Opinion
# 2017-038-517 Claim No. 128410 Motion No. M-89367 Cross-Motion No. CM-89496
02-24-2017
SANO-RUBIN CONSTRUCTION CO., INC. v. STATE OF NEW YORK and THE STATE UNIVERSITY OF NEW YORK
McNAMEE, LOCHNER, TITUS & WILLIAMS, P.C. By: Kevin Laurilliard, Esq. ERIC T. SCHNEIDERMAN, Attorney General of the State of New York By: Brett R. Eby, Assistant Attorney General
Synopsis
Defendant's motion to dismiss on jurisdictional timeliness grounds granted. Claim accrued when construction project was substantially complete, not upon defendant's determination that it would not pay for certain additional costs. Claimant's cross motion to "accept the filed claim as a late claim denied. Such relief is not authorized by the Court of Claims Act, and claimant did not, in any event, offer sufficient argument on the factors set forth in Court of Claims Act § 10 (6).
Case information
| UID: | 2017-038-517 |
| Claimant(s): | SANO-RUBIN CONSTRUCTION CO., INC. |
| Claimant short name: | SANO-RUBIN CONSTRUCTION |
| Footnote (claimant name) : | |
| Defendant(s): | STATE OF NEW YORK and THE STATE UNIVERSITY OF NEW YORK |
| Footnote (defendant name) : | |
| Third-party claimant(s): | |
| Third-party defendant(s): | |
| Claim number(s): | 128410 |
| Motion number(s): | M-89367 |
| Cross-motion number(s): | CM-89496 |
| Judge: | W. BROOKS DeBOW |
| Claimant's attorney: | McNAMEE, LOCHNER, TITUS & WILLIAMS, P.C. By: Kevin Laurilliard, Esq. |
| Defendant's attorney: | ERIC T. SCHNEIDERMAN, Attorney General of the State of New York By: Brett R. Eby, Assistant Attorney General |
| Third-party defendant's attorney: | |
| Signature date: | February 24, 2017 |
| City: | Saratoga Springs |
| Comments: | |
| Official citation: | |
| Appellate results: | |
| See also (multicaptioned case) |
Decision
Claimant filed this claim on August 24, 2016 alleging breach of contract by defendant. Defendant makes a pre-answer motion to dismiss the claim on the grounds that it is untimely and is jurisdictionally defective. Claimant opposes the motion and cross-moves for an order "permitting and accepting" the filed claim as a late claim (Notice of Cross Motion, dated Nov. 9, 2016).
Court of Claims Act §§ 10 (4) and 11 (a) (i) require that a claim or a notice of intention to file a claim ("NOI") sounding in breach of contract be served upon the Attorney General within six months after accrual of the claim. A timely served notice of intention will extend the time within which to serve and file a claim sounding in breach of contract to two years after the date of accrual of the claim (see Court of Claims Act § 10 [4]). It is well established that the filing and service requirements of the Court of Claims Act are jurisdictional in nature, and that the failure to timely serve the claim upon the Attorney General deprives the Court of subject matter jurisdiction (see Finnerty v New York State Thruway Auth., 75 NY2d 721, 722-723 [1989]; Matter of Dreger v New York State Thruway Auth., 177 AD2d 762, 762-763 [3d Dept 1991], affd 81 NY2d 721 [1992]; Tulger Constr. Co. v State of New York, 45 Misc 3d 1224 [A] [Ct Cl 2013]).
The claim states that claimant entered into a contract with defendant in December 2010 for a renovation project at the State University of New York (SUNY) at Albany, and it alleges the following. Subsequent to the commencement of work on the project, defendant made design changes to the project that caused claimant to incur additional and unanticipated costs and expenses to perform its work on the project, and claimant submitted timely requests to be compensated for the additional costs and expenses on July 15, 2013 (Claim No. 128410, ¶ 10; Exhibit B). Defendant's consultant disagreed with claimant's request for additional costs and expenses on October 18, 2013 and claimant filed a Statement of Contention of the consultant's decision, dated October 24, 2013 (id., ¶ 11; Exhibit C). By letter dated February 18, 2015 and received February 24, 2015, claimant was advised that the request for additional compensation was denied, which the claim asserts was a breach of contract (see id., ¶¶ 12, 14). The claim alleges that claimant submitted a timely notice of reservation of rights and timely submitted a NOI (id., ¶¶ 18, 20). The claim states that "[t]he accrual of this Claim is unclear" (id., ¶ 22), and that claimant "recognizes that the general rule is that a claim accrues when damages are ascertainable, which is generally when the work is 'substantially completed or a detailed invoice of the work performed is submitted' " and that the work was substantially completed on or about August 15, 2013 (id., ¶ 23, quoting C.S.A. Contr. Corp. v New York City School Constr. Auth., 5 NY3d 189, 192 [2005]). The claim, however, states that it accrued on or about February 24, 2015 when claimant received notice of the determination denying additional compensation. The claim also alleges that claimant had previously filed an Article 78 proceeding regarding the dispute.
