Opinion
Index No. 03297-19
10-10-2023
Town of Colonie and LATHAM WATER DISTRICT, Plaintiffs, v. Global Contracting & Painting, Inc., LARRY FOTEVSKI, as an Individual and President of Global Contracting & Painting, Inc.; and INTERNATIONAL FIDELITY INSURANCE COMPANY; and C.T. MALE ASSOCIATES ENGINEERING, SURVEYING ARCHITECTURE, LANDSCAPE ARCHITECTURE & GEOLOGY, P.C., Defendants.
Johnson & Peck, P.C. Attorneys for Plaintiffs By: Crystal R. Peck, Esq. Rupp Pfalzgraf, LLC Attorneys for Defendants Global Contracting & Painting, Inc. and Larry Fotevski By: John T. Kolaga, Esq.
Unpublished Opinion
Johnson & Peck, P.C. Attorneys for Plaintiffs By: Crystal R. Peck, Esq.
Rupp Pfalzgraf, LLC Attorneys for Defendants Global Contracting & Painting, Inc. and Larry Fotevski By: John T. Kolaga, Esq.
David A. Weinstein, Acting Supreme Court Justice
In this case, commenced by summons and complaint on May 3, 2019, plaintiffs Town of Colonie (the "Town), and its water district, Latham Water District, (the "District") allege that the Town entered into a contract with defendant Global Contracting & Painting, Inc. ("Global") for sandblasting and painting of the exterior and interior of a municipal water tower owned and operated by the District, known as the Newtonville 1.0 Million Gallon Standpipe ("Standpipe") (Complaint ¶¶ 1, 15, 18). Plaintiffs assert several causes of action against defendants Global and its President, Larry Fotevski (collectively, the "Global Defendants"), including two for breach of contract following the discovery of PCBs on the interior of the Standpipe (id. ¶¶ 81-139). In the first, they allege that Global breached the parties' agreement by transporting waste from the Standpipe off site and refusing to dispose of waste generated by the project, causing plaintiffs to incur additional costs (see id. ¶¶ 110-112). In the second, plaintiffs allege that Global failed to timely complete the project because it refused to carry out its obligations thereunder (see id. ¶¶ 120-130).
The term "PCB" refers to a chemical compound known as "polychlorinated byphenyl," which is a broad family of man-made organic chemicals known as chlorinated hydrocarbons that were used in hundreds of industrial and commercial applications due to their high resistance to heat. Due to the toxic nature of these substances, they were banned from commercial use in 1979, but may be present in products and materials, including oil-based paint, produced before the 1979 ban (see https://www.epa.gov/pcbs/learn-about-polychlorinated-biphenyls#:~ :text=PCBs%20are%20a%20group%20of,oil%20to%20a%20waxy%20solid).
In their verified answer, the Global Defendants asserted a number of counterclaims, chief among them for present purposes was their Sixth Counterclaim alleging breach of contract, also arising out of the hazardous paint-chip waste containing PCBs (Answer ¶¶ 46-50). Specifically, the Global Defendants assert that the PCBs in the interior of the Standpipe were "far in excess of the concentrations represented and disclosed by the Plaintiffs"; Global was unable to perform its obligations under the contract as a result of "the presence of hazardous materials"; and plaintiffs breached the contract when "they failed to issue change orders in accordance with the conditions subsequently discovered" (id.).
Following on the answer and counterclaims, plaintiffs filed an amended complaint dated May 10, 2021, joining its project engineer, defendant C.T. Male Associates Engineering, Surveying, Architecture, Landscape Architecture & Geology, P.C. ("C.T. Male") as a defendant for indemnification purposes (Amended Complaint ¶¶ 13, 160-180). According to the amended complaint, C.T. Male served as the project manager for the rehabilitation of the Standpipe, which included preparation of the bid and contract documents on behalf of plaintiffs (id. ¶¶ 82-100). The Town alleges that it relied on C.T. Male's expertise to prepare contract documents that provided proper notification to bidders of the potential for lead and/or PCB contaminants at the work site (id. ¶ 91).
The Global Defendants and plaintiffs have now each moved for summary judgment on their respective breach of contract claims, seeking - among other things - a judicial determination as to their rights and obligations in connection with certain contractual language set forth in plaintiffs' Project Manual and bid documents (collectively the "Contract Documents") relating to PCB remediation at the project site (Memorandum of Law in Support of Global Defendants' Motion for Summary Judgment Against Plaintiffs, dated January 12, 2023 ["Def MOL"] at 24-27; Memorandum of Law in Opposition and in Support of Plaintiffs' Cross-Motion for Summary Judgment, dated March 20 2023 ["Pl MOL"] at 4-13).
Copies of the Contract Documents have been provided by both the Global Defendants and plaintiffs in support of their respective motions (Affidavit of Larry Fotevski in Support of Global Defendants' Motion for Summary Judgment against Plaintiffs, sworn to on January 10, 2023 ["Fotevski Aff"], Exhibit A; Affidavit of John W. Frazer, Jr., P.E., sworn to on March 14, 2023 ["Frazer Aff"], Exhibit A).
Project Manual and Bid Documents
In March of 2017, the Town and District publicly issued their Contract Documents, which were prepared by C.T. Male on plaintiffs' behalf (Frazer Aff ¶ 13; Fotevski Aff ¶ 3). The relevant contractual language contained in these documents is summarized below.
Section 001116 of the Project Manual, entitled "Invitation to Bid" advised that it sought bids for "Newtonville 1.0 Million Gallon Standpipe Rehabilitation Town of Colonie" and stated that:
"The work includes, but is not limited to, sandblasting, lead based paint abatement and painting of the interior and exterior of the standpipe; pit welding, miscellaneous repairs/modifications; installation of new overflow pipe; installation of a tank mixer, installation of cell carrier brackets, installation of security fence with gates and site restoration" (Frazer Aff, Ex A; Fotevski Aff, Ex A).
The "Instruction to Bidders" set forth in Section 002113 of the bid documents, Article 4, ¶ 4.02 provided the following information on" Existing Site Conditions" (emphasis in original):
"A. Hazardous Environmental Conditions
1. The Supplementary Conditions identify:
a. Reports and drawings known to Owner relating to Hazardous Environmental conditions have been identified at or adjacent the Site.
b. Technical Data contained in such reports and drawings is provided by the Owner in Section 003132 - Available Information
2. Bidder is responsible for any interpretation or conclusion Bidder draws from any Technical Data or any other data, interpretations, opinions, or information contained in such reports or shown or indicated in such drawings.
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C. Adequacy of Data: Provisions concerning responsibilities for the adequacy of data furnished to prospective Bidders with respect to subsurface conditions, other physical conditions, and Underground Facilities, and possible changes in the Bidding Documents due to differing or unanticipated subsurface or physical conditions appear in Paragraphs 5.03, 5.04 and 5.05 of the General Conditions. Provisions concerning responsibilities for the adequacy of data furnished to prospective Bidders with respect to a Hazardous Environmental Condition at the Site, if any, and possible changes to the Contract Documents due to any Hazardous Environmental Condition uncovered or revealed at the Site which was not shown or indicted in the Drawings or Specifications or identified in the Contract Documents to be within the scope of the Work, appear in Paragraph 5.06 of the General conditions (Frazer Aff, Ex A; Fotevski Aff, Ex A [emphasis added]).
