Opinion
9446/05.
Decided December 2, 2008.
Chris Georgoulis, Esq., Georgoulis Associates, PLLC, New York, NY, Attorney for Plaintiff and additional counterclaim defendants.
Frederick R. Rohn, Esq., Holland Knight, LLP, New York, NY, Attorney for Defendant.
Upon the foregoing papers in this action by plaintiff Plato General Construction Corp./Emco Tech Construction Corp., JV LLC (Plato/Emco) against defendant Dormitory Authority of the State of New York (DASNY) alleging the breach of a public improvement contract and seeking recovery of increased costs to perform its work, Plato/Emco moves for an order: (1) granting summary judgment in its favor as to liability as against DASNY, and scheduling this matter for an inquest, and (2) granting additional counterclaim defendants St. Paul Fire Marine Insurance Co. and St. Paul Mercury Insurance Co. (the sureties) summary judgment dismissing the claims as against them. DASNY cross-moves for summary judgment dismissing Plato/Emco's complaint as against it on the grounds that Plato/Emco's claims are barred by a no-damage-for-delay clause in Plato/Emco's contract with it, Plato/Emco's failure to comply with the notice and dispute provisions of that contract, Plato/Emco's execution of change orders, and/or Plato/Emco's inclusion in its total cost claim of claims for costs that are allegedly barred as a matter of law.
Factual Background
On May 20, 1999, DASNY, as the owner, and Plato/Emco, as the prime contractor for general construction, entered into a contract (the Contract) for a project involving the Brooklyn College library, which consisted of the near gut renovation of its existing library building and the construction of a new five-story addition which would double the size of the library. Plato/Emco was awarded the Contract as the lowest responsible bidder following open competitive public bidding as required by General Municipal Law § 101, the Wicks Law. DASNY also entered into separate prime contracts with Eaton Electric, Inc. for the project's electrical work, Almar Plumbing Heating Corp. for the project's plumbing work, and Precision Mechanical, Inc. (Precision) for the project's heating, ventilating, and air conditioning work (i.e., HVAC or mechanical work).
Prior to Plato/Emco's entry into the Contract with DASNY, DASNY had entered into a contract with Turner Construction Company (Turner) on December 29, 1998 (the DASNY/Turner contract), under which Turner agreed to act as the construction manager for the construction phase of the project under Section 13 of Appendix A to the DASNY/Turner contract. Turner was required, among other things, to expedite and coordinate the work of the four prime contractors, and determine the cause of and responsibility for any delays and recommend appropriate remedial action.
Section 13 of Appendix A to the DASNY/Turner contract also required Turner to: (1) prepare a Total Schedule for Construction Completion or Total Project Schedule (a CPM schedule) based on the schedules of the owner, architect, and prime contractor and, in conformity with the owner's completion date, within 60 days after the prime contracts were awarded; (2) monitor the progress of the construction by having scheduled meetings every two weeks or as often as directed by DASNY, and prepare reports showing the status of the work; (3) update the Total Project Schedule to reflect the actual status in relation to the initial or baseline Total Project Schedule on a monthly basis, or as directed by DASNY; (4) provide a comprehensive narrative for each update to the Total Project Schedule, in which it explained the changes to the schedule, the current status of the project, activities that were behind schedule, critical activities, and potentially difficult activities/areas, and in which it was to provide recommendations for keeping the project on schedule; and (5) provide DASNY with the updated schedule, reports, narrative, and updated cash-flow summary reports.
Section 9 of Appendix A of the DASNY/Turner contract provided that Turner was to implement and enforce DASNY's procedure for the processing of change orders, and evaluate requests for extensions of time and make recommendations. Section 10 of Appendix A of the DASNY/Turner contract provided that Turner was to "[a]nalyze and evaluate all claims for Contract time extension or cost adjustment," and "[m]ake recommendations to [DASNY] for resolution, approval, or disapproval."
Under the Contract between Plato/Emco and DASNY, Plato/Emco agreed to perform the general construction work on the project for $19,902,000. The Contract provided that Plato/Emco was to commence work on the Contract at the time specified in the notice to proceed (which was dated May 20, 1999 and directed Plato/Emco to commence work immediately) and required Plato/Emco to "complete the project no later than March 20, 2001" (i.e., 22 months later). It also required Plato/Emco to pay liquidated damages of $1,000 per day for delay in completion. Section 9.01 (B) of the General Conditions to the Contract provided that:
"It is hereby understood and mutually agreed, by and between the Contractor and the Owner, that the time for completion of the Work as specified in the Contract, is an essential condition of the Contract."
Paragraph L of Section 01800 of the Supplemental General Requirements of the Contract stated that contractors would "have complete access to the [project] site after June 1999." Section 01311.01 of the General Requirements of the Contract provided that a Critical Path Method (CPM) would "be provided by [DASNY] or [its r]epresentative [ i.e., Turner]" and would "be used to schedule the progress of the Work." It stated that all work was to "be done in accordance with the Project CPM Schedule" and required Plato/Emco "to cooperate fully with [DASNY's r]epresentative in the development, implementation and updating of the Project CPM Schedule."