The NOI attached to the claim demonstrates that it was verified on August 19, 2015 (id., Exhibit F).
Defendant argues that in construction cases, a claim for breach of contract accrues upon "substantial completion" of the work under the contract (Eby Affirmation, ¶ 8, citing Phillips Constr. Co. v City of New York, 61 NY2d 949 [1984]), and that since the claim alleges that work was substantially completed on or about August 15, 2013, the claim is untimely because the NOI was served two years after that date. Defendant further contends that the claim cites no case law in support of its position in the claim that it accrued when the "final determination letter" was received (Eby Affirmation, ¶ 10). Defendant apparently argues in the alternative that the claim is untimely because claimant's alleged damages were ascertainable on July 15, 2013, when Kenneth Rizzo, claimant's Vice President, submitted to defendant a Change Order Request seeking the additional compensation (Eby Affirmation, ¶11; Claim No. 128410, Exhibit C), and because defendant made its final determination on claimant's Change Order Request on October 18, 2013 through its consultant under the provisions of the contract (Eby Affirmation, ¶¶ 12-14; Claim No. 128410, Exhibit C), and the NOI was not served within six months of either of those two later dates.
Claimant argues that the claim is timely because claimant filed the NOI within six months of exhausting its administrative remedies when it received defendant's final determination to deny claimant's request for the additional compensation on February 24, 2015 and that it was not able to ascertain its damages until that date. Claimant argues that "the inflexible rule" in Phillips Constr. Co., supra, that such claims accrue upon substantial completion of the project "should not be applied in a perverted manner to undermine sound legal principals [sic], public policy and the express terms of the parties' Contract by compelling a contractor to file its claim before the agency issues its final decision" (Laurilliard Affirmation, ¶ 7), and, in any event that defendant's motion does not establish the project's "date of substantial completion" (id., ¶ 4). Rather, claimant argues that the Court should follow other appellate precedent in finding that a claim does not always accrue upon substantial completion of the project, but "instead accrues 'at such time as the agency issues its final determination'" (id., ¶ 7, quoting Koren-DiResta Constr. Co. v New York City School Constr. Auth., 293 AD2d 189, 197 [1st Dept 2002]).
As a general rule, a claim accrues when damages are ascertainable, and "[a]though the determination of the date on which damages are ascertainable may vary based on the facts and circumstances of each particular case, 'it generally has been recognized that damages are ascertainable once the work is substantially completed or a detailed invoice of the work performed is submitted' " (C.S.A. Contr. Corp., 5 NY3d at 192, quoting New York City School Constr. Auth. v Kellen & Lemelson, 290 AD2d 497 [2d Dept 2002]; see also Matter of Board of Educ. of Enlarged Ogdensburg City School Dist. [Wager Constr. Corp.], 37 NY2d 283 [1975] ["The claims of contractors 'accrued' when their damages accrued (as distinguished from the event which incurs them), that is, when their damages were ascertainable"]). Although the contract at issue in this claim defined substantial completion (Eby Affirmation, ¶ 22, citing Claim No. 128410, Exhibit A, at § 2.23[B]), which would control when the work was deemed to be substantially complete (Koren-DiResta Constr. Co., 293 AD2d at 195), the verified claim alleges that the work "was substantially completed in August 2013" (Claim No. 128410, ¶ 23), and therefore damages are ascertainable from that date. Thus, inasmuch as the NOI was not served within six months of substantial completion of the project, nor was the claim filed and served within that same period of time, the claim is untimely and must be dismissed.
