Opinion
602131/04.
April 13, 2009.
In this action by a construction subcontractor seeking damages for an unpaid contract balance and payment for extras, plaintiff Gateway Demolition Corp. (Gateway) moves for partial summary judgment on the issue of liability, leaving the issue of damages for trial. Defendant Lumbermens Mutual Casualty Company a/k/a Lumbermen's Mutual Casualty Corporation (Lumbermens) cross — moves for summary judgment dismissing the complaint.
I. Background
This action is based on a project to demolish an incinerator and other structures, located at 650 West 57th Street, Manhattan, for the New York City Department of Sanitation (DOS). Part of the project involved removing a section of a concrete overpass spanning East 56th Street. DOS originally entered into a contract with Rapid Demolition Company, Inc. (Rapid) to effectuate the demolition. Lumbermens acted as surety on the project, assuring the project's completion. The construction manager for the project was Bovis Lend Lease (Bovis), with Cal Gerson (Gerson) as onsite inspector.
Rapid defaulted on the contract with DOS, leaving the worksite in a haphazard and dangerous condition, including the collapse of a portion of scaffolding. See Memorandum of City of New York Department of Investigation, Office of the Inspector General, Department of Sanitation, Notice of Motion, Ex. A. The overpass especially appears to have been left in a precarious and dangerous state, having been only partially removed.
Lumbermens, as DOS's surety, contracted with Gateway to complete the demolition project. Their agreement was memorialized in a "Completion Contract" (the Contract) as of May 9, 2003. Section 1 of the Contract provides as follows:
[Gateway] agrees to furnish all supervision, labor, tools, equipment and supplies necessary to perform all work set forth in Section 2 hereof and to complete the demolition and abatement of the New York Department of Sanitation Incinerator at 650 West 57th Street, New York, NY, in accordance with the terms and provisions of all of the Plans, Specifications and other documents forming or by reference made a part of this Contract. These governing Plans and Specifications and other documents shall be those that originally were as agreed to between Rapid Demolition Company, Inc. and the New York Department of Sanitation for contract number 15786 [emphasis in original].
Notice of Motion, Ex. E. The Contract also provides that Gateway agreed to perform work described in "Attachment A" to the Contract. Id. Attachment A basically describes the demolition and removal of all of the remaining structural elements on the incinerator's site.
Gateway maintains that, prior to the execution of the Contract, Gateway's vice-president, Michael Richman (Richman), discussed with Steve Weinberg (Weinberg), Lumbermens' attorney, the pressing need to obtain a continuous road closure of 56th Street for three weeks, which closure was alleged by Richman to be absolutely necessary in order to allow Gateway to "demolish the overpass in a safe way, protecting its own employees and also eliminating the risk that any member of the public would get hurt." Aff. of Richman, ¶ 7. Richman claims that he spoke to DOS's chief engineer, Danny Walsh (Walsh), who agreed that the road closure was essential, and that he would contact the Department of Transportation (DOT) to obtain the street closure.
Contrary to the above, Weinberg claims that he never discussed the issue of road closures with anyone at Gateway prior to the execution of the Contract, and that he had no idea that the issue existed until Gateway informed him, several weeks later, that the road closures had not been obtained. It is Weinberg's belief that Gateway spoke solely with DOS about obtaining the road closure. In any event, Weinberg denies that the issue of road closures was ever addressed in negotiations concerning the Contract. Walsh sent a letter to DOT within weeks of the execution of the Contract, requesting the three-week road closure. Id., Ex F. Despite the lack of any mention of the need for street closure in the Contract, Richman insists that "[s]ince the closure was an essential safety measure, it was understood and anticipated by everyone involved that the street closure would be granted." Id., ¶ 11. This understanding is allegedly reflected in the minutes of a job meeting between representatives of DOS, Bovis and Gateway, in which Gerson stated that "[i]t is generally anticipated that DOT will grant a Street Closure Permit, that will enable closure of the 56th Street roadway for most of July 2003." Id., Ex. G.