Section 01200.03 (A) of the General Requirements of the Contract required that DASNY or its representative schedule job progress meetings during the course of construction in order "to coordinate the efforts of all concerned so that the work [would] proceed[ ] without delay to completion as required by the Contract." Section 01200.03 (B) of the General Requirements of the Contract provided that DASNY or its representative "may require any schedule to be modified so that changes in the Work, delays or acceleration of any segment at the Work shall be reflected in such schedule." It required that "[e]ach contractor cooperate with [DASNY] or [its r]epresentative in providing data for such changes in or modifications of schedules."
Section 20.15 of the General Conditions of the Contract provided:
"Inasmuch as the Contractor can be compensated adequately by money damages for any breach of the Contract which may be committed by the Owner, the Contractor agrees that no default, act or omission of the Owner shall constitute a material breach of Contract entitling the Contractor to cancel or rescind the same or to suspend or abandon performance thereof; and the Contractor hereby waives any and all rights and remedies to which the Contractor might otherwise become entitled to because of any wrongful act or omission of the Owner saving only the Contractor's right to money damages."
Thus, in the event of a breach by DASNY, Plato/Emco could not cancel or rescind the Contract or otherwise suspend or abandon its work; its only recourse was to complete its work on the project and seek money damages.
Plato/Emco prepared its schedule and submitted it to Turner at or before the second project meeting held on June 10, 1999 to enable Turner to prepare the Total Project Schedule or CPM Schedule. Plato/Emco had subcontracted for various work, including the masonry, excavation, concrete, carpentry, finishes, and the fabrication and installation of the millwork. Plato/Emco asserts that it entered into each of its subcontracts based upon the premise that the work would be performed in accordance with a CPM schedule and completed by March 20, 2001 because Section 01311.05 (B) of the General Requirements of the Contract with DASNY required that it "make the requirements of the Project CPM schedule an essential part of each purchase order and subcontract."
According to Plato/Emco, however, DASNY breached the Contract by failing to schedule and coordinate the work. Specifically, Plato/Emco states that Turner, on DASNY's behalf, failed to issue and maintain a CPM schedule and to thereafter update the CPM schedule. Plato/Emco asserts that contrary to the requirements in Section 1311.01 of the General Requirements of the Contract (which, as noted above, obligated DASNY or its representative to provide a CPM schedule) and Appendix A, Section 13, to the DASNY/Turner contract (under which, as noted above, Turner was obligated to prepare the CPM schedule for DASNY), no CPM schedule was provided by Turner at the start of the project. Plato/Emco states that Turner first attempted to issue a CPM schedule on February 9, 2000, well after the May 20, 1999 start of the project, and that this February 9, 2000 schedule was not accurate because it did not incorporate the delays that had already occurred or contain a reasonable completion date. Plato/Emco asserts that this February 9, 2000 schedule was also not a proper initial baseline or as-planned CPM schedule because it did not include certain items of work, such as the coordinated drawings, to show the status of the project prior to the start of on-site and preparatory work.
Plato/Emco further claims that Turner did not update the February 9, 2000 schedule on a monthly basis or specifically identify all delays and the cause of delays as required.
Plato/Emco states that Turner only distributed four updates to the February 9, 2000 schedule, on March 8, 2000 (a schedule dated February 28, 2000), April 5, 2000 (a schedule dated April 1, 2000), May 17, 2000 (a schedule that was first approved on May 31, 2000), and January 31, 2001. Plato/Emco claims that these schedules were already out of date when issued and were issued for only four months on a project that ran from May 1999 to December 2002. Plato/Emco contends that these schedules were, thus, insufficient to schedule and coordinate the project. Plato/Emco asserts that by failing to properly update the February 9, 2000 schedule, DASNY abandoned the CPM schedule, relying instead upon ad hoc oral directives, "two-week look-aheads" and/or Letters of Direction. According to Plato/Emco, Turner's failure to update the schedule and to analyze the progress of the work created chaotic conditions as the contractors attempted to complete the project pursuant to Turner's ad hoc directives.
Plato/Emco maintains that DASNY's failure to schedule and coordinate the work delayed and interfered with its ability to efficiently perform work, increased its costs of performance, and caused it to incur delay damages. Plato/Emco specifies that DASNY's failure to coordinate included its failure to award the mechanical prime contract to Precision until three months after Plato had been directed to proceed. It also points to the fact that there was a second major delay and disruption due to the need to redesign the mechanical system and engage a replacement for Precision, which was terminated on December 6, 1999 and not replaced until January 19, 2000 by Roy Kay Inc. (Roy Kay), another mechanical contractor. Plato/Emco asserts that it, therefore, had to perform preliminary work in the absence of a mechanical prime contractor and appropriate coordination for about nine months after it had received its notice to proceed. It also asserts that the coordination and, thus, the construction, continued to be seriously delayed by the redesign of the mechanical system even after Roy Kay was awarded the mechanical contract.
