Opinion
Claim No. 130991
07-21-2023
A. Servidone, Inc./B. Anthony Construction Corp., J.V., Claimants v. The State of New York, Defendant.
Claimant's attorney: DUKE, HOLZMAN, PHOTIADIS & GRESENS, LLP By: Patricia Gillen, Esq. Defendant's attorney: HON. LETITIA JAMES Attorney General for the State of New York By: Michael Getz, Assistant Attorney General, Ivanna Bilych, Assistant Attorney General
Unpublished Opinion
Claimant's attorney: DUKE, HOLZMAN, PHOTIADIS & GRESENS, LLP By: Patricia Gillen, Esq.
Defendant's attorney: HON. LETITIA JAMES Attorney General for the State of New York By: Michael Getz, Assistant Attorney General, Ivanna Bilych, Assistant Attorney General
Walter Rivera, J.
This breach of contract claim arises out of a construction contract bearing Contract No. D262058, entered into on September 6, 2012 by claimant (Servidone), the general contractor, and the New York State Department of Transportation (the State), for the refurbishment and painting of structural steel on the Route 17 bridge over I-84 in the Town of Wallkill, New York. Servidone brings this claim on behalf of its subcontractor, Erie Painting and Maintenance Inc. (Erie), pursuant to a liquidating agreement between Servidone and Erie.
The parties submitted a Statement of Stipulated Facts to the Court in an effort to resolve the matter prior to trial (Court Ex. 2). Despite extensive efforts, the matter did not resolve prior to trial and a unified trial was heard via video conferencing technology on September 19, 22, 23, 28, 2022 and January 11, 12, 2023 and February 14, 2023.
The Parties' Contentions
The claim alleges damages resulting from a conceded error on the State's Plan Sheet, which is part of the contract documents provided to the contract bidders on July 18, 2012. Specifically, Plan Sheet No. 782 contains Note 56 from the State's Bridge Manual which states, "THERE ARE ___ SQUARE METERS OF PAINTED STRUCTURAL STEEL ON THIS BRIDGE. (Designer shall indicate area to the nearest 10 m2.)" (Court Ex. 2, ¶ 23 [i] [1]; Ex. 23, p 36). The State filled in the blank space with the number "2600" (Ex. 22). As of November 22, 2010, more than a year and a half prior to the State's advertisement for contract bids on July 18, 2012, the State knew that the 2,600 that it had inserted into Note 56 on the State's Plan Sheet No. 782 was an error (T:276-279, 282-283, 336-337; Ex. 38). The correct quantity calculated by the State on November 22, 2010 was 7,635 square meters and was supposed to match the quantity indicated in Note 56 on the State's Plan Sheet No. 782 (Court Ex. 2, ¶¶ 47, 54, 56). The quantity of 2,600 as indicated in Note 56 on the State's Plan Sheet No. 782 does not match the quantity calculated by the State on November 22, 2010 and does not indicate the actual area of the bridge to the nearest 10 square meters as mandated by the State's Bridge Manual (id. at 25). The State concedes that it did not correct its error on Plan Sheet No. 782 prior to releasing the contract documents to the contract bidders on July 18, 2012 (id. at 47).
The contract documents include the contract, the bid proposal, the standard specifications with three amendments, and a set of plans prepared by the State (Court Ex. 2, ¶¶ 16, 18-19; Ex. P; T:117).
References to the trial transcript are preceded by the letter "T."
Based upon the aforenoted undisputed facts, claimant contends that the State's error constitutes an affirmative misrepresentation for which the State must be held liable. Claimant also maintains that Erie had no choice but to rely upon the State's representation of 2,600 square meters because the State did not provide sufficient information in the contract documents to enable a calculation of the total quantity of square meters.
The State argues that Servidone and Erie did not satisfy the contractual duty to carefully examine the contract documents and the job site before submitting a lump sum bid. The State also contends that its conceded error as to the total quantity of square meters was, or should have been, apparent and that therefore any reliance upon the State's representation was unreasonable. Additionally, the State argues that Erie took advantage of the State's "apparent error" and that such conduct is specifically prohibited under the standard specifications set forth in the contract documents (Ex. Q, p 26). Therefore, the State maintains that Erie waived its right to plead a misunderstanding of the State's representation of the total quantity of square meters. The State also argues that claimant cannot recover any damages because Erie failed to comply with the contract terms requiring the production of all bid documents and that the bid documents produced by Erie failed to establish Erie's bidding methodology and Erie's claim that it reasonably relied upon the State's representation as to the total quantity of square meters. Finally, the State argues that claimant did not sustain any damages because Erie's claimed extra costs were less than its lump sum bid and that claimant was paid in full (T:479-480).
The Relevant Portions of the Statement of Stipulated Facts, the Exhibits and the Trial Testimony Pertaining to the State's Plan Sheet Error and the Job Site Inspection
Pete Toptsidis, Erie's superintendent and job inspector, testified that he has nearly 40 years of experience in the bridge painting business as a bridge painter and then as a foreman (T:16). He provided testimony to aid the Court's view of a demonstrative video which was presented to show a bridge painting operation with a containment and the necessary PPE (Personal Protective Equipment) (T:16, 19-22; Ex. 110). A photograph of the steel platform used in the project at issue by the workers to blast and paint the bridge was also received into evidence (Ex. 93). Toptsidis explained how the workers stand on the platform to blast and paint and how they lay on their backs, on top on the platform, to work on the underside of the bridge (T:23-24). The project called for the blasting and painting of every piece of steel on the bridge and to replace any damaged steel and then to paint it (T:39-40).
Plan Sheet No. 782 lists Stuart Goodrich, P.E, as the State's designer, job manager, and "check" for the Plan Sheet dimensions, including the total quantity of square meters (Ex. 22). Goodrich was responsible for developing the Plan Sheets and ensuring their accuracy (Court Ex. 2, ¶ 54). John Reilly is listed on the Plan Sheet as the State's drafter and served as an additional check on Goodrich's calculations (Ex. 22).