Paragraph 5.06, referenced in the final paragraph above, is set forth in the "Standard General Conditions of the Construction Contract" ("SGC") contained in Section 007200. That paragraph, which addresses "Hazardous Environmental Conditions at Site," provides:
"A. Reports and Drawings: The Supplementary Conditions identify:
1. Those reports and drawings known to Owner relating to Hazardous Environmental Conditions that have been identified at or adjacent to the Site; and
2. Technical Data contained in such reports and drawings
B. Reliance by Contractor on Technical Data Authorized: Contractor may rely upon the accuracy of the Technical Data expressly identified in the Supplementary Conditions with respect to such reports and drawings, but such reports and drawings are not Contract Documents. If no such express identification has been made, then Contractor may rely on the accuracy of the Technical Data (as defined in Article 1) contained in any geotechnical or environmental report prepared for the Project and made available to Contractor. Except for such reliance on Technical Data, Contractor may not rely upon or make any claim against Owner or Engineer, or any of their officers, directors, members, partners, employees, agents, consultants, or subcontractors with respect to:
1. the completeness of such reports and drawings for Contractor's purposes, including, but not limited to, any aspects of the means, methods, techniques, sequences and procedures of construction to be employed by Contractor and safety precautions and programs incident thereto; or
2. other data, interpretations, opinions and information contained in such reports or shown or indicated in such drawings; or
3. any Contractor interpretations of or conclusion drawn from any Technical Data or any such other data, interpretations, opinions or information.
C. Contractor shall not be responsible for removing or remediating any Hazardous Environmental Condition encountered, uncovered, or revealed at the Site unless such removal or remediation is expressly identified in the Contract Documents to be within the scope of the Work.
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E. if Contractor encounters, uncovers, or reveals a Hazardous Environmental Condition whose removal or remediation is not expressly identified in the Contract Documents as being within the scope of the Work, or if Contractor or anyone for whom Contractor is responsible creates a Hazardous Environmental Condition, then contractor shall immediately: (1) secure or otherwise isolate such condition; (2) stop all Work in connection with such condition and in any area affected thereby (except in an emergency as required by paragraph 7.15); and (3) notify Owner and Engineer (and promptly thereafter confirm such notice in writing). Owner shall promptly consult with Engineer concerning the necessity for Owner to retain a qualified expert to evaluate such condition or take corrective action, if any. Promptly after consulting with Engineer, Owner shall take such actions as are necessary to permit Owner to timely obtain required permits and provide Contractor the written notice required by Paragraph 5.06.F. If Contractor or anyone for who Contractor is responsible created the Hazardous Environmental Condition in question, the Owner may remove and remediate the Hazardous Environmental Condition, and impose a set-off against payments to account for the associated costs.
F. Contractor shall not resume Work in connection with such Hazardous Environmental Condition or in any affected area until after Owner has obtained any required permits related thereto, and delivered written notice to Contractor either (1) specifying that such condition and any affected area is or has been rendered safe for the resumption of Work, or (2) specifying any special conditions under which such Work may be resumed safely.
G If Owner and Contractor cannot agree as to entitlement to or on the amount or extent, if any, adjustment in Contract Price or Contract Times, or both, as a result of such Work stoppage or such special conditions under which Work is agreed to be resumed by Contractor, then within 30 days of Owner's written notice regarding the resumption of work, Contractor may submit a change proposal, or Owner may impose a set-off.
H. If after receipt of such written notice Contractor does not agree to resume such Work based on a reasonable belief it is unsafe, or does not agree to resume such Work under such special conditions, then Owner may order the portion of the Work that is in the area affected by such condition to be deleted from the Work, following the contractual change procedures in Article 11. Owner may have such deleted portion of the Work performed by Owner's own forces or others in accordance with Article 8.
I. To the fullest extent permitted by Laws and Regulations, Owner shall indemnify and hold harmless Contractor, Subcontractor, and Engineer, and the officers, directors, members, partners, employees, agents, consultants, and subcontractors of each and any of them from and against all claims, costs, losses, and damages (including but not limited to all fees and charges of engineers, architects, attorneys, and other professionals and all court or arbitration or other dispute resolution costs) arising out of or relating to a Hazardous Environmental Condition, provided that such Hazardous Environmental Condition (1) was not shown or indicated in the Drawings, Specifications, or other Contract Documents, identified as Technical Data entitled to limited reliance pursuant to Paragraph 5.06.B, or identified in the Contract Documents to be included within the scope of the Work, and (2) was not created by Contractor or by anyone for whom Contractor is responsible. Nothing in this Paragraph 5.06.H shall obligate Owner to indemnify any individual or entity from and against the consequences of that individual's or entity's own negligence" (Fotevski Aff, Ex A; Frazer Aff, Ex A [emphasis added]).
Section 003132, referred to as "Available Information," provides technical data for "Water Tank Surface Coating (Paint) Sampling Data" as follows:
"Lead and PCBs: One (1) paint chip sample was collected from the roof and two (2) paint chip samples were collected from the tank's exterior on opposite sides on December 13, 2016 and submitted for laboratory analysis to determine the lead and PCBs content of the exterior paint. A copy of the laboratory analysis report and chain of custody record are attached at the end of this section. Based on the laboratory analysis results summarized below, lead and low levels of PCBs are present in the coating system on the exterior of the water tank" (id. [emphasis added]).
As part of the bid process, Global provided the Town with a Health and Safety Plan, dated August 5, 2017 (Fotevski Aff, Ex E). At the outset of its Plan, Global states that it relied on the accuracy of the Technical Data provided in the bid documents indicating that the "Exterior" of the Standpipe contained low levels of lead and PCBs (id.).
This section further advises that PCBs were also detected in surface soil at the water tank. A Water Storage Tank Report, dated June 2015 and prepared by CorrTech, Inc. for the District, is also contained in section 003132. According to this report:
"The tank is a welded steel standpipe with a capacity of 1,000,000 gallons. Information on previous inspections was not available at the time of the inspections. Original construction was in 1955 and the last paint job was in 1991" (Fotevski Aff, Ex A; Frazer Aff Ex A).
The report does not address the presence of any lead or PCBs on the tank's paint coating system, but provides "an estimate of the cost to completely blast and coat the interior [$195,000] and exterior [$180,000] with current high performance coatings" (id.). In a subsequent report prepared by C.T. Male for the Town, dated January 9, 2017 - which was not made part of the Contract Documents - the Town was advised that the Standpipe was last painted in 1986 (not in 1991 as described in the 2015 report), but the majority of the interior of the tank at that time was left unpainted (Fotevski Aff ¶ 7, n 2). Global notes that this second report was not made known to the Global Defendants until it was turned over during the discovery process in this litigation (id.). It further argues that the fact that the interior had not been re-painted in 1986 would have tipped Global off that it "might contain elevated lead and some level of PCBs" - a particular problem because "[p]laintiffs had advised in the Contract Documents that the Water Tank had been repainted in 1991" (id.). The report itself notes that tests of the caulking and soil samples revealed the presence of PCBs, but below "NYSDEC guidelines for restricted residential and commercial use" (Affidavit of Larry Fotevski in Further Support of Global Defendants' Motion for Summary Judgment Against Plaintiffs an in Opposition to Plaintiffs' Motion for Summary Judgment, sworn to on March 29, 2023 ["Def Reply Aff"], Ex A).