Claimant's argument that defendant's submission does not establish the date of substantial completion (Laurilliard Affirmation, at ¶ 4) is clearly contradicted by the concession in the verified claim that the work was substantially completed on or about August 15, 2013. --------
Claimant's reliance on Koren- DiResta Constr. Co., supra, as permitting the Court to find that the claim accrued upon SUNY's "final determination" to deny the additional compensation does not compel a different result. In that case, the Court applied Phillips Constr. Co. (supra) and other precedent to hold that a claim against the New York City School Construction Authority accrued upon substantial completion, which was defined under that contract as occurring after a final determination had been made with regard to an estimate of known remaining items and a schedule for the completion of the items (Koren-DiResta Constr. Co., 293 AD2d at 196-197). Thus, Koren-DiResta Constr. Co. identified substantial completion as having occurred in that matter when the agency made a final determination as to the outstanding work in accordance with the terms of the parties' contract; it does not state a new rule that the accrual date should be measured from the date of the agency's final determination. By comparison, the contract upon which this claim rests provides that the work is substantially complete when it has "reached such point of completion that the Project can be fully occupied and used for the purposes for which it was intended" (Claim No. 128410, Exhibit A at § 2.23 [B]), at which point claimant was required to give SUNY Albany and its consultant written notice, and the consultant would then inspect the work to confirm that the project was substantially completed, and if so, advise claimant. While the documents submitted on the instant motion do not demonstrate when claimant gave such written notice or when claimant was advised by the consultant that the work was substantially complete under the contract, it is clear that the project was substantially complete when the consultant determined that claimant was not entitled to additional payment under the contract (id., Exhibit C [10/18/13 Andrews Letter]). Thus, even affording claimant the latest date of October 18, 2013 as the date of accrual, the claim is untimely as no NOI was served nor was a claim filed within six months of that date.
Claimant contends that the "substantial completion" rule may encourage the filing of claims against state contracting entities, an observation that is in accord with the view that "contractors [as a result of the rule] sometimes find themselves in the position of a [claimant] in this case, whose claim was [untimely] before there was any reason to expect litigation" (C.S.A. Contr. Corp., 5 NY3d at 194 [concurring opinion]). However, in the absence of legislative or decisional authority providing that such claims accrue upon a final agency determination (cf. Education Law § 3813 [1] [claim accrues "as of the date payment for the amount claimed was denied"]), the holding of Phillips Constr. Co. is controlling. Accordingly, the claim must be dismissed on jurisdictional grounds as being untimely, and the Court need not consider defendant's remaining arguments.
Claimant's cross motion to accept the filed claim as a late claim will be denied because the Court of Claims Act does not authorize such relief. Court of Claims Act § 10 (6) authorizes the Court to exercise its discretion to permit the filing and service of a late claim, but even if the Court were to construe claimant's motion as one pursuant to Court of Claims Act § 10 (6), it would be denied for the following reasons. First, claimant has failed to submit a proposed claim in support of his motion, as is required by Court of Claims Act § 10 (6), which precludes granting such a motion (see Davis v State of New York, 28 AD2d 609, 610 [3d Dept 1967]); Di Bacco v State of New York, 57 Misc 2d 832, 834 [Ct Cl 1968]; Smith v State of New York, UID No. 2016-038-521 [Ct Cl, DeBow, J., May 5, 2016]). Even if the Court were to deem the filed claim as the proposed claim, the motion would be denied. While claimant offers a passing cursory and summary argument that defendant was aware of the claim and would not be prejudiced (see Laurilliard Affirmation, ¶ 9), claimant presents no argument on any other factor that the Court is required to consider when deciding whether to permit the filing and service of a late claim (see Court of Claims Act § 10 [6] ["whether the delay in filing the claim was excusable; whether the state had notice of the essential facts constituting the claim; whether the state had an opportunity to investigate the circumstances underlying the claim; whether the claim appears to be meritorious; whether the failure to file or serve upon the attorney general a timely claim or to serve upon the attorney general a notice of intention resulted in substantial prejudice to the state; and whether the claimant has any other available remedy"]).
Accordingly, it is
ORDERED, that defendant's Motion No. M-89367 is GRANTED, and claim number 128410 is DISMISSED; and it is further
ORDERED, that claimant's Cross Motion No. CM-87496 is DENIED without prejudice to a subsequent motion for late claim relief.
February 24, 2017
Saratoga Springs, New York
W. BROOKS DeBOW
Judge of the Court of Claims Papers considered: (1) Claim number 128410, with Exhibits A-G, filed August 24, 2016; (2) Notice of Motion (M-89367), dated October 17, 2016; (3) Affirmation of Brett Eby, AAG, dated October 17, 2016; (4) Notice of Cross Motion (CM-89496), dated November 9, 2016; (5) Affidavit of David M. Rubin, sworn to November 9, 2016; (6) Affirmation of Kevin Laurilliard, Esq., in Opposition, dated November 9, 2016, with Exhibits A-G; (7) Defendant's Reply Memorandum of Law, dated December 2, 2016.