Goodrich testified that he prepared the PS&E (plans, specifications and estimate) for the project (T:321-323, 325). He conceded that the standard notes on the Plan Sheet are an important element of the PS&E package because the notes provide necessary additional information that cannot be easily included in a detailed drawing (T:324-325). He stated that the bid package should also include the designer's calculations (T:325). Goodrich chose Note 56 to insert into Plan Sheet No. 782, which provides for a definitive quantity of the total square meters, and mandates that the quantity be accurate within 10 square meters (T:330). The Court notes that Goodrich testified that a bidder could reasonably rely upon the number of square meters specified in Note 56 on the State's Plan Sheet (T:328).
Goodrich explained that he inserted the number 2,600 into Note 56 on Plan Sheet No. 782 and that his work should have been checked for accuracy (T:330-331). Reilly checked Goodrich's work.
The quantity work-up sheets were prepared by Reilly. On page two of the work-up sheets, Reilly had a calculation of 2,743.45 square meters, which Goodrich reviewed on November 22, 2010, and corrected to be 6,089.60 square meters (Ex. 38; T:332-334). On page three, Reilly calculated 3,555.37 square meters, which Goodrich corrected to be 6,937.45 square meters (T:335). Goodrich calculated the total quantity of square meters to be 7,635 square meters, which he conceded is substantially more than 2,600 square meters (T:336-337, 342). Before finalizing the plans, Reilly and Goodrich did a field measurement of the bridge to confirm that 7,635 square meters conformed to the record plans and the as-built plans (T:337-338). When Goodrich calculated the amount of painted structural steel to be 7,635 square meters on November 22, 2010, that amount was supposed to match the quantity shown in Note 56 on Plan Sheet No. 782 and it did not (Court Ex. 2, ¶¶ 47, 56; T: 342). Neither Goodrich nor Reilly discovered the error and the entire bid package was then submitted for a final review by the State's Design Quality Assurance Bureau. The Bureau also failed to discover the error (T:331-332, 321).
Goodrich conceded that he and Reilly had the information of the correct quantity of the total amount of square meters for approximately a year and a half before the project was advertised for bid and that they "overlooked that to go back and make that correction" on the State's Plan Sheet (T:336-337, 342). The State's calculations and corrections were not provided to Servidone, Erie, or the other contract bidders (Court Ex. 2, ¶¶ 47, 56).
The contract had a five-week period between the advertisement for bids on July 18, 2012 and the letting of the contract on August 23, 2012 (Court Ex. 2, ¶ 11). The as-built plans, containing the measurements of the bridge, were not provided to the contract bidders and Goodrich conceded that the contract bidders would need a lane closure and special equipment to reach the bridge to measure it (id. at 48; T:339-340). The State did not close the roads to traffic for a pre-bid inspection by the contract bidders and the State's witnesses testified at their examinations before trial that physical measurements of the bridge could not be taken without lane closures to traffic (Court Ex. 2, ¶ 53).
Scott Geiger, P.E., the State's construction manager for the project, testified at trial that, within less than a week, contract bidders could obtain a work permit and a lane closure to examine the bridge (T:386). Geiger also testified at his examination before trial that, without a work permit closing the road to traffic, he would not expect a contractor to place a ladder under the bridge to get a close-up view of the bridge (Court Ex. 2, ¶ 10 [b]).
Leontios Bahas, Erie's Vice-President, testified that in preparing his bid for the job, he performed a site visit. He explained that he drove under the bridge to look at it while traveling at a speed slower than the 65 miles per hour speed limit, while also trying to avoid being rear-ended in an accident. He assessed the staging area for the work to be performed, but he could not assess if the structural steel of the bridge was in fact 2,600 square meters as specified in Note 56 on the State's Plan Sheet or whether it was greater (T:174-180). He testified that he was probably a little closer to the bridge than depicted in the photograph received into evidence as Exhibit 87 and that, from that distance, he could not estimate the square footage of the bridge for bidding purposes. When asked if he could get a feel for the quantity on the bridge, he responded, "[n]o. You always measure them. We relied on the spec where they gave us the number of 2,600 square meters" (T:148).
When asked if it is necessary to access the bridge to measure it he replied,
"[y]ou'd have to physically be able to get up to the steel to measure all the - every piece of steel that's in there, the girders, the diaphragms, the gusset plates, the stiffeners, the shoes, the bearings; you have to measure every square inch of the bridge for the most part"(T:144). He further explained that, "[y]ou have to physically measure each piece of steel that's in the bridge to come up with the square footage or square meter figure" (T:146).
When asked if he could have stopped on the side of the road underneath the bridge, he responded,
"[n]o, this is a very busy highway. There's a lot of traffic and it's a - it'd be extremely dangerous. Because on the bridge, there's concrete walls, so it's like going through a field goal where like everything narrows in the traffic. It is not, like, open. You know, it's more dangerous when you park underneath a bridge"(T:148). He further explained that while some bridges have slopes where you could pull over somewhere safely and walk up to reach the steel to measure it, this bridge had an end abutment. He explained, "like, the walls were straight up and down, so there's no way to safely access any part of the bridge. Obviously, it's not safe to put up a ladder on the shoulder either/or to get up on the bridge" (T:146).
He testified that he did not pull over to the side of the road close to the bridge to get a view of the steel under the bridge because a work permit was needed to close traffic to inspect the bridge (T:146). When questioned on cross-examination about whether Erie had requested a work permit and a lane closure to measure the bridge, the following ensued:
"Q... Erie never requested the work permit to examine and measure the bridge when Erie bid on the Route 17 project correct?
A It was not an option in the proposal.
Q But you could have asked for the work permits, could you?
A No, it wasn't an option in the proposal. Typically there's a lane closure for all contractors to enter the lanes so they can all bid it fairly and evenly. It wouldn't work for just one contractor based on my experience and all the jobs we've ever bid.
Q Isn't the work permit where you can ask just to go and take a look up close and examine the steel structure?
A Typically the industry standard is the State provides a lane closure prior to the bid for all bidding members - - you know, all bidding contractors to bid it so everybody could see everything equally and fairly. But - - and/or there was no option in the proposal to request for a lane closure permit"(T:170).