It eventuated that DOT did not grant the closure of East 56th Street for the three weeks requested. Instead, DOT offered to grant closure of the street on eight consecutive weekends.
In a letter to Weinberg from Richman, Richman advised Lumbermens of the turn of events, and indicated his belief that, as a result of the failure to obtain the three-week street closure, "there will be cost increases and schedule delays due to these unforeseen circumstances." Id., Ex. I. As important to Gateway, a consultant to Lumbermens stated that failure to obtain the street closure "appears to present a much changed circumstanc [sic] and a possibly expensive one." Id., Ex. J. Thus, Gateway argues that Lumbermens knew, at least after the fact, that Gateway's failure to obtain a continuous street closure would result in monetary difficulties under the Contract.
Gateway proceeded to work on weekends as of July 26, 2003. As the work neared completion, Gateway determined that it had suffered from the impact of the failure to obtain continuous street closure. At the same time, Lumbermens apparently discovered a drawing labeled "MPT" (meaning "Maintenance and Protection of Traffic Plan") in Rapid's original specifications, in which the City of New York (presumably, DOT) granted street closure to Rapid for night work only. Aff. of Weinberg, Ex. I. Gateway contends that neither Lumbermens nor Gateway was aware of this restriction at the time the Contract was executed, and that Gateway would never have agreed to do night work on the dangerous overpass, due to the difficulties and dangers involved in working at night. Lumbermens avers that the MPT was part of the Contract, incorporated therein as part of Rapid's assumed obligations under Section 1 of the Contract. As a result, Lumbermens claims that a limitation as to Gateway's time to work on the project (at least as to the overpass) was included in the Contract.
According to Gateway, Lumbermens agreed to seek an extra from the City of New York (presumably, DOS) on Gateway's behalf, which it would pass along to Gateway, for the reduction of hours Gateway was restricted to as a result of the change from the night street closures, to the weekend closures. See Aff. of Richman, ¶ 28.
The request was denied by DOS, on the ground that the change from night work to weekend work caused no loss to Lumbermens. Consequently, Lumbermens refused to allow Gateway the extra.
Another part of the job required the demolition and removal of a small "enforcement building" on the corner of the project. Apparently, after some effort by Bovis, Lumbermens and Gateway, a permit for the removal of the enforcement building was granted by the Department of Buildings, dated November 20, 2003. Aff. of Richman, Ex. N. The work of removing this structure was completed on December 17, 2003, within 30 days of issuance of the permit.
II. Arguments
It is Gateway's argument that the option of doing night work was never part of the negotiations for the Contract, and that, in fact, the Contract contained no limitation at all as to Gateway's access to the worksite. Gateway argues that "[f]rom the very outset of Gateway's involvement in this project, the basis of the bargain with Lumbermens was that Gateway was promised a continuous three week road closure. Gateway's schedules were all based on this fact." Richman Aff., ¶ 32. Based upon this alleged understanding, Gateway argues that the change from the anticipated continuous three-week street closure, to the limitation of working weekends, was an extra for which Lumbermens must pay, regardless of the fact that Lumbermens failed to obtain the extra from DOS for itself. The amount of damages claimed by Gateway for the unpaid contract balance is $168,894.43, plus interest, with the value of the unpaid extras to be determined at trial.
Lumbermens maintains that Gateway's action is barred by the above-quoted Section 1 of the Contract (Richman Aff., Ex. E), which, it avers, holds Gateway to the terms of DOS's contract with Rapid. Lumbermens focuses on the second sentence of Section 1 of the Contract, which, as quoted above, states that "[t]hese governing Plans and Specifications and other documents shall be those that originally were as agreed to between Rapid Demolition Company, Inc. and the New York Department of Sanitation for contract number 15786 [emphasis in original]."