Plato/Emco further claims that its demolition work in the existing building was delayed due to DASNY's failure to timely vacate the library. Plato/Emco states that although paragraph L of Section 01800 of the Supplemental General Requirements of the Contract provided that contractors would have "complete access to the site after June 1999," it could not begin demolition until mid-August 1999 and the entire library was not vacated until October 5, 1999. Plato/Emco explains that due to DASNY's failure to vacate the library, it was unable to begin its work in some areas for over three months. It asserts that it also had to start limited demolition while some parts of the library were still occupied, creating labor inefficiencies and increasing its costs.
Plato/Emco also points out that it was required to perform asbestos abatement, and that a substantial amount of additional asbestos was discovered in unanticipated locations in the exterior walls, delaying the demolition in the existing building. Plato/Emco further points to the fact that at the same time that it was to start its work in June 1999, Consolidated Edison was performing work on a chiller line that ran alongside the existing building and the new addition. Plato/Emco states that this work on the chiller line made the demolition work more difficult, time consuming, and expensive since it limited its access to the site and interfered with its work. Plato/Emco additionally states that from August to October 2000, it was unable to erect scaffolding on the eastside of the new addition, which was necessary to perform its exterior masonry work, because Roy Kay had to perform work on the steam pipe. Plato/Emco further asserts that the relocation of telephone lines in the streamline trench also interfered with its work.
It is undisputed that over the course of the project, 254 change orders were issued to Plato/Emco with a total dollar value of $6,503,526, representing 30% of the original Contract value. Almost one-half of these change orders were required due to a design error or omission and the vast majority of the remainder were issued due to unanticipated field conditions. According to Plato/Emco, Turner did not respond to its change order requests in a timely manner. Plato/Emco also asserts that problems or ambiguities in the designs required it to submit 467 requests for information (RFIs), and that Turner did not respond to the RFIs in a timely fashion. Plato/Emco points out that 500 sketches had to be issued by the project architect and engineers to clarify various elements of the project design.
On February 9, 2000, DASNY and Turner extended the Contract completion date by one month, from March 20, 2001 to April 20, 2001. Plato/Emco alleges that prior to that time, Turner had demanded that it take all actions necessary to maintain the March 20, 2001 completion date, and that after the one-month extension, Turner insisted that the project be completed by April 20, 2001. It was not until the January 31, 2001 meeting that Turner distributed a schedule showing an August 13, 2001 substantial completion date, which Turner then allegedly pushed Plato/Emco to meet.
By letter dated January 4, 2001, Turner advised DASNY that the project had been delayed by 12.5 months based upon 12 separate causes of delay. These delays included: the delay in awarding the HVAC (mechanical) contract — six months; the delay in vacating the library — one month; the steam line work — one and a half months; the asbestos abatement — one and a half months; and the chiller line work — two months.
On January 14, 2002, DASNY issued a change order to Plato/Emco which stated:
"This change order is to advance funds for a general conditions change that is under negotiation: Reimburse $314,270.40 for extended project costs associated with An estimated 4 months extended completion. These costs include but are not limited to all extended General Condition costs, i.e., supervision, job site overhead cost, etc. A subsequent change order will be issued adjusting the amount of this change order upon conclusion of the negotiations of the time impacts and verification of actual costs."
On March 4, 2002, DASNY issued another change order to Plato/Emco as an advance of funds in the amount of $207,616.71 for a general conditions change under negotiation. This March 4, 2002 change order contained the identical language as the January 14, 2002 change order, providing that "[a] subsequent change order w[ould] be issued adjusting the amount of this change order upon conclusion of the negotiations of the time impacts and verification of actual costs." The project was not completed until December 2002, one year and nine months (21 months) after the March 20, 2001 completion date set forth in the Contract. In addition, Plato/Emco alleges that its costs to complete its work were almost double the original Contract amount.
On March 30, 2005, Plato/Emco filed this action against DASNY, alleging that DASNY breached its Contract by, among other things, failing to timely prepare and maintain a schedule for the project, failing to coordinate work among the prime contracts at the project, interfering with its means and methods at the project, and failing to provide it with time extensions, which all created substantial delays and caused it to incur additional costs and damages beyond the adjusted Contract price. Plaintiff seeks recovery of these damages due to the delay in the project, which, the complaint alleges, was no less than 645 days beyond the original 22-month period for completion of the work set forth in the Contract. DASNY interposed its answer and counterclaims on May 23, 2005, and served an amended answer and counterclaim on March 27, 2006. Plato/Emco served a reply to the counterclaims dated July 1, 2005. Discovery has been conducted, including the taking of depositions and the exchange of documents. Plato/Emco and DASNY have now brought the instant motion and cross motion, each seeking summary judgment, submitting voluminous documentation to the court.