Markos Bahas, Erie's President, testified that he relied upon the 2,600 meters in Note 56 on the State's Plan Sheet and that he also sent his son and Erie's Vice-President, Leontios Bahas, to perform an inspection of the job site (T:360-361). During cross-examination, Markos Bahas was asked if anyone from Erie had measured the bridge prior to bidding and he responded,
"[m]y answer is for forty years, never, never the State make mistake or put the wrong square footage to their proposal. In Syracuse region, Buffalo, all the regions, they put each bridge the square foot. I would check and it was, you know, we never have disagreements. So all my life, I bid whatever the State asks for in the proposal. Whatever the State says, it says for one of the bridge (inaudible). If they wanted total removal, they wanted whatever the proposal says, I follow the proposal all my life, and I never have any disagreements with the State"(T:359-360).
Mark Sweeney, Servidone's project manager and estimator who has a degree in engineering, testified that he inspected the job site with his bosses, but that measurements of the bridge were not taken during their site inspection (T:83-84). He explained that, "[t]ypically on a site investigation, we don't do any measurements" (T:84). He stated that the purpose of the site visit was to "get a feel, a lay of the land" (id.).
Sweeney testified that he reviewed bids from five subcontractors, which were all within 10 percent of each other. Erie was not the lowest bidder, but was among the three lowest bidders (T:119). Erie was chosen because of its agreement to build the containment platform that was necessary for the project (T:82). Sweeney was not aware of how Erie had calculated its bid (T:120).
After Servidone was awarded the job, Erie began constructing the platform on or about October 24, 2013 (Court Ex. 2, ¶ 27). Pete Topsidis, Erie's superintendent and job inspector, testified that the platform was one of the first things that needed to be done on the project and he supervised its construction and the daily work on the project (T:31-32). Topsidis reported daily to his boss, Erie's President, Markos Bahas (T:32). During the construction of the platform, Toptsidis made two requests for additional material, which led Markos Bahas in November 2013 to direct Topsidis to measure the bridge (T:32-33; Court Ex. 2, ¶ 28).
Topsidis, having the benefit of a constructed platform, measured every steel part of the bridge, including the cross-beams, the gusset plates, the cross-frames, the stiffeners, the flanges and the girders, using a tape measure and a wheel measure (T:33-38; Ex. 96; Court Ex. 2, ¶ 29). As Topsidis took a measurement from the platform, he relayed the measurement to Markos Bahas over the telephone and Markos Bahas wrote down each of the measurements (T:34, 37-38). This was the first time that Erie had measured the bridge and the process took several days to complete (T:38, 40). Leontios Bahas, Erie's Vice-President, testified that after two days of measuring by Toptsidis, Erie directed Christopher Nachreiner, Erie's project manager and estimator, to measure the bridge because he specialized in taking measurements (T:150-151). Nachreiner testified that he arrived at the job site and continued to take measurements with Toptsidis and to write down the measurements (T:40, 197-198). Nachreiner obtained the measurements by standing on the platform and it took an entire day to complete (T:198). According to Leontios Bahas, Nachreiner reported that the amount of square meters of painted structural steel was more than double the amount that the State had specified in Note 56 on the State's Plan Sheet (T:151). When the measurements were completed, Nachreiner notified Servidone that the total was 5,541 square meters (T:41, 201).
Stuart Goodrich, P.E., the State's designer and job manager conceded that 5,541 was substantially more than 2,600 square meters (T:342).
On November 26, 2013, Toptsidis and Nachreiner attended a progress meeting with the State where they discussed the error on the State's Plan Sheet indicating that the total quantity of painted structural steel on the bridge was 2,600 square meters and that Erie's measurements of the bridge were much greater (T:92; Ex. BBB, p 9). It was noted at the meeting that Servidone would send a Request for Information (RFI) to the State (T:92, 94).
Toptsidis testified that, approximately two days after the meeting, Clay Corjulo, the State's inspector, went to the job site to measure the bridge and that he returned a second time to measure the bridge again (T:41, 46). A few days after that, the State's Engineer in Charge, Rashid Shariff, went to the job site with Corjulo and measured the bridge and took notes (T:42). Toptsidis testified that the State used the platform to measure the bridge (T:45). Nachreiner also testified that, after the progress meeting, Corjulo measured the bridge and then Shariff measured the bridge again and that they never reported the results of their measurements to Erie (T:202-204). Sweeney also recalled that, after the progress meeting, the State measured the bridge and that the State did not indicate the quantity that it calculated or whether it differed from Erie's calculation (T:94, 99-100). On November 29, 2013, Erie submitted RFI 464-077 to the State indicating that, during the construction of the platform and the containment unit, it was discovered that the total amount of painted structural steel on the bridge was 5,541 square meters and not 2,600 square meters as indicated in Note 56 on the State's Plan Sheet No. 782 (Court Ex 2, ¶ 30; T:94-95; Ex. 31). Erie also requested instructions from the State as to how to proceed.
On or about December 5, 2013, Shariff, the State's Engineer in Charge, responded to the RFI with the following two statements: "[t]he contract documents contain sufficient information to accurately estimate the number of square meters of painting to be done" and "[t]he quantity mentioned in your RFI using contract documents seems to be in the ballpark" (Court Ex. 2, ¶ 31).
Hans Priebe, a licensed civil engineer and the State's Engineer in Charge of the project, disagreed with Shariff's statement that Plan Sheet Nos. 777, 778 and 779 contained enough information to compute the actual amount of square meters (T:266-275; Exs. 27, 36).
On December 9, 2013, Erie submitted a second RFI, RFI 464-077.1, requesting,"[w]hat are the State's 'ballpark' calculations of the total square meters of steel that needs to be removed and coated that equals the contract document quantity of 2600SM?" and "[p]lease reference where in the contract documents this information can be found when the state did their calculations" (Court Ex. 2, ¶ 32; Ex. 32; T:96-98). At a progress meeting on December 10, 2013, the State reported that it had answered the RFI on November 29, 2013 and that the "contract quantity is correct" (Court Ex. 2, ¶ 33). Shariff's undated response to the RFI, states, "[w]e meant that the 5,541 SM, which you evidently determined from examining the contract documents, is a reasonable estimation of the total square meters of structural steel to be painted" (id. at 34; Ex. 32).