The SGC further provides for a" Limitation of Damages" (emphasis in original) at section 18.04, which states that:
"A. With respect to any and all Change Proposals, Claims, disputes subject to final resolution, and other matters at issue, neither Owner nor Engineer, nor any of their officers, directors, members, partners, employees, agents, consultants, or subcontractors, shall be liable to Contractor for any claims, costs, losses, or damages sustained by Contractor on or in connection with any other project or anticipated project" (id.).
In Section 005200, entitled "Agreement Between Owner and Contractor for Construction Contract (Stipulated Price)" the Town (referred to as the "Owner"), and Global (i.e., the party referenced in the document as the "Contractor"), agreed to the following:
"1.01 Contractor shall complete all Work as specified or indicated in the Contract documents. The Work is generally described as follows:
The work includes, but is not limited to sandblasting, lead based paint abatement and painting of the interior and exterior of the standpipe; pit welding miscellaneous repairs/modifications; installations of new overflow pipe; installation of a tank mixer, installation of a security fence with gates and site restoration" (id.).
As an addendum to the Project Manual, section 28319 provides for the contractual requirements concerning "Lead Based Paint Remediation." Under ¶ 1.3, it sets forth the Description/Scope of Work" as follows:
"A. The work covered by these specifications shall consist of furnishing all labor, materials, tools, equipment containment system, and lead controls to abate lead-based paint (LBP) and PCB containing paint on all of the exterior surfaces of the 1.0 million gallon water tank and ancillary equipment, and to protect the public and the environment from exposure to lead and PCBs during the work.
B. The work shall also include personal air monitoring; area air monitoring and laboratory analysis for lead and PCBs during removal of the coating system on the 1.0 million gallon water tank and ancillary equipment; post abatement soil sampling and laboratory analysis for lead and PCBs; generated wastes' sampling and laboratory analyses; and transportation and proper disposal off-site of the LBP and PCBs waste and debris generated from removal of the coating system on the 1.0 million gallon water tank.
C. Paint containing levels of 0.47% to 16% lead is present in the coating system (paint) on the exterior of the 1.0 million gallon water tank. Total PCBs at levels of 5 mg/kg to 7.9 mg/kg are also present in the coating system (paint) on the exterior of the 1.0 million gallon water tank. Refer to Section 003132 for sampling data results.
D. The Contractor shall comply with the requirements of 29 CFR Part 1926.62 during the removal of the coating system (paint) on the exterior of the 1.0 million gallon water tank.
E. The Contractor shall take reasonable and appropriate precautions to protect the public from the inhalation and/or ingestion of dust, lead, PCBs or debris from the Contractor's operations, and is responsible for the clean-up of all spills of waste at no additional cost to the Town.
F. Lead and PCBs were tested for and detected in seven (7) shallow soil samples collected from around the perimeter of the 1.0 million gallon water [tank] to determine existing conditions. Refer to Section 003132 for the sampling data and results. The Contractor shall place reinforced polyethlene sheeting, canvas tarp, other sheeting or equivalent method approval by the Engineer on the ground surface around the perimeter of the 1.0 million gallon water tank where the Contractor will be working (including below the containment system) and secure the sheeting/tarps to prevent the existing lead and PCB containing soil from being tracked to other areas of the site and off-site during the tank rehabilitation work. The sheeting/tarps shall be disposed of with the lead and PCB contaminated debris per Section 3.5.C. of this specification section" (Fotevski Aff, Ex A; Frazer Aff, Ex A [emphasis added]).
This federal regulation "applies to all construction work where an employee may be occupationally exposed to lead" (20 CFR § 1926.62).
The "Work Procedures" to be performed in accordance with section 28319, under Part 3, ¶ 3.1.A., further provides that "LBP and PCB waste and debris, and associated waste shall be disposed of in compliance with Federal, state, and local regulations" (id.). With regard to "Clean Up and Disposal," Part 3.5 provides as follows:
"A. Clean-up
1. Surfaces in the lead control area containment system during lead abatement of coating systems containing lead-based paint (LBP), on the exterior of the 1.0 million gallon water tank, shall be maintained free of accumulations of paint chips, LBP/PCB debris, blasting debris and dust. Dry sweep or compressed air shall not be used for clean-up, unless it is conducted within a containment system that is designed with a ventilation system capable of collecting the airborne dust and debris created by sweeping and blowing with compressed air. At the end of each shift, the area shall be cleaned of visible lead/PCB paint contamination...
2....
a. LBP/PCB-contaminated debris from the exterior of the 1.0 million gallon water tank shall be containerized in accordance with Paragraph 3.5.C.1" (Fotevski Aff, Ex
A; Frazer Aff, Ex A [emphasis added]).
Under this paragraph, among other things, "lead/PCBs-contaminated waste and debris shall be containerized in DOT approved containers (i.e. 55 gallon drums, roll-off, etc)" (Fotevski Aff, Ex A; Frazer Aff, Ex A).
The final contract "Summary," set forth in Section 011000, under ¶ 1.4, entitled "Work Covered by Contract Documents," states that the "Work of Project" is defined by the Contract Documents as follows:
"1. The work includes, but is not limited to, sandblasting, lead based paint abatement and painting of the interior and exterior of the standpipe, pit welding, miscellaneous repairs/modifications; installation of a new overflow pipe; installation of a tank mixer, installation of cell carrier brackets, removal of abandoned cell carrier equipment, such as electrical equipment, conduits and a staff gage, installation of a security fence with gates and site restoration (id. [emphasis added]).
The History of the Present Dispute
The factual narratives before me are provided by the plaintiffs via the affidavit of District Superintendent John Frazer, Jr., and by the Global Defendants through the affidavit of Golbal President Larry Fotevski, and the exhibits annexed to each (Frazer Aff ¶ 2; Fotevski Aff ¶ 2). These affidavits reveal no dispute as to the following chronology, unless otherwise noted:
After the issuance of the Project Manual and the bidding documents in March 2017, plaintiffs received six bids, including that of Global (Frazer Aff ¶ 27; Fotevski Aff ¶18). On April 27, 2017, the Town awarded the contract to Global (id.). Global commenced blasting the interior of the Standpipe on November 29, 2017 and finished re-painting the interior on or about December 14, 2017 (Fotevski Aff ¶ 20; Frazer ¶¶ 34, 40). In blasting the interior, instead of using an expendable abrasive to blast away the paint, Global used a recyclable steel grit and a recycler device to recover the steel grit from the resulting paint chips (Fontevski ¶ 19; Frazer Aff ¶ 45). The recyclable steel grit was also used to blast the exterior of the tank, which occurred between May 1, 2018 and May 9, 2018 (Frazer Aff ¶ 40; Fontevski Aff ¶¶ 20-21).
On or about May 11, 2018, paint chip samples from the exterior and interior chip waste were sent to Schneider Laboratories for testing for hazardous metals (Frazer Aff, Ex E). On May 21, Schneider Laboratories provided the results of its testing to Global's environmental consultant, MB Environmental Consulting Inc. ("MB"), which revealed that both the exterior and interior chip waste were negative for any hazardous levels of metals (Fontevski Aff ¶ 21, Ex G; Frazer Aff, Ex E).