Discussion
Initially, it is noted that, with respect to Plato/Emco's motion insofar as it seeks dismissal of this action as against the sureties, Plato/Emco was never declared to be in default or terminated, and, thus, the sureties cannot be held liable under the performance bond. This branch of Plato/Emco's motion, which is unopposed, must, therefore, be granted.
In support of Plato/Emco's motion insofar as it seeks summary judgment in its favor and an inquest on damages, Plato/Emco argues that DASNY breached the Contract by failing to schedule and coordinate the work, entitling it to summary judgment as to liability against DASNY for its increased costs to perform its work. In opposition to Plato/Emco's motion for summary judgment and in support of its cross motion for summary judgment, DASNY argues that Plato/Emco's claims are barred by the no-damage-for-delay clause set forth in Section 11.02 of the General Conditions of the Contract, which provided:
"Section 11.02-Claims for Delay
No claims for increased costs, charges, expenses or damages of any kind shall be made by the Contractor against the Owner for any delays or hindrances from any cause whatsoever; provided that the Owner, in the Owner's discretion, may compensate the Contractor for any said delays by extending the time for completion of the Work as specified in the Contract."
Plato/Emco, however, maintains that the no-damage-for delay clause is inapplicable to it based upon certain exceptions to the enforcement of such a clause.
Generally, clauses in construction contracts which bar contractors from recovering damages for delay in the performance of the contract are valid and enforceable ( see Corinno Civetta Constr. Corp. v City of New York, 67 NY2d 297, 309; Kalisch-Jarcho, Inc. v City of New York, 58 NY2d 377, 384). However, the Court of Appeals, in Corinno Civetta Constr. Corp., expressly held that there are exceptions to this general rule, and that a no-damage-for-delay clause which purports to preclude damages for all delays resulting from any cause whatsoever will not be read literally. Based upon the established exceptions set forth in Corinno Civetta Constr. Corp. ( 67 NY2d at 309), despite the inclusion in a construction contract of a clause which exculpates an owner from liability to a contractor for damages resulting from delays in the performance of the contractor's work, a no-damage-for-delay clause may not be invoked to bar the recovery of damages for "(1) delays caused by the [owner'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 [owner], and (4) delays resulting from the [owner's] breach of a fundamental obligation of the contract" (see also Trocom Constr. Corp. v City of New York , 51 AD3d 533 , 535; Trataros Constr., Inc. v New York City Hous. Auth ., 34 AD3d 451 , 453; Eldor Contr. Corp. v County of Nassau , 6 AD3d 654 , 655; Bovis Lend Lease LMB v GCT Venture , 6 AD3d 228 , 229; Tougher Indus. v Northern Westchester Joint Water Works, 304 AD2d 822, 822; Abax Inc. v New York City Hous. Auth., 282 AD2d 372, 373; Clifford R. Gray, Inc. v City School Dist. of Albany, 277 AD2d 843, 844; Clark-Fitzpatrick, Inc. v Long Island R.R. Co., 198 AD2d 254, 255; J.J. Flannery, Inc. v Kerby Saunders, Inc., 173 AD2d 415, 415; Castagna Son v Board of Educ. of City of NY [New Dorp High School], 173 AD2d 405, 406; Spearin, Preston Burrows v City of New York, 160 AD2d 263, 264; J.R. Stevenson Corp. v County of Westchester, 113 AD2d 918, 922; Dal Constr. Corp. v City of New York, 108 AD2d 892, 893).
As enunciated in Corinno Civetta Constr. Corp., "exculpatory clauses will not bar claims resulting from delays caused by the [owner] if the delays or their causes were not within the contemplation of the parties at the time they entered into the contract." Therefore, "even broadly worded exculpatory clauses . . . are generally held to encompass only those delays which are reasonably foreseeable, arise from the contractor's work during performance, or which are mentioned in the contract" ( 67 NY2d at 310; see also Eldor Contr. Corp., 6 AD3d at 655; Abax Inc., 282 AD2d at 373; Clifford R. Gray, Inc., 277 AD2d at 845; Castagna Son, 173 AD2d at 406; Commercial Elec. Contrs., Inc.v Pavarini Constr. Co., Inc., 5 Misc 3d 1002 [A], 2004 NY Slip Op 51155 [U], *5 [2004]).
Plato/Emco asserts that the delays encountered by it on the project were uncontemplated because neither the cause nor the extent of the delay was foreseeable. Plato/Emco contends that it reasonably expected that DASNY would properly schedule and coordinate the work, pursuant to its obligations under the Contract to prepare, issue, and update CPM schedules. Plato/Emco further contends that it did not foresee the failure to timely vacate the library or that a 22-month project would be so extensively delayed so as to become a 41-month project. In addition, Plato/Emco points to the number and value of the numerous change orders as evidence of uncontemplated delays.