Sweeney testified that, contrary to the State's reference to the contract documents, the calculation of 5,541 square meters was not obtained from the contract documents. Rather, it was obtained from Erie's actual field measurements of the bridge by Toptsidis and Nachreiner (T:98-99).
The Relevant Portions of the Statement of Stipulated Facts, the Exhibits and the Trial Testimony Pertaining to Whether the Total Quantity Could be Calculated from the Plan Sheets
Sweeney, Servidone's project manager and estimator, disagreed with the State's assessment that the Plan Sheets were sufficient to compute the actual total amount of square meters of painted structural steel on the bridge (T:101-102). In that regard, Sweeney testified to his review of Plan Sheet Nos. 777, 778 and 779 (T:84; Exs. 19-21). He testified that Plan Sheet No. 777 depicts the proposed bridge and not the existing bridge (T:85). Additionally, Plan Sheet No. 779 is missing significant information that prohibited Sweeney from calculating the actual square meters of painted structural steel on the bridge (T:86; Ex. 20). Specifically, Sweeney noted that Plan Sheet No. 779 does not contain any dimensions for the thickness of the flanges or the I-web and does not show any of the cross members, cross frames, gusset plates, bearing stiffeners, connection plates or lateral bracing (T:86-87). Sweeney testified that while Sheet No. 788 depicts the existing bridge with lateral braces and gusset plates, there is no indication of the number of lateral braces or gusset plates, and there are no dimensions provided (T:87-88). Sweeney also noted that the Plan Sheet is marked N.T.S. (Not To Scale). Therefore, Sweeney maintained that the Plan Sheet cannot be used to calculate any of the area depicted (id.).
Sweeney testified that the as-built plans contain the necessary dimensions (T:90). However, the as-built plans were not provided by the State. The State also did not provide the calculations of the State's engineer.
Sweeney further testified that there was no need to calculate the total quantity of painted structural steel on the bridge because the State had specified on the Plan Sheet that the total quantity was 2,600 square meters (T:91, 106).
On cross-examination, Sweeney was asked if there were ways to estimate Erie's bid and he responded that "[t]here are ways but I'm not sure you had enough information on this one" (T:121). When asked if it was possible to survey the area, he responded, "[a]t some point, I guess the answer's yes but it's not realistic" (id.). When asked if he could use measuring rods, electronic devices or a laser device, he responded, "I would say probably, yes" (id.). When asked if he could estimate the job from the plans and drawings, he responded, "I believe there's not enough... information by just looking at the plans" (id.).
The State's attorney then conceded that he was neither an estimator nor an engineer, but that he could "certainly walk [Sweeney] through it" by using Plan Sheet Nos. 788 and 779 to calculate an approximate sum of nearly 5,000 square meters, which is more than 2,600 square meters listed on Plan Sheet No. 782 (Exs. 20, 21, TT, SS; T:121-127). The State's attorney proceeded to question Sweeney using the Plan Sheets to show how adding up the number of square meters depicted on Plan Sheet No. 788, along with the information and the scale on Plan Sheet No. 779, a sum could be calculated of a portion of the project. The State's attorney then asked Sweeney, "[s]o anybody who looks at these plans knows there's more that 2,600 square meters, isn't that correct?" and Sweeney responded, "I guess you could get that from that, yes, I guess" (T:127). When instructed by the Court not to guess, Sweeney conceded that the attorney's math appeared to be correct (id.).
Sweeney acknowledged that the bid proposal provides that the bidder declares to have carefully examined the plan specifications and to have personally inspected the actual location to be satisfied as to all quantities and that, in signing the proposal, the right to plead a misunderstanding of the same is waived (Ex. B, p 3; T:127-128). Additionally, the standard specifications provide that the bidder agrees that it has examined the contract documents and the site work and has fully informed itself, from personal examination of the same, regarding the quantities affecting the work to be performed (Ex. Q, p 35; T:130). Specifically, the standard specifications provide that:
"[t]he bidder agrees that its proposed contract prices include all costs arising solely from existing conditions shown or specified in the contract documents, including the Base Line Data and/or readily observable from a site inspection during the bidding period available under this contract and/or generally recognized as inherent in nature of the work, The Bidder shall take no advantage of any apparent error or omission in the contract documents (emphasis added)"(Ex. Q; T:130-131).
The subcontract between Servidone and Erie and the Project Labor Agreement provide that Erie represents and agrees that it has carefully examined and understands the agreement and the contract documents, has investigated the site, and has entered into the agreement based upon its own examination, investigation and evaluation of all matters and without reliance upon any representations of the contractor or others (Ex. O; T:132-133). Additionally, the contract documents provide that a significant portion of the structural steel on the bridge requires near white metal blast cleaning and therefore bidders should inspect the bridges carefully prior to submitting bids (Ex. 22; T:133-134).
Christopher Nachreiner, Erie's project manager and estimator, testified that in his experience with bidding jobs with the State, the State would provide either the record plans or the as-built plans, which set forth either the exact dimensions of the steel or a specification of the steel member that could be referenced to the steel structural manual for the exact dimensions of the steel (T:186-187, 192). In this project, however, the State did not provide the as-built or the record plans. Nachreiner also testified that the State did not provide Erie with the State engineer's estimate, which is customarily provided by the State (T:192).
Nachreiner testified that he was not able to calculate the total quantity of square meters of painted structural steel from the Plan Sheets (T:189). He explained that there was nothing on Plan Sheet No. 779 regarding the steel measurements and that he would "never use the scale to come up with an approximate number... because everything we do is based off of square footage of actual structural steel and using that scale, you can't accurately tell how much steel is there" (T:189-190; Ex. 20). In reviewing Plan Sheet No. 788, Nachreiner noted that an approximate length of the bridge and the steel girders could be determined, but that the area of the end diaphragm pieces, the intermediate diaphragm pieces, or the lateral braces could not be determined because the plan indicates N.T.S. (Not To Scale) (T:190-192; Ex. 21).