In May 2018, MB also sent interior and exterior paint chip samples to Schneider Laboratories for PCB testing (Fontevski Aff ¶ 22, Ex H; Frazer Aff, Ex F). On June 4, 2018, the Lab advised MB that the sample collected from the interior chip waste contained a high level of PCBs such that the interior chip waste qualified under federal law as being hazardous waste (Fontevski Aff ¶ 22, Ex H; Frazer Aff ¶ 42, Ex F). On June 15, MB informed Global of the PCB test results (Fontevski Aff ¶¶ 24; Frazer Aff ¶ 43). According to Global, it then stopped the transfer of the chip waste to a landfill in New Jersey, and had the transporting company return the waste to the project site (Fontevski Aff ¶ 25). At this same time, having learned that its blasting equipment had apparently been exposed to PCBs while used in the interior of the Standpipe, Global quarantined the equipment (Fotevksi Aff ¶ 23; Frazer Aff ¶ 54). On June 16, Global notified the Town that the lab tests revealed that the chip waste from the interior of the Standpipe contained a hazardous level of PCBs (Frazer Aff ¶ 47, Ex F; Fotevski Aff ¶ 24, Ex H).
Upon being notified of the high level of PCBs in the interior chip waste, C.T. Male sent an e-mail on behalf of the Town to Global on June 18, 2018, directing it to secure the waste due to it qualifying as a hazardous material (Frazer Aff ¶ 49, Ex H; Foteski Aff ¶ 25, Ex J). In this same communication, the Town took the position that disposal of the chip waste and any necessary environmental site remediation was the responsibility of Global (id.). The Global Defendants, however, disagreed, and asserted by letter of counsel that the PCBs in the chip waste from the interior of the Standpipe constituted a newly-discovered hazardous environmental condition that was not expressly identified in the contract documents as being within the scope of the work and, therefore, the Town was responsible for remediation (Fotevski Aff, Ex L; see also id. ¶¶ 26-27).
As a result of the parties' dispute as to whether PCBs found in the interior waste constituted a previously unknown hazardous environmental condition, and whether the plaintiffs or Global should bear the cost of project site and equipment remediation, Global ceased working on the project (Fotevski Aff ¶¶ 35-38; Frazer Aff ¶¶ 58, 74). There followed an extended period in which plaintiffs asserted that Global had the responsibility to address the interior PCB contamination, and Global insisted that this was the Town's responsibility (see Fotevski Aff ¶¶ 37-48 & Exs T-Z, AA; Frazer Aff ¶¶ 47-74).
Ultimately, the Town wrote Global a letter dated July 24, 2018 stating that (1) Global could not abandon the site because of the presence of hazardous waste, as it was aware from the contract documents that such waste would be present, and under the contract, the contractor was required to continue to work during a dispute between the parties; (2) Global failed to segregate interior and exterior waste, and did not adequately collect and analyze such waste or implement decontamination procedures; (3) there was work Global had not yet completed, including installing a security fence and tank mixer, and "dispos[ing] of hazardous waste"; and (4) Global had not timely providing soil samples results to C.T. Male (see Fotevski Aff ¶ 48 & Ex AA; Frazer Aff ¶ 59). The letter cautioned that "Global has seven (7) days from receipt of this letter to correct its continued failure to perform," and "[f]ailure to do so, will result in contract termination and the Town will be entitled to enforce all rights available under Global's performance bond and pursue any and all legal remedies and damages available under New York State Law and the subject Contract" (Fotevski Aff, Ex AA).
Plaintiffs state that the letter was mailed on July 25 (Frazer Aff ¶ 59). Frazer refers to the letter as having been sent on September 24, but given the date on the letter and on the response, that appears to be a mistake (see Fotevski Aff ¶ 48).
For its part, Global responded by letter on July 30, stating that the discovery of PCBs and lead on the interior of the tank "presents a serious threat to health and safety" of both Global employees and "to the environment" (Fotevski Aff ¶ 38, Ex U). It said it had not been notified of the presence of such contaminants in the tank interior, and its equipment must be cleaned before it could continue (id., Ex U). It denied having abandoned the contract due to a dispute, but rather asserted that it was awaiting guidance from the Town as to "proper contamination procedures" (id.). Global stated that it had completed the tank mixer and provided information on soil samples, and the installation of the security fence "must await removal of the contaminated soil" and testing verifying the safety of the site (id.).
Further correspondence continued in a similar vein. Plaintiffs assert that they tested the equipment left by Global on the worksite and blasting grit, which determined that it was non-hazardous (Frazer Aff ¶¶ 69-70). Global states that while C.T Male performed wipe samples of Global's equipment and announced it was clean, it "never provided Global with the applicable cleaning criteria or a work plan approved by USEPA (which Global knew was required by USEPA)" and thus it declined to rely on C.T. Male's tests or continue its work (Fotevski Aff ¶ 61).
In addition to the arguments regarding responsibility for addressing the interior PCB contamination, the parties also debated whether Global violated the contract, as well as state or federal law, by the manner in which it brought certain waste off site. In this regard, Fotevski asserts that Global's plan to use recyclable steel grit on another project was disclosed to the Town; Town consultant C.T. Male was on site and aware of Global's activities in this regard; exterior paint chip waste was transported off site with C.T. Male's approval; and recyclable steel grit was removed from the site with C.T. Male's knowledge (Fotevski Aff ¶¶ 19-20, 23). He further states that when PCBs were detected in interior pain chip waste, Global notified the Town immediately, and took the position (based on its reading of the contract as discussed above), that it was not responsible for disposal of this waste (id. ¶¶ 24-26).
In plaintiffs' submission, Frazer avers that Global violated contractual provisions in failing to label waste property (Frazer Aff ¶ 38), and in combining interior and exterior waste in one container for shipping off site (id. ¶ 43). He also contends that Global did not inform the Town that it was moving the waste until September 2018, that it never represented to the Town or District that it intended to re-use blasting material from the site on other projects (id. ¶¶ 64-65), and that such re-use would violate a contractual provision requiring specific authorization before an abrasive used in blast cleaning operations may be re-used (id.).
Finally, Frazer also detailed what he characterized as the failure of Global to follow certain protocols regarding the treatment of potentially hazardous materials (e.g. id. ¶ 38 ["Global continuously failed to label the waste generated from blasting operations"]), and failed to test its waste in a timely fashion (id. ¶ 41). He also questions Global's claim that its equipment was contaminated by the PCBs, stating that the test results of the soil was within regulatory limits (id. ¶ 60), the blasting grit came back "non-hazardous" and the Global equipment left at the project tested "non-detect for PCBs and lead" (id. ¶ 70).
The Parties' Arguments
Global takes the position that the Technical Data set forth in the Contract Documents identified lead and PCBs, at low levels, only on the "exterior" of the Standpipe, and the contract language itself is replete with references to PCBs being only on the "exterior," with no mention anywhere in the Documents of PCBs being present on the "interior" of the water tank (Def MOL at 25-26). Since PCBs were not expressly identified as being on the "interior," Global asserts that the discovery of such constitutes a "Hazardous Environmental Condition" under SGC Article 5, ¶ 5.06, that was not "expressly identified in the Contract Documents to be within the scope of the Work" (id. at 24-25, citing ¶ 5.06).