DASNY, in response, argues that the causes of delay were contemplated because Section 8.01 (A) of the General Conditions of the Contract, entitled "Changes," stated:
"Without invalidating the Contract, the Owner may order Extra Work or make changes by altering, adding to or deducting from the Work, the Contract consideration being adjusted accordingly."
This "extra work" clause, however, makes no mention of any type of delay. Indeed, it actually states that the Contract price (i.e., "the Contract consideration") will be "adjusted" to reflect any change.
DASNY also relies upon Section 13.01 (D), (E), and (F) of the General Conditions of the Contract, which provided:
"Section 13.01 — Cooperation with Other Contractors . . . D. Should the Contractor sustain any damage through any act or omission of any other contractor having a contract with the Owner or through any act or omission of any Subcontractor of said other contractor, the Contractor shall have no claim against the Owner for said damage.
E. Should any other contractor having or which shall have a contract with the Owner sustain damage through any act or omission of the Contractor or through any act or omission of a Subcontractor, the Contractor shall reimburse said other contractor for all said damages and shall indemnify and hold the Owner harmless from all said claims.
F. The Owner cannot guarantee the responsibility, efficiency, unimpeded operations or performance of any Contractor. The Contractor acknowledges these conditions and shall bear the risk of all delays including, but not limited to, delays caused by the presence or operations of other contractors and delays attendant upon any construction schedule approved by the Owner and the Owner shall not incur any liability by reason of any delay."
DASNY'S reliance upon Section 13.01 of the General Conditions of the Contract, however, is misplaced since Plato/Emco's claim is based on delays that DASNY caused; not delays caused by other contractors.
DASNY also relies upon Section 11.02 of the General Conditions of the Contract in arguing that Plato/Emco's claim is precluded. The no-damage-for-delay clause itself, however, cannot suffice to establish that Plato/Emco contemplated that the delays at issue might occur. The inquiry to be made under Corinno Civetta Constr. Corp. ( 67 NY2d at 309-310) is whether the delay was actually contemplated.
DASNY asserts that the Contract contemplates possible problems with coordination since it provides for coordination meetings to resolve coordination issues. The contractual provision for these meetings, however, does not establish that the coordination problems encountered on this project, alleged to have been caused by DASNY's failure to perform its own duties under the Contract, were contemplated. DASNY also asserts that the possibility of delay in vacating the library was inherent in the fact that the move out had not started at the time of the Contract award. This, however, cannot preclude Plato/Emco's claim in view of the contractual language providing for the vacatur of the library at a certain date.
DASNY also claims that Section 01311.10 of the General Requirements of the Contract contemplates that the CPM schedule may differ from the required completion date under the Contract. That Section, however, actually provides that "[n]otwithstanding the implementation of the Project CPM Schedule, it is the sole responsibility of the Contractor to complete the Work within the time of completion required by the Contract," thus mandating the original required completion date under the Contract.
Thus, DASNY has pointed to no specific provision of the Contract or evidentiary proof demonstrating, as a matter of law, that the extent of the delay at issue was within the contemplation of the parties ( see Corinno Civetta Constr. Corp., 67 NY2d at 319; compare Universal/MMEC Ltd. v Dormitory Auth. of State of NY , 50 AD3d 352 , 353). The court does, however, find that Plato/Emco has submitted evidentiary facts sufficiently indicative of delays beyond the contemplation of the contracting parties to raise a triable issue of fact as to the enforceability of the no-damage-for-delay clause ( see Corinno Civetta Constr. Corp., 67 NY2d at 319; Eldor Contr. Corp., 6 AD3d at 655; Bovis Lend Lease LMB, 6 AD3d at 229; Abax Inc., 282 AD2d at 373; J. J. Flannery, Inc., 173 AD2d at 415; Castagna Son, 173 AD2d at 406; Dal Constr. Corp., 108 AD2d at 893).
Moreover, Plato/Emco also asserts that there was a breach of a fundamental obligation that the Contract expressly imposed on DASNY (see Corinno Civetta Constr. Corp., 67 NY2d at 313; Castagna Son, 173 AD2d at 406). Plato/Emco alleges that DASNY and its construction manager, Turner, failed to adequately schedule and coordinate the work of the various contractors, failed to issue coordinated drawings, and failed to have a mechanical prime contractor working on the project at the same time that the other contractors were proceeding. Plato/Emco specifically points to Turner's alleged failure to issue a proper CPM schedule and updates to it in accordance with contractual requirements.
Plato/Emco has submitted the affidavit of James R. Beach, its expert engineer specializing in construction claims and scheduling, who notes that a CPM schedule is a computerized progress schedule that shows the interrelationships of various concurrent or sequential construction activities along the "critical path" necessary to complete a project within the time allotted. Beach states that the CPM schedule calculates the minimum completion time for a project, along with the possible start and finish times for each activity, and explains that the CPM schedule shows the sequencing of the work by the contractors and prioritizes activities, and that, without a proper CPM schedule, there is little or no control over the project. Beach further states that updates of CPM schedules are absolutely necessary to keep a CPM schedule accurate and to maintain the usefulness of the schedule as a management tool. Moreover, it is noted that James Gray (Gray), the managing director of construction for DASNY, testified at his deposition that it is absolutely necessary to have a project schedule in order to have a coordination process on a multi-prime project (Gray's Dep. Transcript at 12).