Nachreiner testified that the standard practice in the industry is to measure the bridge itself (T:193). When asked if a laser could be used to measure the bridge, he responded, "I've never used a laser to take steel measurements. You wouldn't be able to accurately measure any piece of steel with a laser. I don't even know where you would stand with the laser to measure" (id.). He further testified that, even with a lane closure, you would not be able to measure the length, the width, the height or the thickness of any portion of the steel by using a laser because it is not accurate (T:193-194).
Leontios Bahas, Erie's Vice-President, testified that "[i]t was not possible" to calculate the total quantity of square meters from the Plan Sheets and he noted that the State had provided the total quantity in its Plan Sheet (T:171). When asked on re-direct if Plan Sheet No. 777 contained dimensions or measurements that he could have used to calculate an approximation of the area to be painted, he responded, "[n]o, not even close" (T:174; Ex. 19). He further testified that you need the length, width and depth of every piece of steel on the bridge and that Plan Sheet No. 779 was not sufficient to calculate the area of the beams (T:175, 177; Ex. 20). He also testified that he would never use the scale because it is inaccurate (T:177). On re-cross-examination, he demonstrated why he believed that the scale was inaccurate and "near impossible" to get an exact unit measurement for each member of the bridge to obtain an accurate total for the square meters of the bridge (T:177-179). He testified that,
"[t]he only accurate way, industry standard, was always to measure off as-builts or record plans which give you the exact measurements of the length and width of every steel member on the bridge, and that's what we always have used to verify the square footage if the square footage was given to us in the proposal. And never in one proposal in my life, and I've talked to many contractors, have they used the scale to measure the bridge for a bridge painting job"(T:179). When shown a photograph of the bridge and asked if he could tell by looking at the photograph that the bridge was more than 2,600 square meters, he responded in the negative (Ex. 95; T:146).
Pete Toptsidis, Erie's superintendent and job inspector, testified during his cross-examination, that he was not an estimator and was not involved in the bidding process (T:48-49, 53). He was then shown a photograph of the job site and the following ensued:
"Q but you could tell from your experience that this was more than 2,600 square meters of painting to be done, right?"
A No, you cannot tell, really.
Q You can't tell from your experience painting bridges for 40 years that that bridge is larger than 2,600 square meters of painting?
A No, I can't."
...
Q But...if you had thought about it, you would know that it was more than 2,600 square meters, right?
...
A You cannot tell by what square meters on any bridge unless you go and really physically measure it.
Q I'm not asking for an exact amount. I'm just saying you can tell that is was more than 2,600 square meters.
A You can take a guess and you might be close, but you might be way off, because the one little area you think is that, but then you measure the whole thing, you gonna be way off. You might be close in a little area but you might be, you know - - from my experience, I never did that. I never measured by my eye. I go up there and measure it"(T:53-54; Ex. 107).
Hans Priebe, a licensed civil engineer and the State's Engineer in Charge of the project, testified that, prior to the project in issue, he had been involved in one or two projects involving painted structural steel on a bridge (T:254-255). Priebe maintained that he used Plan Sheet Nos. 788 and 779 to calculate an estimate of the square meters and that in 10 to 15 minutes he calculated over 5,000 square meters (T:287-288). He further stated that an estimator would be able to use the scale on Plan Sheet No. 779 to calculate an estimate (T:288-289). Priebe noted that the State specified that the area to be painted was 2,600 square meters and that it was not an estimate or an approximate number (T:261-264; Ex. 37).
Priebe also testified that the best way to obtain an accurate measurement of the area of a bridge is to physically measure it (T:255). Alternatively, the area could be calculated from the State's as-built or record plans, which Priebe acknowledged were not provided by the State for this project (T:255-257). There were also eight addenda to the contract documents issued by the State prior to the bid due date, which did not address the quantity of square meters (T:265).
Priebe acknowledged that Plan Sheet No. 782 was stamped with seal of the State Engineer, Stuart Goodrich, dated March 14, 2012, and that Goodrich was also listed on the Plan Sheet as the designer and job manager (T:282, 286; Ex. 27). The Plan Sheet also listed N. Choubah as the design supervisor, John Reilly as the drafter and "check" of Goodrich's calculations, and D. Bennett as the project manager (Ex. 27; T:282). Priebe testified that the listed individuals were responsible for selecting Note 56 and the calculation of 2,600 square meters, which should have reflected 7,635 square meters (T:283-285). Thereafter, the Plan Sheet was reviewed by the State's Design Quality Assurance Bureau to ensure its accuracy (T:285). Priebe conceded that there was insufficient information provided by the State to the contract bidders to calculate the total square meters of painted structural steel on the bridge and that the Plan Sheets did not contain enough information to compute the actual amount of square meters (T:266-275; Exs. 27, 36).
When Erie indicated that it had calculated 5,541 square meters, Priebe did not disagree with Erie's number or indicate that the State's engineer had calculated 7,635 square meters in November 2010, prior to the advertisement for bids on July 18, 2012 (T:279). Priebe conceded that the State had failed to correct Plan Sheet No. 782 during the nearly two-year period prior to the advertisement for bids (id.).
Scott Geiger, P.E., the State's construction manager for the project, conceded that 2,600 meters would not be read by a contract bidder as an approximation or an estimate (T:465). Geiger maintained that there was enough information on the Plan Sheets to calculate the total quantity of square meters and he explained how he used the Plan Sheets to calculate a ballpark of 7,000 square meters (T:393-398). Geiger testified that Plan Sheet No. 779 provided dimensions and quantities of members of the bridge and that a calculation of square meters could be made using that Plan Sheet (T:391). He also testified that an estimator could use the scale on the Plan Sheet to calculate the square footage of the bridge (T:389-390). Geiger did not agree with Erie's calculation of 5,541 square meters because the actual amount was greater than that (T:434).
On cross-examination, Geiger was confronted with his deposition testimony that he could not calculate the actual total quantity of square meters, but that he could calculate an estimate. He then conceded that the Plan Sheets would allow a bidder to come up with an approximation, but not the actual total quantity of the area to be painted (T:438-439, 442).
