26, 2007 meeting between Interim Director Perminder Ahluwalia and Becker, that previously submitted change orders dealing with labor rate increases, insurance costs, certain delay damages, among other things, had been approved. Considering all of these circumstances, a question of fact arises as to whether through their course of conduct the parties intended to treat the contractor's claim for increased costs related to the long delay in the start of the project as delay damages.
Under the contract, notice of delay is to be provided within 10 days of the start of the condition and must include information about the delay, its anticipated effect on the work, and whether it will affect completion of the work. Although defendant suggests that the contract requires that information regarding increased costs resulting from the delay be included in the notice, CUNY fails to point to any such contract language. The course of conduct discussed above also raises a triable issues of fact as to whether there was a waiver of the notice requirement regarding delays. In addition, claimant has submitted numerous correspondence to CUNY which address delays including the pre-contract notice sent in May 2002. Other correspondence, sent over the length of the contract, shows that CUNY was advised of claimant's inability to progress the work due to repeated instances of failing to provide access to work areas, multiple delays in processing pay requisitions, missing work drawings and others moving claimant's tools and equipment from a long-used storage area. The correspondence in many instances notes that work hours are being lost and unproductive labor costs are being incurred. The correspondence is sufficient to raise issues of fact as to whether claimant complied with the contract's notice requirement regarding conditions causing delay.
The items of extra work claimed in the second cause of action involved inspection of door holders, work involving the HVAC system, the reprogramming of pull station devices as well as FICA payments not included in claims for alleged extra work. Defendant argues that these claims have been waived by reason of claimant's failure to comply with contract requirements of notice and record-keeping. Under the contract, CUNY reserves the right to make changes in the scope of the work and such changes are deemed extra work. If the contractor wishes to do such extra work a change order proposal is to be submitted within "an agreed time". The contents of a change order proposal are set out in the contract which also provides that any contractor who proceeds without an approved change order does so at their own risk. By contrast, the disputed work provisions in the contract call for the contractor to submit a protest when it is believed that work ordered to be done is extra work. The protest report must be submitted within five business days of such ordered work. During performance of such protested work the contractor is required to provide, on a daily basis, specific information regarding the labor and materials being used to accomplish the work. Failure of the contractor to comply with the requirements of the disputed work provisions is deemed a waiver of any claim for damages for disputed work.
Here, defendant has failed to show that the claims for extra work come within the disputed work provisions of the contract. The parties agree that change orders were submitted by the contractor for extra work but it does not appear that CUNY ever rejected those particular change orders. Pizer's June 15, 2007 letter addresses only delay damages. As a result, the disputed work provisions of the contract did not come into play. Consequently, defendant has failed to make a prima facie showing that it is entitled to dismissal of the extra work claims in the second cause of action.
THIRD CAUSE OF ACTION: LOST PROFITS
In moving for judgment on the third cause of action defendant simply asserts that claimant has failed to make any timely claim therefor under the contract and have failed to allege timely compliance. The conclusory fashion in which the arguments are made is insufficient to establish a prima facie showing of entitlement to summary judgment. Defendant's other argument, that the cause of action should be dismissed because claimants failed to keep and maintain any financial records supporting their purported damages is also insufficient to support summary judgment. Essentially, defendant argues that it made discovery requests for financial records regarding this claimed loss but that claimants failed to produce the records. Relying on Certified Elec. Contr. Corp. v City of New York (Dept. of Transp.), 23 AD3d 596 [2d Dept 2005], defendant argues that this failure, and the spoliation of documentation, warrants a sanction of dismissal. While defendant correctly cites the case law, CUNY has failed to show what documentation was demanded but not produced and what documentation was lost or destroyed. The bare assertion that documentation was not produced is insufficient to support summary judgment.
Accordingly, it is
ORDERED, that the motion for summary judgment is denied.
February 29, 2016
Albany, New York
RICHARD E. SISE
Judge of the Court of Claims