Gateway completely leaves out this second sentence in its presentation of the Contract to the court, and fails even to acknowledge its existence throughout the motion, despite Lumbermens' attempts to draw Gateway out as to the meaning of the provision. As such, Gateway argues that only a few of Rapid's obligations to Lumbermens were incorporated into the Contract: the obligations in Attachment A; certain obligations concerning the use of locally based enterprises; parts of Section 4 regarding liquidated damages in Rapid's contract; and certain of Rapid's insurance obligations. Richman categorically states that "in light of Rapid's history of hazardous work, I did not and would not agree to a wholesale incorporation by reference to Rapid's agreement." Richman Aff., ¶ 16. Thus, he concludes that "[o]ur contract only incorporated in its text and by reference to limited portions of Rapid's contract which Gateway could agree to." Id.
As to Gateway's claim for the unclaimed contract balance, Lumbermens asserts that these amounts are subsumed by credits Gateway owes Lumbermens, and liquidated damages due to Lumbermens for Gateway's delays.
The crux of Gateway's argument is that the Contract did not restrict its access to the site in any way (much less limit it to dangerous night work), and that the unforeseen restriction of the street closure to weekends was a "changed condition to Gateway which warranted the payment of an extra." Id., ¶ 31.
III. Discussion
"The proponent of a motion for summary judgment must demonstrate that there are no material issues of fact in dispute, and that it is entitled to judgment as a matter of law." Dallas — Stephenson v Waisman, 39 AD3d 303, 306 (1st Dept 2007), citing Winegrad v New York University Medical Canter, 64 NY2d 851, 853 (1985). Upon proffer of evidence establishing a prima facie case by the movant, "the party opposing a motion for summary judgment bears the burden of `produc[ing] evidentiary proof in admissible form sufficient to require a trial of material questions of fact.'" People v Grasso, 50 AD3d 535, 545 (1st Dept 2008), quoting Zuckerman v City of New York, 49 NY2d 557, 562 (1980) .
"`[W]hen parties set down their agreement in a clear, complete document, their writing should . . . be enforced according to its terms.'" South Road Associates, LLC v International Business Machines Corp., 4 NY3d 272, 277 (2005), quoting Vermont Teddy Bear Company v 538 Madison Realty Company, 1 NY3d 470, 475 (2004), quoting W.W.W. Associates v Giancontieri, 77 NY2d 157 (1990). "The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent [and that] [t]he best evidence of what parties to a written agreement intend is what they say in their writing [interior quotation marks and citation omitted]." Greenfield v Philles Records, Inc., 98 NY2d 562, 569 (2002); see also Innophos, Inc. v Rhodia, S.A., 10 NY3d 25 (2008). Where the contract language is unambiguous, the matter is one of law for the court to determine. Greenfield v Philles Records, Inc., 98 NY2d 562, supra; Wallace v 600 Partners Company, 86 NY2d 543 (1995).
A contract is unambiguous if the language employed has "a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion." Breed v Insurance Company of North America, 46 NY2d 351, 355 (1978). That is, the words must be accorded their "plain and ordinary meaning." White v Continental Casualty Company, 9 NY3d 264, 267 (2007). "It is also important to read the document as a whole to ensure that excessive emphasis is not placed upon particular words or phrases." South Road Associates, LLC v International Business Machines Corp., 4 NY3d at 277. "Particular words should be considered, not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby [emphasis in original]." Matter of Stravinsky, 4 AD3d 75, 81 (1st Dept 2003),
(A) Gateway's right to an extra
With regard to the question of Gateway's right to an extra for its failure to obtain a continuous street closure, the court perceives that the present action is ruled by three arguments: (1) whether the need for a continuous road closure was a part of the Contract; (2) whether the contract incorporated Rapid's permit for night closures under the MPT, so that DOT's offer of weekend closures instead was not a breach of the Contract on Lumbermens part; and (3) whether Lumbermens breached the contract by, in some manner, denying Gateway full access to the worksite.