DASNY, in response, claims that it did not breach a fundamental obligation to schedule and coordinate the project. DASNY asserts that the provisions of the Contract show that scheduling and coordination were to be joint efforts with the contractors, dependent on the performance of the contractors. DASNY also asserts that even if Turner had failed to properly issue schedules, 01311.10 of the General Requirements of the Contract stated that "it [wa]s the sole responsibility of the Contractor to complete the work within the time of completion required by the Contract." Frank J. Regnery, DASNY's engineering and scheduling expert, asserts that many of the delays of which Plato/Emco complains did not, in fact, delay the project. He avers that Plato/Emco is responsible for most of the delays to the project and its late completion.
DASNY further argues that the project CPM schedule was not fundamental to Plato/Emco's obligation to complete the project on time. DASNY asserts that it provided a detailed CPM schedule, which it gave to the contractors in May 1999. While Plato/Emco claims that this was an insufficient baseline schedule, DASNY states that it actually provided detailed scheduling for the entire project, which was adopted by Plato/Emco. DASNY further asserts that there were at least 17 additional schedules and numerous attempts to prepare updated schedules on other occasions that were hampered by the lack of reliable information from Plato/Emco. In addition, DASNY relies upon initial bi-weekly meetings, and, after January 2002, weekly meetings, held by Turner to coordinate and schedule the work on the project.
DASNY also notes that Section 13 (d) (2) of Appendix A of the DASNY/Turner contract only required updating the progress of the work on a "monthly basis, or as directed by the owner," and asserts that monthly updates were, therefore, not specifically mandated. Despite the unequivocal admission contained in Turner's letter of January 4, 2001, DASNY also disputes Plato/Emco's contention that the delay in the mechanical contract interfered with Plato/Emco's work. Based on all of the above, there are material and triable issues raised as to whether the alleged delay damages sustained by Plato/Emco resulted from DASNY's breach of a fundamental obligation of the Contract so as to permit plaintiff's recovery notwithstanding the no-damage-for-delay provision ( see Castagna Son, 173 AD2d at 406).
Finally, Plato/Emco asserts that DASNY was recklessly indifferent to the absence of a proper CPM schedule and was grossly negligent in monitoring Turner's performance. Plato/Emco asserts that DASNY was grossly negligent in proceeding with the project despite the fact that the four prime contractors were not ready to proceed at the same time, and in having Roy Kay bid on mechanical plans which it should have already known were defective. As noted above, where delays are caused by the owner's bad faith or its willful, malicious, or grossly negligent conduct, a contractor may sue for delay damages despite a no damage for delay clause in the contract ( see Corinno Civetta Constr. Corp., 67 NY2d at 309; Castagna Son, 173 AD2d at 406; Spearin, Preston Burrows, 160 AD2d at 264). Although DASNY denies that it acted in bad faith or with deliberate intent to delay the project, the court finds that a triable issue of fact exists as to this issue and the applicability of this exception under Corinno Civetta Constr. Corp. ( 67 NY2d at 309) ( see Williams Sons Erectors, Inc. v South Carolina Steel Corp., 983 F2d 1176, 1184 [2d Cir 1993]; Trocom Constr. Corp., 51 AD3d at 535; Castagna Son, 173 AD2d at 406; Spearin, Preston Burrows, 160 AD2d at 264; Dal Constr. Corp., 108 AD2d at 893).
A no-damage-for-delay clause may also be unenforceable "if the [owner] causes delays which are so great or so unreasonable that they may fairly be deemed equivalent to [its] abandonment of the contract'" ( Corinno Civetta Constr. Corp., 67 NY2d at 312, quoting People ex rel. Wells Newton Co. of NY v Craig, 232 NY 125, 144; see also Bovis Lend Lease LMB, 6 AD3d at 229; Abax Inc., 282 AD2d at 373). An intentional abandonment that renders unenforceable a no-damage-for-delay clause may be found when an owner makes design changes that substantially alter the work and cause such significant delay that the terms of the original contract no longer control ( see Bovis Lend Lease LMB, 6 AD3d at 229; J.R. Stevenson Corp., 113 AD2d at 922).
Here, Plato/Emco alleges that DASNY's substantial design changes, including the redesign of the mechanical system, the excessive number (254) of change orders, and the excessive design clarifications (467 RFIs) and sketches (500 sketches), fundamentally changed the project and constituted a "cardinal change" so as to be equivalent to an abandonment of the Contract by DASNY. DASNY claims that since it continued the work to completion, it has refuted any claim of abandonment. The court finds that this is a disputed factual issue which can only be resolved at trial ( see Bovis Lend Lease LMB, 6 AD3d at 229).