Accordingly, Global takes the position that the Town breached the parties' contract "by failing to indemnify and hold harmless Global for its claims, costs, losses, and damages arising out of or relating to a Hazardous Environmental Condition not expressly identified in the scope of the Work in the Contract Documents" (Def MOL at 24). In support of this contention, Global cited the language from ¶ 5.06(I) set forth supra pp 6-7 that the "Owner shall indemnify and hold harmless [Global] from and against all claims, costs, losses... arising out of or relating to a Hazardous Environmental Condition, provided that such Hazardous Environmental Condition (1) was not shown or indicated in the Drawings, Specifications, or other contract Documents, identified as Technical Data... or identified in the Contract Documents to be included within the scope of the Work, and (2) was not created by Contractor or by anyone for whom [Global] or by anyone for whom [Global] is responsible..." (SGC, Article 5, ¶ 5.06[I]).
In contrast, plaintiffs contend in their opposition filings that the Contract Documents made clear the presence of PCBs, and the inclusion of PCB abatement within the scope of the work to be performed by Global, on both the exterior and the interior of the Standpipe (Pl MOL at 2). In his affidavit, Frazer points to the following to support this contention:
• Evidence of lead and PCBs in the Standpipe's coating system was disclosed to prospective bidders (Affidavit of John W. Frazer, Jr., dated March 14, 2023 ["Frazer Aff"] ¶ 9).
• Given the age of the Standpipe and "technical data provided," it was not a "reasonable assumption" that there were no PCBs or lead on the Standpipe's interior (id. ¶ 10). This was supported by the presence of lead and PCBs in paint chip samples, which would not have been present if the tank had been "completely blasted" in 1991 (id. ¶ 11).
• Global had the ability to access the site to conduct additional examinations or tests, and was advised in advance that its submission of the bid reflected an agreement that no such tests were needed (id. ¶¶ 18-19).
• In preconstruction meetings "there was no indication that Global would not handle the interior blasting of the Standpipe in the same manner as it would handle the exterior blasting" (id. ¶ 31).
Further, according to plaintiffs, because the Contract Documents revealed that the Standpipe was built in 1955, the Global Defendants should have known that all of the paint on the water tank - both exterior and interior - was likely contaminated with lead and PCBs (Pl MOL at 4). In short, it is plaintiff's position that "it was expected that a qualified Bidder understood that given the findings of the lead and PCBs on the interior coating of the tank, that all blasting would be considered abatement work which could result in contamination of equipment" (Frazer Aff ¶ 16 [emphasis in original). Its explains this position as follows:
"Nowhere in the Contract Documents did the Plaintiffs represent that the previous coating of the Standpipe - either on the interior or the exterior - had been removed. Rather, the Additional Information set forth in Section 003132 of the Contract Documents disclosed that paint chip samples were taken from the exterior of the Standpipe and soil surrounding the Standpipe in 2016, with the laboratory analysis of that data revealing both PCBs and lead in the exterior coating system and surrounding soil. The Global Defendants were expected to be experienced in water tank rehabilitation projects. If the Standpipe had been blasted down to bare steel in 1991, there would not have been levels of PCBs or LBP in the exterior coating system. The Global Defendants knew of the presence of PCBs and LBP before the project even started. This information was included in the Technical Data" (Pl MOL at 5 [emphasis in original]).
The Town argues that the Contract Documents "expressly contemplated" that the Standpipe's "interior" likely contained PCBs given that the Contract Documents, at sections 1116 and 5200, reference "remediation" efforts that will occur in both the "interior" and "exterior" of the Standpipe (Reply Attorney Affirmation of Crystal R. Peck, Esq., dated April 6, 2023 ["Pl Reply"] ¶ 5). To the extent the Contract Documents omitted any information concerning whether PCBs were inside the tank, plaintiffs contend that this should have caused Global to realize that it needed more information and ask for additional PCB testing (id. ¶ 11). The reason, according to Frazer, that the Town itself never made any representation regarding the level of PCBs or lead in the pipe interior because samples could not be taken from it (Frazer Aff ¶ 15).
In addition, the Town asserts that in the event that it is found liable for breach of contract, SGC Article 18, ¶ 18.04, concerning" Limitation of Damages," bars the Global Defendants from seeking any damages for business losses stemming from PCB contamination to equipment used on the Project site (id. at 8). As previously noted (supra p 8), this provision states that:
"With respect to any and all Change Proposals, Claims, disputes subject to final resolution, and other matters at issue, neither Owner nor Engineer, nor any of their officers, directors, members, partners, employees, agents, consultants, or subcontractors, shall be liable to Contractor for any claims, costs, losses, or damages sustained by Contractor on or in connection with any other project or anticipated project" (id. [emphasis added]).
Moreover, the Town maintains that any environmental damages or other damages caused by PCB contamination that may be claimed by the Global Defendants are subject to offset due to the Global Defendants being "Co-Generators" of such contamination as a result of Global's alleged violations of federal and state environmental laws regarding the generation of hazardous waste, including but not limited to decontamination procedures (Pl MOL at 11-12).
In response to the Town's cross-motion, and in further support of Global's own motion, Defendants reassert that the Contract Documents make clear that Global was responsible to remediate only the Hazardous Environmental Conditions "expressly identified" within the scope of work in the bid documents (Def Reply Aff ¶ 4). They argue that this leaves the Town responsible for any toxic environmental issues that were not expressly set forth in the Contract Documents, which includes indemnifying the Global Defendants "to the fullest extent permitted by Law and Regulations" (id.).
According to Global, nowhere in the Contract Documents is there any express notice that PCB contamination was present in the "interior" of the Standpipe - a condition that it characterizes as materially differed from what was actually represented in the Contract Documents (id. ¶ ¶ 5-6). Global further argues that the absence of such notice is tacitly acknowledged by the Town in its resort to an argument that Global should have surmised that PCBs were present in the interior of the Standpipe (id. ¶ 7). Global contends that the absence of any express identification in the Contract Documents that PCBs were present in the "interior" of the Standpipe, constituted a failure disclose this condition as part of the scope of work and, therefore, the Town must provide the requisite indemnification referenced in the parties' agreement (id. ¶ 28).
While Global acknowledges that the Contract Documents contain a limitation of damages clause under SGC Article 18, ¶ 18.04, barring damages for losses sustained in connection with other projects or anticipated projects, it argues that the indemnification provided under SGC Article 5, ¶ 5.06(I), when read together with the damages limitation, provides for indemnification that includes future business losses to the extent such losses arise out of the undisclosed Hazardous Environmental Condition (id. ¶¶ 33-34). The key language on which it relies, cited supra pp 6-7, provides that "[t]o the fullest extent permitted by Laws and Regulations, Owner shall indemnify and hold harmless Contractor,... against all claims, costs, losses, and damages... arising out of or relating to a Hazardous Environmental Condition, provided that such Hazardous Environmental Condition (1) was not shown or indicated in the Drawings, Specifications, or other Contract Documents, identified as Technical Data entitled to limited reliance pursuant to Paragraph 5.06.B, or identified in the Contract Documents to be included within the scope of the Work, and (2) was not created by Contractor or by anyone for whom Contractor is responsible."
Further, Global argues that the limitation of damages clause should be found inoperable against Global on the ground that plaintiffs intentionally, with reckless disregard for the rights of others, withheld information concerning the likely presence of PCBs in the "interior" of the Standpipe - specifically the January 2017 report prepared by C.T. Male (Def Reply Aff ¶¶ 38-39, Ex A; see supra p 7-8).