Plan Sheet No. 782 stated that "bidders should inspect the bridges carefully prior to submitting bids" (T:400). Geiger testified that contract bidders are permitted to ask the State for more information during the five-week advertisement for bids. The State then issues its response to all the contract bidders. Erie did not submit any requests for information during the five-week period nor did any other contract bidders (T:388). Geiger also testified that all the bids submitted from the contract bidders were in line with each other (T:400, 455-456).
Photographs shown to Geiger at trial indicated to him that there was a shoulder under the bridge where a vehicle could safely stop to examine the bridge and a guide rail on the side of the roadway where one could walk behind it to examine the bridge (T:383-385; Exs. 104, 105). Geiger also testified that one could drive under the bridge and look up to see the members of the bridge for clarification or look to Google Maps (T:396-397).
Excerpts of the deposition testimony of Nicholas Hallios, Erie's former project manager, were read into the record (Ex. 85). Hallios testified that he reviewed the contract documents and the drawings and used Google Earth to look at the bridge and the surrounding area (T:487). He took information from the plans and the framing drawing and entered it into a computer program, Shapebook, which generated a summary of calculations for the surface area of the items that he input; however, there was insufficient information on Plan Sheet Nos. 788 and 779, such as the size of the girders, to input into the program to come up with the surface area of the entire bridge (T:489, 491, 492).
When asked how he generally prepared bids, but not specifically to this project, he responded that he looks at the project documents which include the specs and drawings (T:495-496). Hallios explained:
"[f]rom the drawings, you would look at a rigging plan which provide you with details for the structural steel members. The structural steel members then would be utilized to come up with a takeoff to determine how much work needed to be done for each bridge. You know, contained within the project. From there then, Markos Bahas would come up with pricing on what he wanted to bid the projects for"(T:496). Hallios explained that a "takeoff is coming up with quantities, square feet of the work to be completed" and that he did takeoffs when estimating projects (T:495). When asked what he would do if the Plan Sheets and specifications provided by the State were insufficient to make calculations, he responded that he would do a field measurement or go to the State's regional office and ask for the file on the specific bridge because the State should have the framing plan in its file (T:499).
When asked if in this project he relied upon Note 56 in Plan Sheet No. 782 which stated that there are 2,600 square meters, Hallios responded, "[n]o. I mean typically we would do our own calculation and not base our - the number on anybody else's, you know, quoted quantity" (T:497-498). He further testified that he would not rely on the State's note on a Plan Sheet for quantity because he always does his own analysis or takeoff to determine quantity and he uses Shapebook to generate a summary of the calculations (T:499-501).
If Hallios' calculations differed from the note on the State's Plan Sheet, he would use his calculations because he knows it was calculated (T:499). On the re-direct examination of Hallios, the following ensued:
"Q Do you have any recollection, sir, as to whether the analysis you performed was 2,600 square meters?
A No I do not.
Q Do have any recollection, sir, of what number you came up with in doing your takeoffs?
A No"(T:504).
The Relevant Portions of the Statement of Stipulated Facts, the Exhibits and the Trial Testimony Pertaining to Notice to the State of a Claim For Disputed Work
By letter dated December 16, 2013, Erie gave written notice to the State and Servidone about the quantity discrepancy and a claim for additional compensation (Court Ex. 2 at ¶35). Servidone forwarded Erie's notice letter to the State (T:100; Ex. 34).
By letter dated December 23, 2013, the State rejected the request for additional compensation based upon the contract provision that the contractor "personally inspected the actual location of the work together with the local sources of supply, to be satisfied as to all the quantities and conditions, and understands that in signing this proposal waives all right to plead any misunderstanding regarding the same;" and that the Contract Plan Sheets 777, 779 and 788 provide information which "was sufficient to compute the actual amount of square meters of structural steel to be painted at the time of bid" (Court Ex. 2, ¶ 36; Exs. 19, 20, 21, 36).
Pursuant to the terms of the contract, the work continued, pending the resolution of the dispute (Court Ex. 2, ¶37). Servidone and Erie maintained and submitted force account records to the State (id. at 38).
By letter dated January 6, 2014, Servidone and Erie gave notice to the State's Regional Director of the dispute and Erie's disagreement with the December 23, 2013 decision of the State's Engineer in Charge (id. at 39). Erie's letter stated:
"[c]ontrary to the [Engineer in Charge]'s position that the plans contained 'information sufficient to compute the actual amount of square meters of structural steel to be painted at the time of bid,' there was no need to compute the actual amount. This is because Sheet no. 782, drawing ST-6, expressly states the following:
'SUPERSTRUCTURE NOTES:
...
The structural steel for this bridge shall be completely painted. Finish coat color shall be red. The color shall conform to Munsell Book Notation 7.5R 3/10. The viewing shall be done under north standard daylight. There are 2600 square meters of painted structural steel on the bridge." (Emphasis added.)'
...
That section does not say: 'estimate,' 'approximate,' or other qualifying language. In addition, the repeated use of the word 'shall' makes it very clear that this is language that dictates to the contractor the painted steel requirements. No further calculations were required to bid this item which was listed as a 'lump sum' item "(Ex. 37).
The State did not respond to the letter dated January 6, 2014 (Court Ex. 2 at 40).
Pete Toptsidis, Erie's project inspector, interacted with the State inspector regarding the job specifications and the progress. Toptsidis maintained the daily work records, known as MURK sheets. Toptsidis was also in charge of the 8 to 10 workers on the job and their safety (T:26-28). Toptsidis testified that the blasting of the paint as to the first 2,600 square meters took approximately one month to a month and a half to complete and that Erie had completed blasting and priming the first 2,600 square meters by February 5, 2014 (T:22, 55-56).
At that point, Toptsidis asked Servidone for permission to speak with the State's Engineer in Charge, Rashid Shariff (T:46). After obtaining permission, Toptsidis went to the State's office and spoke with Shariff. He told Shariff, "we're coming near the end of the 2,600 square meters, you know, pretty soon. So what are we gonna do?" (T:47). According to Toptsidis, Shariff said, "continue doing the good work and we will pay you. Just keep track of your MURK sheets" (id.). Toptsidis testified, so "[t]hat's what I do" and he continued to keep track of the MURK sheets through the end of the project (T:47-48).