(i) Whether the need for continuous street closures was incorporated into the Contract
It is readily apparent that no provision for any type of road closure can be read into the Contract. "[A] court may not rewrite into a contract conditions the parties did not insert or, under the guise of construction, remake a contract to implement an unexpressed intention [internal quotation marks and citations omitted]." Matter of 17th Glenville Corporation v Board of Assessors of Town of Glenville, 214 AD2d 792, 793 (3d Dept 1995); see also Kushlin v Bialer, 32 AD2d 217 (1st Dept 1969) . Gateway's unexpressed expectations that it would receive the continuous street closure it desired did not become part of the Contract merely because the need existed. Thus, Lumbermens was never made responsible for Gateway's failure to obtain the continuous street closure, as nothing in the Contract required it to do so. There is no ground in the Contract upon which to hold Lumbermens responsible to pay Gateway for an extra because Gateway did not receive the street closure it desired.
Gateway may not reference its discussions with the DOS concerning the street closure, or even communications with Lumbermens after execution of the Contract, in which Lumbermens speculates that the failure to obtain the desired closures would be costly. Such communications are parol evidence, which cannot be utilized to interpret an unambiguous contract. See South Road Associates, LLC v International Business Machines Corporation, 4 NY3d 272, supra; W.W.W. Associates v Giancontieri, 77 NY2d 156, supra.
(ii) Whether the Contract incorporated Rapid's permit for night closures under the MPT
Gateway denies that the MPT ever became part of the Contract, a position premised on Gateway's insistence that the Contract nowhere incorporated the contract between Rapid and DOS. This belief is based entirely on a reading of Section 1 of the Contract, which does not include the second sentence specifically incorporating the Rapid/DOS contract. However, Gateway cannot avoid the consequences of its own agreement by avoiding discussion of the second sentence of the Contract.
Gateway does not argue that the MPT cannot be considered "Plans and Specifications and other documents" for the contract at issue. Nor does Gateway maintain that it asked to review all "Plans and Specifications and other documents" and that the MPT was not provided. Had this been the case, the determination here may have been different.
"The doctrine of incorporation by reference requires that the paper to be incorporated into the written instrument by reference must be so described in the instrument that the paper may be identified `beyond all reasonable doubt.'" Kenner v Avis Rent A Car System, Inc., 254 AD2d 704, 704 (4th Dept 1998), quoting Matter of Board of Commissioners of Washington Park of City of Albany, 52 NY 131, 134 (1873). In the present case, Rapid's contract, concerning that contract's "Plans and Specifications and other documents" as "originally . . . agreed to betweenRapid Demolition Company, Inc. and the New York Department of Sanitation for contract number 15786" is very clear. Contract, Section 1. In consequence, the road closures approved by DOT solely for night work are included in the Contract.
Gateway insists that it would never have taken on the job had it known that it included night work, because of the dangerous nature of the work. However, Gateway's obligations were constrained by Rapid's under the Contract, which included night work. Therefore, Gateway is bound to follow the "Plans and Specifications" contained in Rapid's contract with DOS, which did provide for street closure, albeit, limited to night time closure of 56th Street, and, by exception, its own success (such as it was) in obtaining a street closure permit allowing it to work under allegedly safer conditions. Lumbermens was not bound to obtain better conditions for Gateway than DOS did for Rapid.
To the extent that Gateway may be arguing that a restriction to night work made the contract impossible to perform, Gateway is mistaken under the law. "Impossibility excuses a party's performance only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible. Moreover, the impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract." Kel Kim Corporation v Central Markets, Inc., 70 NY2d 900, 902 (1987).
In the present case, the court finds that night work was not "impossible" under this standard, only undesirable. It should be noted that DOT gave a night street closure for the removal of the overpass, and apparently does give night closures for construction projects, indicating that it did not consider the job to be impossible. Further, it cannot be said that the eventuality could not have been addressed in the Contract. There was no attempt to add a condition for any kind of street closure in the Contract, although there is no reason that the issue could not have been addressed. Consequently, Gateway's insistence that it would not have agreed to work at night is of no moment.