Thus, the court finds that both DASNY and Plato/Emco have failed to make a sufficient factual showing to establish, as a matter of law, whether the delays which actually occurred were initially contemplated by the parties as potential events in the construction project or whether the exceptions set forth in Corinno Civetta Constr. Corp. are applicable ( compare Commercial Elec. Contrs., Inc. v Pavarini Constr. Co., Inc ., 50 AD3d 316, 317; Metropolitan Steel Indus., Inc. v Perini Corp. , 23 AD3d 205 , 206; Grace Indus., Inc. v New York City Dept. of Transp. , 22 AD3d 262 , 262; T.J.D Constr. Co. v City of New York, 295 AD2d 180, 180). Material factual issues exist concerning the applicability of these exceptions ( see Trocom Constr. Corp., 51 AD3d at 535; Trataros Constr., Inc., 34 AD3d at 453 ; Eldor Contr. Corp., 6 AD3d at 655; Bovis Lend Lease LMB, 6 AD3d at 229; Tougher Indus., 304 AD2d at 822; Abax Inc., 282 AD2d at 373 ; Clifford R. Gray, Inc., 277 AD2d at 844 ; Clark-Fitzpatrick, Inc., 198 AD2d at 255; J.J. Flannery, Inc., 173 AD2d at 415; Castagna Son, 173 AD2d at 406; Spearin, Preston Burrows, 160 AD2d at 264; J.R. Stevenson Corp., 113 AD2d at 922 ; Dal Constr. Corp., 108 AD2d at 893).
Plato/Emco further argues that DASNY waived the no-damage-for-delay clause in the January 14, 2002 and March 4, 2002 change orders for extended project costs associated with the delay in completion of its work, both of which expressly acknowledged many of the causes for delay set forth above and expressly provided that the sums advanced were based on an estimate that would be adjusted in a subsequent change order "upon conclusion of the negotiations of the time impacts and verification of actual costs." Thus, an additional triable issue of fact is raised as to whether DASNY waived the no-damage-for-delay clause by issuing these change orders and by making partial payments to Plato/Emco for the delays, rather than merely extending the time to complete without an increase in the Contract price as provided in the no-damage-for-delay clause (Section 11.02 of the Contract). See Williams Sons Erectors, Inc., 983 F2d at 1184; Eldor Contr. Corp., 6 AD3d at 655; Spearin, Preston Burrows, 160 AD2d at 264; Commercial Elec. Contrs., Inc., 2004 NY Slip Op 51155 [U], *5.
Both DASNY's issuance of these change orders and the language of Section 20.15 of the General Conditions of the Contract, which prohibited Plato/Emco from stopping work in the event of a breach by DASNY, but provided that Plato/Emco "c[ould] be compensated adequately by money damages for any breach of the Contract which may be committed by the Owner," raise an issue as to whether such inconsistencies, both in the course of dealing and the contractual language renders ambiguous the no-damage-for-delay clause, which purports to bar any monetary compensation for delays ( see Williams Sons Erectors, Inc., 983 F2d at 1184; Eldor Contr. Corp., 6 AD3d at 655). Plato/Emco contends that instead of granting time extensions, DASNY and Turner (by Robert D. Kilar and Joseph Dunning [Turner's project managers]) repeatedly told it that there would be no time extensions, but that DASNY would compensate it for its increased costs to complete the work when the project was finished. In fact, when Gray was asked at his deposition if he represented that representatives of DASNY would go over the costs associated with the time delays, he responded "I'm sure I did" (Gray's Dep. Transcript at 157). Thus, it appears that DASNY may well have waived the limitations set forth in Section 11.02 of the Contract.
Although DASNY does not contest the evidence of the delays incurred, DASNY argues that Plato/Emco's claims as against it must, in any event, be dismissed on the ground that they are barred by Plato/Emco's failure to comply with notice and dispute provisions in the Contract. Specifically, DASNY relies upon Section 9.01 (F) of the General Conditions of the Contract, which provides that the time for completion is subject to extension for delay that is not the contractor's fault, and requires that the contractor "within ten (10) days from the beginning of any such delay, notify the Owner, in writing, of the causes of the delay." DASNY asserts that Plato/Emco did not send it 10-day written notices of the causes of the delay as required under Section 9.01 (F) of the General Conditions of the Contract.
DASNY further relies upon Section 11.01 (A) (2) of the General Conditions of the Contract, entitled "Claims for Extra Work," which provides:
"A. If the Contractor claims that any Work which the Contractor has been ordered to perform will be Extra Work, or that any action or omission of the Owner is contrary to the terms and provisions of the Contract and will require the Contractor to perform Extra Work the Contractor shall:
. . .
2. File with the Owner within fifteen (15) working days after being ordered to perform the Work claimed by the Contractor to be Extra Work or within fifteen (15) working days after commencing performance of the Work, whichever date shall be earlier, or within fifteen (15) working days after the said action or omission on the part of the Owner occurred, a written notice of the basis of the Contractor's claim, including estimated cost, and request for a determination thereof."