Discussion
To obtain summary judgment, a movant must establish its position "sufficiently to warrant the court as a matter of law in directing judgment" in its favor (Friends of Animals, Inc. v Associated Fur Mfrs., 46 N.Y.2d 1065, 1067 [1979], quoting CPLR 3212[b]). The proponent of a summary judgment motion must initially make a prima facie showing of entitlement to judgment as a matter of law, by tendering sufficient evidence to eliminate any genuine material issues of fact from the case (see Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986]). The failure to make such a showing mandates denial of the motion, regardless of the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 [1985]). If a prima facie showing is made, the burden shifts to the party opposing the motion for summary judgment to come forward with evidentiary proof in admissible form to establish the existence of material issues of fact which require a trial (see Zuckerman v City of New York, 49 N.Y.2d 557, 562 [1980]). Further, if a motion for summary judgment is denied or is granted in part, the court may, in its discretion "ascertain what facts are not in dispute or are incontrovertible" and "make an order specifying such facts and they shall be deemed established for all purposes in the action" (CPLR 3212[g]).
Before I can apply these standards, I must first resolve the parties' central dispute as to the proper interpretation of the Contract Documents concerning disclosure by the Town of any PCB contamination on the interior of the Standpipe, and the obligation of the contractor to remediate it. To the extent I find the contract to be unambiguous in this regard, the dispute may be decided by the court as a matter of law (see 301 East 60th Street LLC v Competitive Solutions LLC, ___ A.D.3d ___, 190 N.Y.S.3d 327, 332 [1st Dept May 30, 2023] [court contract interpretation proper on summary judgment]; see also Ficel Transport, Inc. v State, 209 A.D.3d 1153, 1155 [3d Dept 2022] [construction of unambiguous contract is a "matter of law"]).
Where the parties to a contract have "set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms" (IKB International, S.A. v Wells Fargo Bank, N.A., ___ N.Y.3d ___, 2023 WL 4002324, *3 [June 15, 2023]). In the absence of any ambiguity in the parties' agreement, their intent "must be found within the four corners of the contract, giving practical interpretation to the language employed and reading the contract as a whole... and every part will be interpreted with reference to the whole; and if possible it will be so interpreted as to give effect to its general purpose" (Ficel Transport, Inc., 209 A.D.3d at 1155).
Moreover, where the prospect of a contractual ambiguity is raised, "the court should examine the entire contract and consider the relation of the parties and the circumstances under which it was executed" (White Knight Constr. Contractors, LLC v Haugh, 216 A.D.3d 1345 [3d Dept 2023]). In doing so, particular words "should be considered, not as if isolated from the context, but in light of the obligation as a whole and the intention of the parties as manifested thereby" (id.).
Applying these principles, I find that the clear and unambiguous language of the contract specifically restricts its disclosure regarding PCBs, and the contractor's obligations in regard to remediating any PCB contamination, to the exterior of the Standpipe, and neither discloses such contamination nor imposes any duty on Global to address it as concerns the interior. The analysis underlying these conclusions is set forth below.
Contract Documents Legal Interpretation and Meaning
The Town's Project Manual and bidding documents contain numerous disclosures relating to testing for PCBs performed in relation to the Standpipe. In each one, the disclosure is made only in regard to the exterior.
Section 003132 sets forth lab results for paint chips taken from the "exterior" of the Standpipe which revealed that "lead and low levels of PCBs are present in the coating system on the exterior of the water tank" (Frazer Aff, Ex A; Fotevski Aff, Ex A [emphasis added]). This contractual provision is supported by the Technical Data annexed to this section, on which Global was permitted to rely pursuant to SGC Section 07200 at Article 5, ¶ 5.06(B), and which indicated that the paint on the "exterior" of the tank contained lead and low levels of PCBs (id.).
Notably, there is no mention in this section - or any where else in the Contract Documents - as to the presence of PCBs in the "interior" of the Standpipe. While plaintiffs rely on the fact that the "Work" that was to be performed on the Standpipe, as described in the Project Manual at section 01116, and again in Section 005200, was to include "sandblasting, lead based paint abatement and painting of the interior and exterior" (see Pl MOL at 4) - these sections make no mention of PCBs (see Frazer Aff, Ex A; Fotevski Aff, Ex A).
The lack of any duty placed on the contractor for remediation of PCBs on the "interior" of the water-tank is re-emphasized in section 28319, ¶ 1.3(A), which specifically addresses "Lead Based Paint Remediation" (id.). According to the plain language of this contractual provision, Global was to furnish all necessary "labor, materials, tools, equipment containment system, and lead controls to abate lead-based paint (LBP) and PCB containing paint on all of the exterior surfaces of the 1.0 million gallon water tank" (id. [emphasis added]). The fact that this duty is imposed solely for the "exterior" surfaces of the Standpipe makes clear that all other references to lead and PCB remediation in this section - and elsewhere in the Contract Documents - concern the abatement of these contaminants from only the "exterior" of the tank. This point is re-emphasized at ¶ 1.3(C), which again states that "lead is present in the coating system (paint) on the exterior... [and] [t]otal PCBs at levels of 5 mg/kg to 7.9 mg/kg are also present in the coating system (paint) on the exterior of the 1.0 million gallon water tank" (id. [emphasis added]).
The "Work Procedures" and "Cleanup and Disposal" provided for in Section 28310, ¶ 3.1(A) and that address LBP and PCB waste and debris, also refer to such waste as is generated by the abatement of lead-based paint and PCB-containing paint on the "exterior" surfaces of the Standpipe (id.). And ¶ 3.5(A)(1) and (2) of Section 28319 - which provide for "Cleanup and Disposal" of "LBP/PCB debris" - further clarifies that such contaminated waste would come from abatement on the" exterior of the 1.0 million gallon water tank" (Frazer Aff, Ex A; Fotevski Aff, Ex A [emphasis added).
Given the specific and repeated reference to the exterior of the Standpipe, it is hard to understand why the Town would have used such language if it intended the disclosure and scope of work to cover the interior as well.
Plaintiffs' various assertions to the contrary are unconvincing (see Uribe v Merchants Bank of New York, 91 N.Y.2d 336, 341[1998] [declining to engage in a "strained reading to find an ambiguity which otherwise might not be thought to exist"]). They argue that such references to the "exterior" of the Standpipe do not expressly exclude the possibility of PCBs also being in the "interior" of the water-tank, and that an experienced contractor like Global should have surmised from the Contract Documents that PCBs were also present inside the water tower. But a basic cannon of contract construction provides that the inclusion of one specific contractual term should be read to exclude any alternative to such term not set forth in that term (see Uribe, 91 N.Y.2d at 340). Thus, when the plain language of the Contract Documents repeatedly and expressly identifies the location of PCBs as the "exterior" of the Standpipe, the documents cannot be read as a disclosure that PCBs were also present in the water tower's "interior"- and no alternative contractual interpretation makes sense (id.; see also Frank v Metalico Rochester, Inc., 174 A.D.3d 1407, 1410 [4th Dept 2019] [contract integration clause in 2009 employment agreement stating that it supersedes 2004 employment agreement, without including any language concerning 2004 non-competition agreement, did not require a determination that 2004 non-competition agreement was to also be superseded, and summary judgment was granted for defendant on contrary construction]; RM 14 FK Corp. v Bank One Trust Co., N.A., 37 A.D.3d 272, 274 [1st Dept 2007] ["there is no basis to interpret an agreement as impliedly stating something which the parties have neglected to specifically include"] [citations omitted]).