Toptsidis testified that he prepared a "Daily Record of Work Authorized - Not Included in Contract" form each day for the disputed work completed by the workers (T:28-31; Ex. 51, p 3). The form detailed the workers' names, the material and equipment used, the hours worked and the work accomplished. The form also listed the name of the State inspector, Clay Corjulo (T:31).
By letters to the State dated February 5 and 6, 2014, Servidone and Erie notified the State that Erie had finished blasting and priming the initial 2,600 square meters of structural steel on the bridge and sought clarification from the State as to how to proceed with the disputed square meters of structural steel (Court Ex. 2 at 44, 45). Specifically, the State was asked if Erie should complete the contracted portion of work by applying the remaining coats of paint and demobilize or if Erie should continue blasting and priming the additional disputed work area and then apply the remaining coats of paint to the contracted and disputed areas at the same time (id. at 45). The State did not respond and Erie continued working pending the resolution of the dispute (id. at 46; T:109).
On February 20, 2014, Servidone gave notice to the Commissioner's Office of Erie's claim letter dated February 18, 2014, to which the State had not responded (Court Ex. 2 at 41). Other than an acknowledgment of receipt, Servidone did not receive a response from the Commissioner to Servidone's February 20, 2014 letter (id.)
The State had a right to request additional documentation within 30 days of receipt of the notice of dispute dated February 20, 2014 (id. at 43). The State did not make any requests for additional documentation (id.).
The State's Engineer in Charge of the project, Hans Priebe, expected the work to continue while the dispute was pending (id. at 46). The work was completed for the contract area and the disputed area on May 4, 2014 (id. at 62). Priebe testified that Erie complied with the notice requirements regarding its claim (T:275).
Mark Sweeney, Servidone's project manager and estimator, testified that on August 6, 2014, Servidone and Erie met with the State to resolve the dispute (Ex. VV; T:112-113). The attendees were Sweeney, Hans Priebe, Rashid Shariff, Scott Geiger and Joseph Osso. Sweeney had no recollection of the State asking Erie about any of the documents that Erie had submitted to the State regarding the disputed work (T:113-114). After the meeting, Sweeney sent a follow-up letter to the State dated September 11, 2014 (Ex. 44; T:114). The letter summarized the meeting and provided the revised number for Erie's costs (T:115).
The Relevant Portions of the Statement of Stipulated Facts, the Exhibits and the Trial Testimony Pertaining to Erie's Bid Methodology
Markos Bahas, who is 72 years old, testified that he moved to America from Greece at the age of 18 and joined the bridge painters union in 1971. He formed Erie in 1988 and remains as Erie's President. He does not read and write much English and he testified through a Greek interpreter. He stated that this was the first time in 40 years that he has been in court for his business and that he has never had a disagreement with the State (T:356). He also stated that, prior to the instant claim, he has never previously filed a claim with the State for additional compensation (T:358).
On occasion, Markos Bahas testified in English rather than through the Greek interpreter. While he explained that it is customary for him to speak in both languages, the Court directed the witness to utilize the Greek interpreter that had been requested for the trial and to refrain from testifying in English.
Markos Bahas testified that he estimates the bids for jobs. He does not use a computer or have computer knowledge. Nick Hallios was Erie's estimator who worked with Markos Bahas on the bid for the project in issue. Markos Bahas stated that Hallios brought Markos Bahas the documents with the 2,600 square meters highlighted (T:353). Hallios read the proposal to Markos Bahas and told him that the quantity of square meters was 2,600 (T:354). Markos Bahas then asked Hallios the details of the project, particularly if the location was south of Albany because the union rates are different in each locale (T:353).
Markos Bahas testified that he used a handheld calculator to multiply 2,600 square meters by $410.00 to $415.00 per meter price to arrive at a bid price for the job (T:354-355). He does not write anything on paper and does not take notes (T:357-358). He testified that everything is in his head and done from memory, including the conversion of footage to square meters (T:357-358). He further testified that this has been his custom and practice of calculating bids for the past 40 years.
Leontios Bahas testified that at age 12 he began working for Erie after school and on the weekends, and that in 2008, he became a superintendent at Erie. In 2014, he transitioned to office work where he worked with his father, Markos Bahas, a secretary, and an estimator. Nick Hallios was the estimator at the time of the project. Leontios Bahas assisted in preparing bids "to a degree" (T:140).
Leontios Bahas testified that Markos Bahas has a really good memory and does everything in his head because he does not know how to use a computer or how to read and write well. Leontios Bahas explained:
"[i]t kinda sounds foolish the way I'm explaining it but he's a remarkable human being, you know, with how he does everything. So, he has a square foot number, square meter number, and basically, you just multiply that by the square feet or square meter number that's, you know, that's on the bridge or whatever structure you're working on"(T:140-141). Leontios Bahas further explained the bid process as follows:
"the first thing we do is get the specs, you know, the proposal, and the estimator that's in the office reviews the specs thoroughly and then we go into my father's office and we'll talk about the job. We'll talk about the special notes of the project and if the square meters or foot is given, we'll give that number to my father and we'll also perform a site visit. It was common for me to do site visits.
...
The location of the bridge is very important, so you know which pay rate it is, whether in the New York City rate union or the Buffalo union. If the structure's over heavy traffic or over water. The type of structure, whether it's like an overpass or a truss bridge, you know, the steel above the roadway"(T:141-142). Leontios Bahas testified that Erie always does a site visit. He explained a site visit as follows:
"[s]o basically, you get to look and figure out the logistics of actually performing the work. If you have to put a platform up or if it's rapid deployment, which would be rapid deployment's if you have to close the lane, say, for eight or ten hours, you're only allowed to close the lane because you're working on a highway. You've got to do it, you know, rapidly, you pull equipment on and off the road every day. You look for lodging, both house for the structure; if it was over water or heavy traffic, you look at if you're able to measure the bridge, we would always do a field takeoff if we're able to access the bridge. Field takeoff to measure the square footage or square meters"(T:143). The following ensued on direct examination:
"Q Would it be okay to just eyeball it, standing from the side of the road and come up with a rough number?