DASNY claims that Plato/Emco did not file 15-day notices with estimates of these costs as required under Section 11.01 (A) (2) of the General Conditions of the Contract, noting that Section 11.03 (A) of the General Conditions of the Contract further provides:
"Any decision or determination of the Owner or the Owner's representative shall be fully binding and conclusive on the Contractor unless the Contractor shall, within ten (10) working days after said decision, make and deliver to the Owner a verified written statement of the Contractor's contention that said decision is contrary to a provision of the Contract."
DASNY asserts that Plato/Emco did not deliver verified written statements challenging its decision and determinations as required under Section 11.03 (A) of the General Conditions of the Contract.
Plato/Emco disputes its lack of compliance with the notice and dispute provisions. Plato/Emco asserts that it gave DASNY notice of its claims regarding demolition of electrical and plumbing work, and it has submitted correspondence showing DASNY's awareness of its claims ( see Tratoros Constr., Inc., 34 AD3d at 453; Abax, Inc. v Lehrer McGovern Bovis, Inc. , 8 AD3d 92 , 93; G. De Vincentis Son Constr. v City of Oneonta, 304 AD2d 1006, 1008; Clifford R. Gray, Inc. 277 AD2d at 846). DASNY states that many of the claim notices (submitted by Plato/Emco as Exhibit 85) do not specifically indicate that they are notices of claims under the Contract or that they are notices of the claims that Plato/Emco is pursuing in this case. DASNY also complains that Plato/Emco's Exhibit 86 shows that Plato/Emco's second notice, which contains a reservation of rights, was not properly verified in compliance with Section 11.03 (A) of the General Conditions of the Contract. However, where claims have been "the subject of sufficient correspondence to make them well known to the contract manager, complete technical compliance with . . . notice of claim requirements [is] not necessary" ( Abax, Inc., 8 AD3d at 93; see also Whitmyer Bros., Inc. v State of New York, 63 AD2d 103, 107, affd 47 NY2d 960). The evidence that DASNY was actually aware of the substance of plaintiff's claims is overwhelming and, as noted, includes acknowledgments thereof by DASNY's own construction manager, Turner.
Furthermore, it is noted that with respect to Section 11.01 of the General Conditions of the Contract, this Section pertains to "Extra Work" under the Contract, as opposed to delay damages and would not apply to plaintiff's claims herein ( see Gemma Constr. Co. v City of New York, 246 AD2d 451, 456). In any event, a material and triable issue of fact is raised as to whether DASNY waived any claim that Plato/Emco failed to follow the dispute resolution procedures by issuing the two change orders to compensate Plato/Emco, in part, for its delay damages ( see G.De Vincentis Son Constr., 304 AD2d at 1008; Commercial Elec. Contrs., Inc., 2004 NY Slip Op 57155 [U], *5). While DASNY argues that Turner had no actual or apparent authority to waive Plato/Emco's compliance with the notice provisions of the Contract or to approve payments for delay and extra work, Sections 9 and 10 of Appendix A of the DASNY/Turner contract gave Turner the authority to process change orders, and to analyze and evaluate all claims for contract time extension and cost adjustment. Thus, issues of fact are raised with respect to Turner's authority ( see G.De Vincentis Son Constr., 304 AD2d at 1008-1009).
DASNY additionally argues that many of Plato/Emco's claims for damages are barred because Plato/Emco executed releases for those claims when it accepted relevant change orders during the project. Plato/Emco responds that it is not seeking recovery for items that are already covered by change orders. Moroever, DASNY's argument is unavailing since DASNY fails to identify the change orders in which releases were given.
DASNY further argues that Plato/Emco'scomplaint must be dismissed because it calculates its claimed damages on a total cost basis, so that there is no way to distinguish between aspects of its claim that are not barred by its failure to comply with notice provisions, the releases in change orders, and the no-damage-for-delay clause. This argument is rejected. Plato/Emco is not required to prove its claimed damages on this motion, which seeks summary judgment only as to liability, or in opposition to DASNY's cross motion for summary judgment. Plato/Emco may prove its claimed damages, and its connection to the alleged breaches of the Contract by DASNY, at trial ( see generally Eldor Contr. Corp., 6 AD3d at 655; Clifford R. Gray, Inc., 277 AD2d at 847; Dal Constr. Corp., 108 AD2d at 893-894).
Accordingly, Plato/Emco's motion is denied insofar as it seeks summary judgment in its favor as to liability against DASNY, and is granted insofar as it seeks summary judgment dismissing the claims as against the sureties. DASNY's cross motion for summary judgment dismissing Plato/Emco's claims as against it is denied in its entirety.
Counsel shall appear in Kings County Supreme Court, Room 756, with a principal of the party authorized to act on behalf thereof on Friday, January 9, 2009, at 10 am for a final settlement conference.
This constitutes the decision and order of the court.