As to the claims in the Frazer affidavit that Global, as an experienced contractor, should have known that PCBs would be on the interior of the Standpipe, and that a contrary understanding was "not a reasonable assumption" (Frazer Aff ¶ 10), there is a contradiction at the heart of this contention. Frazer asserts that there was "no data provided or representation made [in the contract documents] regarding the level of lead and PCBs in the interior or the tank" because "samples could not be taken from the interior" (Frazer Aff ¶ 15). But at the same time, he argues that the information provided was enough for Global to have intuited the presence of these hazardous materials. In short, he says the Town did not have enough information to disclose the presence of interior PCBs, but Global had enough information to understand that they were there. Plaintiffs cannot have it both ways. If any reasonable actor should have known of this hazard, then the Town (which had the same information) had a basis to disclose it to potential contractors, or at least to make clear that abatement of PCBs on the "interior" of the Standpipe was included in the scope of work. And yet, it did no such thing, explicitly limiting the contractor's obligation to the exterior.
In any event, plaintiffs' argument runs headlong into the contractual language providing that the contractor "shall not be responsible for removing or remediating any Hazardous Environmental Condition encountered, uncovered, or revealed at the Site unless such removal or remediation is expressly identified in the Contract Documents to be within the scope of the Work" (SCG, Section 007200, ¶ 5.06[C]). This limitation to hazards specifically identified leaves no room for the imposition of an obligation for contamination that a contractor "should have known" about, even if was not expressly disclosed. Yet the imposition of such a duty on Global on this basis is the very premise of plaintiff's argument.
Plaintiffs make various attempts to demonstrate the validity of its interpretation via defendants' conduct. Since I find that the contract is not ambiguous, I cannot consider these efforts to demonstrate its construction by pointing to the parties' actions regarding the agreement; at best, this is parol evidence, which can only be considered if the Court "finds an ambiguity in the contract" (Schron v Troutman Sanders LLP, 20 N.Y.3d 430, 436 [2013]). In any event, such evidence generally concerns instances of inaction on Global's part, which shows nothing about the parties' understanding or intent vis-a-vis the Agreement (e.g. Frazer Aff ¶¶ 18-19 [ Global had the ability to access the site to conduct additional examinations or tests, and was advised in advance that its submission of the bid reflected an agreement that no such tests were needed]; id. ¶ 31 [in pre-construction meetings "there was no indication that Global would not handle the interior blasting of the Standpipe in the same manner as it would handle the exterior blasting"]). Rather, the circumstances described are as consistent with an understanding of the contract that excluded removal of PCB contamination from the interior of the Standpipe from the contractor's responsibilities as a construction that included it.
Finally, to the extent I could find any ambiguity in the Contract Documents on this issue, "it is to be construed against... the drafter of the agreement" (Total Environmental Restoration Solutions, Inc., v Contract Dispute Resolution, 215 A.D.3d 466, 466 [1st Dept 2023]; see also Lai Ling Cheng v Modanksy Leasing Co., Inc., 73 N.Y.2d 454, 460 [1989] [ambiguous contract terms "must be strictly construed again the drafter"]; Dube v Horowitz, 258 A.D.2d 724, 725 [3d Dept 1999] [same]). Given that the Town wrote the contract documents that repeatedly referred to PCBs in the exterior but not the interior, it is responsible for the most obvious reading of that language.
The question that remains is what the implications of the above interpretation of the contract are for the cross motions for summary judgment. The answer is that, notwithstanding the contract's clear language, there are numerous disputed questions of fact that must be resolved before the causes of action for contractual breach can be decided as a matter of law.
Plaintiffs' two causes of action for breach of contract are premised on (1) Global's transporting of waste off the project site (First Cause of Action, Complaint ¶¶ 81-99); and (2) Global's refusal to complete the work it was obligated to perform under the contract (Second Cause of Action, Complaint ¶ 100-110), including by refusing to dispose of waste from the site "generated from a lead and PCB abatement project" (id. ¶¶ 112-113, 115).
The First Cause of Action does not turn on the construction of the parties' responsibilities for addressing the interior PCB contamination, but on the removal of waste from the site. As the summary of the parties' supporting affidavits above makes clear, the parties present contradictory evidence in this regard as to the extent to which the Town and its agents were aware of an approved Global's conduct; whether Global was compliant with the contract and law in the way it carried out such disposal; and whether plaintiffs suffered any damages as a result (see supra p 14). Such disputes preclude summary judgment on the First Cause of Action. As to the Second, plaintiffs contend that testing showed any PCB contamination of Global's equipment was not hazardous and within legal limits, and should not have prevented the Global Defendants from completing the work, while Global presents evidence to the contrary (see supra pp 13-14). There is no expert testimony or other proof in the record from which the Court can gauge the veracity of these claims. The parties' submissions also present factual disputes as to what work was left to be completed (see id.). Further, Global argues that once Colonie took the position that it was not responsible for addressing the interior PCB contamination, it was already in breach (see Def MOL at 26), but the actual correspondence reveals that after the Town adopted this position, the parties engaged in extended discussions about how next to proceed, and as to whether the remaining aspects of the contract could be completed and what mechanisms should be used to resolve their dispute. Thus, there are disputed questions of material fact as to the impact of the discovery of interior PCB contamination, and the justification for and effect of Global's actions in not proceeding with its work.
In sum, plaintiffs' allegations that the Global Defendants wrongly refused to complete the remaining work, and that they failed to follow decontamination procedures, properly test waste, and comply with federal and state hazardous waste regulations, cannot be resolved on this record, and remain subjects for trial (see generally Friends of Animals, Inc. v Associated Fur Mfrs., 46 N.Y.2d 1065, 1067 [1979] [on motion for summary judgment, movant must establish its position sufficiently to warrant the court as a matter of law in directing judgment in its favor]; Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986] [proponent of summary judgment motion must make a prima facie showing of entitlement to judgment by tendering sufficient evidence to eliminate any genuine material issues of fact]).
Defendants' counterclaim for breach of contract is based on the allegation that Global was ready to perform under the contract, did so until it was "prevented from doing so by the presence of hazardous materials," and plaintiffs' breached the contract when they "failed to issue change orders in accordance with the conditions subsequently discovered"(Global Answer ¶¶ 48-49). For the reasons stated above, Global's ability to perform in the face of the contamination is a subject of factual disputes between the parties, and cannot be resolved on summary judgment. Thus, defendants have not met their burden on this cause of action.
Finally, I turn to plaintiffs' argument that the Global Defendants are not entitled to recover business losses in this action (e.g. Pl MOL at 8-9).
Because the Contract Documents expressly state that PCBs are located only on the exterior surfaces of the Standpipe, it naturally follows that, as provided for under SGC Article 5, ¶ 5.06(C), (E) and (I), PCBs that were "encountered, uncovered or revealed" in the Standpipe's interior, were a "Hazardous Environmental Condition" that "(1) was not shown or indicated in the Drawings, Specifications or other Contract Documents, identified as Technical Data entitled to limited reliance pursuant to Paragraph 5.06[B], or identified in the Contract Documents to be included within the scope of the Work, and (2) was not created by [Global] or by anyone for whom [Global] is responsible" (Frazer Aff, Ex A; Fotevski Aff, Ex A). Therefore, in accordance with ¶ 5.06(I), "[t]o the fullest extent permitted by Laws and Regulations, [the Town] shall indemnify and hold harmless [Global]... against all claims, costs, losses, and damages (including but not limited to all fees and charges of engineers, architects, attorneys, and other professionals and all court or arbitration of other dispute resolution costs) arising out of or relating to a Hazardous Environmental Condition" (id.).