Gateway's reference to the case of Northern Corporation v Chugach Electric Association ( 518 P2d 76 [Alaska 1974]), in which a contract to make deliveries of goods by truck over a frozen lake was found to be impossible due to the extremely hazardous nature of the work (which resulted in deaths), is misplaced. The court herein does not see any element of impossibility in the Contract, incorporating as it does, Rapid/DOS plans and specifications, which compares to the extreme conditions in Northern Corporation.
(iii) Whether Lumbermens breached the contract by, in some manner, denying Gateway full access to the worksite.
Although not discussed by the parties, the DOT's permission to allow Gateway to work on the overpass on weekends only does not appear to have affected Gateway's access to the rest of the work site. As such, the question is only whether Lumbermens illicitly barred Gateway from access to the overpass. There is no evidence of this claim.
Gateway cites to a case wherein a general contractor failed to provide plaintiffs with an "unobstructed" worksite for almost one year, thus entitling the subcontractor to obtain an extra for the delay occasioned by the general contractor. See Anders v State of New York, 42 Misc 2d 276, 278 (Ct Cl, 1964). This case is clearly distinguishable from the case at bar. Lumbermens never obstructed Gateway's access to the worksite; Gateway's own failure to obtain sufficient permission to work during the hours it would have preferred had nothing to do with any action on Lumbermens' part. Obtaining street closures, much less the extensive street closure Gateway would have preferred, was simply not Lumbermens' obligation under the Contract. Gateway took it upon itself to obtain appropriate street closures without incorporating the need for such in the Contract. That is not Lumbermens' doing, and Lumbermens is not required to pay Gateway for something not encompassed within the Contract. As a result of the foregoing, this court finds that Gateway is not entitled to an extra for being constrained to weekend work.
(B) Gateway's right to contract balance
With regard to Gateway's claim for the balance due on its contract, there is a question of fact as whether liquidated damages permitted under the Contract to Lumbermens apply so as to set off any amount due to Gateway.
Section 4, paragraph three of the Contract states that
[t]he Contractor [Gateway] and/or the Contractor's surety shall be liable for liquidated damages as provided for in contract number 15786 [the Rapid/DOS contract] incorporated herein in the event that there is a delay completing this contract within eleven (11) weeks of substantial completion and fifteen (15) weeks of final completion of the New York City Department of Buildings issuing a permit and/or subject to any further extensions the New York City Department of Sanitation or its authorized agent may grant expressly waiving liquidated damages.
The Rapid/DOS contract provides for liquidated damages of $3,000 per day of delay.
The Contract states that Gateway is to substantially complete the project within 11 weeks of obtaining "a permit" from the DOB. Gateway maintains that the last permit it obtained from the DOB, that for removal of the "enforcement building," is the date from which any limitations period should be counted, and that it completed that demolition well between the issuance of the permit, and the end of the limitation period for work under the Contract. As the Contract gives no indication as to what permit was to start the clock running, the issue is one of fact for the jury. Therefore, partial summary judgment on the issues of any contract balance due to Gateway, and any liquidated damages due to Lumbermens as a setoff, is denied. Accordingly, it is
ORDERED that the motion for partial summary judgment brought by plaintiff Gateway Demolition Corp. is denied; and it is further
ORDERED that the cross motion brought by defendant Lumbermens Mutual Casualty Company a/k/a Lumbermen's Mutual Casualty Corporation is granted solely as to the dismissal of Gateway's demand for a contract extra for any loss it sustained as a result of being compelled to work on weekends, and is otherwise denied; and it is further
ORDERED that the remainder of the action concerning the contact balance alleged to be due to Gateway shall continue.
This Constitutes the Decision and Order of the Court. Dated: April 13, 2009