The application of this clause to the present dispute, however, requires that I reconcile this provision with the plain language of the "Limitation of Damages" clause found at SGC Article 18, ¶ 18.04 (A). That clause expressly exempts plaintiffs from liability for any "claims, costs, losses, or damages sustained by [Global] on or in conjunction with any other project or anticipated project" (Frazer Aff, Ex A; Fotevski Aff, Ex A). The Global Defendants contend that this limitation does not apply here, since the indemnification provision "permits broader damages in specific situations," such as where there are undisclosed environmental hazards (Reply Aff ¶ 33). This argument is premised on the breadth of the indemnification language (i.e., "to the fullest extent permitted by law," "all claims"), which purportedly contradicts the damages limitation language in this context. But I cannot find that such broad, general language trumps a specific exclusion of damages (see Muzak Corp. v Hotel Taft Corp., 1 N.Y.2d 42, 46 [1956] [to the extent there is contradiction between general and specific provision of contract, "the specific provision controls"]; Green Harbour Homeowners Ass'n, Inc. v G.H. Dev. & Constr., Inc., 14 A.D.3d 963, [3d Dept 2005] ["Where a contract... employs contradictory language, specific provisions control over general provisions"]). If the parties had wanted such a carve out from the damages limitation, they could have said so specifically, rather than implying it through broad, generalized language.
This conclusion is particularly warranted in light of the rule that an indemnification provision "must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed," and thus a promise to indemnify "should not be found unless it can be clearly implied from the language and purpose of the entire agreement and the surrounding facts and circumstances" (Hooper Associates, Ltd. V AGS Computers, Inc., 74 N.Y.2d 487 [1989]). There is no such clear implication here that the Town agreed to take on a boundless obligation to compensate Global for potential losses it might face during its work on any and all other projects on which it was engaged, given the specific contractual limitation on such, and the failure of the parties' agreement to otherwise specifically address the matter.
Global, however, makes a second argument against dismissing its claim for other business losses here: that there are questions of fact as to whether plaintiffs engaged in acts that were "willful or grossly negligent," and a restriction of recovery for consequential damages is unenforceable in the face of such conduct (see Banc of Am. Sec. LLC v Solow Bldg. Co. II. LLC, 47 A.D.3d 239, 244 [1st Dept 2007]).
The question of whether a party engaged in reckless, willful or bad faith conduct is generally an issue properly addressed at trial (see Pernet v Peabody Engineering Corp., 20 A.D.2d 781 [1st Dept 1964] [in considering whether the "conduct of the defendant [was] in such reckless or neglectful disregard of plaintiff's contract rights as to justify an inference of bad faith" the question is "[g]enerally... one of fact"]; see also Murray Bresky Consultants, Ltd. v New York Compensation's Manager's Inc., 106 A.D.3d 1255, 1260-1261 [3d Dept 2013] [plaintiff's allegations of willful misconduct, bad faith or gross negligence raised material questions of fact as to whether defendant's conduct qualified as such]; Sing v PGA Tour, Inc., 162 A.D.3d 556, 557 [1st Dept 2018] [whether party acted in bad faith in violation of implied contractual covenant of good faith and fair dealing raises questions of fact warranting denial of summary judgment on such issue]; St. Irene Chrisovalantou Greek Orthodox Monastery, Inc. v Cigna Ins. Co., 226 A.D.2d 624, 624 [2d Dept 1996] [questions of fact raised by allegations that plaintiff acted with willful intent to defraud or to misrepresent material facts]). True, the burden that defendants will need to carry to render the limitation on damages clause unenforceable here is indisputably a heavy one, requiring evidence that plaintiffs evinced "reckless indifference to the rights of others" (see Soja v Keystone Trozze, LLC, 106 A.D.3d 1168, 1170 [3d Dept 2013]). But at this stage of the litigation, before there has been a full opportunity for discovery and where there are numerous disputed questions as to the nature of any breach, I cannot say that plaintiffs have met their burden to demonstrate as a matter of law that their conduct could not be held by a fact-finder to meet this standard. I note, for example, that plaintiffs fail to address the evidence submitted by defendants that a January 2017 report showed that the Standpipe was last painted in 1986; that such painting did not include the Standpipe interior; that Global had erroneously been told the last painting was in 1991; that samplings in 2017 indicated the presence of PCBs, albeit within legal limits; that such evidence would have indicated to Global that the interior could be contaminated; and that the 2017 report was not disclosed to Global at the time the contract was formed (see supra pp 7-8). Whatever the ultimate merits of defendants' claims regarding the meaning of this document, at this stage, such evidence is sufficient to warrant the denial of summary judgment on this issue.
In light of the foregoing, it is
ORDERED that the Global Defendants' motion for summary judgment is granted in part to the extent that I find PCBs that were encountered, uncovered or revealed in the Standpipe's interior constituted a "Hazardous Environmental Condition" that was not disclosed and is thus subject to indemnification by the Town under the Contract Documents as provided for in SGC Article 5, ¶ 5.06(I), and that as to such hazard the Global Defendants had no duty to remediate, but is denied in all other respects; and it is further
ORDERED that the plaintiffs' cross-motion for summary judgment is granted to the extent that I find the Global Defendants right to indemnification is subject to the "Limitation of Damages" clause found at SGC Article 18, ¶ 18.04 (A), which may be overcome only upon a showing of reckless, willful or bad faith conduct, but is denied in all other respects.
This constitutes the Decision & Order of the Court. This Decision & Order is being mailed to the Global Defendants' counsel for filing with the County Clerk, with a copy to plaintiffs' counsel. The signing of this Decision and Order and mailing to the parties shall not constitute notice of entry under CPLR 5513, and counsel is not relieved from the applicable provisions of that Rule respecting to filing and service of Notice of Entry.
Papers Considered:
1. Notice of Motion and Affidavit of Larry Fotevski in Support of Global Defendants' Motion for Summary Judgment Against Plaintiffs, sworn to on January 10, 2023, with Exhibits annexed thereto, and Statement of Material Facts of Global Contracting & Painting, Inc. and Larry Fotevski in Support of their Summary Judgment Motion against Plaintiffs, dated January 12, 2023, along with Memorandum of Law in Support of Global Defendants' Motion for Summary Judgment Against Plaintiffs. 2. Notice of Cross-Motion and Attorney Affirmation of Crystal R. Peck, Esq., dated March 20, 2023, with Exhibits annexed thereto, and Affidavit of John W. Frazer, Jr., P.E., sworn to on March 14, 2023, with Exhibits annexed thereto, along with Response to Defendants Global Contracting & Painting, Inc. and Larry Fotevski's Statement of Material Facts and Plaintiffs' Counter-Statement of Material Facts in Opposition to Motion for Summary Judgment, and Memorandum of Law in Opposition and in Support of Plaintiffs' Cross-Motion for Summary Judgment. 3. Affidavit of Larry Fotevski in Further Support of Global Defendants' Motion for Summary Judgment against Plaintiffs and in Opposition to Plaintiffs' Motion for Summary Judgment, sworn to on March 29, 2023, with Response to Plaintiff's Counter-Statement of Material Facts, dated March 31, 2023. 4. Reply Attorney Affirmation of Crystal R. Peck, Esq., dated April 6, 2023.