A No, it's not possible to do that.
Q Why do you say that?
A Because by eye, you can never really know a true measurement of anything. Even if you thought it was three feet and say it was three feet and six inches, your square foot number would be completely off, and that's just on one steel member. And you also can't even see all of the steel members that are, you know, behind the webs of the bridges and the beams and girders. You need to actually physically measure the bridge to get an accurate measurement"(T:144). Leontios Bahas did a site visit before Erie finalized its bid. Specifically, he testified that:
"I drove to the bridge and I just kept driving around, looking at the structure and there was a, you know, I looked for hotels. There wasn't a safe place for me to pull over to really get a good look at the bridge because of the traffic was 65 miles an hour. It was heavy traffic. There was a safe place for me to pull over, like a mile from the bridge where I could pull thirty feet off the road safely, and look at the bridge from there"(T:145). Leontios Bahas testified that after a site visit, they go into Markos Bahas' office. Leontios Bahas explained the process as follows:
"we just tell my father a bunch of information, he thinks about everything in his head and he plays around on the calculator, multiplying different square foot numbers by the total square footage numbers of the bridge, and he just thinks about it for, you know, a long time and when he finally comes up with the final number, he'll tell us the number, the square foot number, he'll multiply by the square meter number or foot number of the structure, and then the estimator plugs that information into the bid sheet and submits it"(T:142). When asked to explain what Leontios Bahas meant by the square meter price in his father's head, Leontios Bahas responded,
"[l]ike as time goes on, the wages go up or the material costs are going up in general, and so he starts raising that set number, you know, or based on where it's at and then he - - so like, when you're bidding jobs, say the square meter number's $400 a square meter, and as time goes on, you know, every year the union members get raises and their benefits go up, you know, we talk about it and he slowly raises up his number, the cost of material or whatever the reason may be. If we have a lot of work, you know, that year and we're bidding more work, he'll raise the number. I guess the normal factors"(id.). When asked if his father gets numbers from a book or writes them down, Leontios Bahas responded,
"[f]rom memory. He doesn't know how to really read or write, he doesn't take notes. It's like from us communicating information to him"(T:143).
On cross-examination, Leontios Bahas conceded that the price per square meter that he testified to on direct examination was not set forth in the bid document, nor was the 2,600 square meters. Leontios Bahas, however, testified that the 2,600 was reflected by the total calculation (T:171-173).
The Relevant Portions of the Statement of Stipulated Facts, the Exhibits and the Trial Testimony Pertaining to Erie's Bid Documents Submitted For Disputed Work
A final contract closeout meeting was scheduled for March 30, 2015 with Servidone, Erie and the State (T:115-116). Prior to the meeting, Erie submitted information for the State's review (T:151). Leontios Bahas, Erie's Vice-President, Christopher Nachreiner, Erie's project manager and estimator, Mark Sweeney, Servidone's project manager and estimator, Rashid Shariff, the State's Engineer in Charge, and Hans Priebe, the State's Engineer in Charge of the project, attended the meeting.
Leontios Bahas testified that the State did not ask any specific questions about the MURK sheets or any of the other document that Erie had submitted to support its claim for additional costs (T:152). The State did not make any claim that the hours listed on the MURK sheets did not match Erie's certified payrolls (T:152-153).
At the end of the meeting, the State requested that Erie provide additional documents to support its bid (T:151-153). Leontios Bahas and Nachreiner went back to Erie's office to check for bid documents on the computer server and in the storage files in the attic (T:151- 153).
The job folder was found in storage and contained Google images of the bridge, a copy of an email between Nick Hallios and Servidone dated April 14, 2012, a copy of an email from Nachreiner regarding the cost-per-gallon for paint to cover 2,600 square meters, a copy of an email from June 2013 between Nachreiner and Sweeney confirming the price of $1,229,800.00, the bid tabulation sheet and the bid sheet that Erie had submitted to Servidone (T:153-161). Leontios Bahas was not surprised that the folder did not contain any other information such as "take off sheets" because the contents in the folder were "common... for a job that you would bid that the square meters or square footage were given to you" (T:154).
The bid sheet that Erie submitted to Servidone was also found on Erie's server (T:155; Ex. 48, p 2352). It listed all of Erie's pay items and the bid amount for each item (id.) Leontios Bahas explained that the handwriting on the bid sheet and the notation "Revised" indicated that Erie and Servidone had made a deal to revise the bid amount because Erie had agreed to build the platform (T:155-156; Ex. 48, p 2352). Leontios Bahas testified that the bid sheet was a form document that Erie used (T:156). He explained that his father, Markos Bahas, does not use the form (id.). Rather, Markos Bahas tells the estimator a price per square meter and then directs the estimator to multiply that amount by the number of square meters (id.). The numbers are then plugged into the form (id.). Leontios Bahas explained that the bid sheet indicates a price per square meter of $414.00 (T:156-157; Ex. 48, p 2352).
All the documents found were sent to the State on April 13, 2015 (Ex. 48; T:116, 154-155, 161). Thereafter, the State never contacted Erie regarding an audit or an examination of the project file maintained in Erie's office nor did the State ever indicate that the information supplied by Erie was insufficient to support Erie's reliance upon the 2,600 meters specified by the State on its Plan Sheet (T:161-162). Leontios Bahas assumed that the State's silence indicated that Erie had satisfied the State's request (T:162). Additionally, Sweeney testified that there were no further requests from the State regarding the bid package and that he never received anything in writing from the State indicating that the MURK sheets that Erie had submitted to the State were inadequate (T:116, 118).
Christopher Nachreiner, Erie's project manager and estimator, was not employed by Erie until after the bid for the project in issue had been submitted and the State's error was discovered (T:187-188). He testified to Erie's practice of preparing bids since he was hired by Erie in June 2013 (T:183). Nachreiner would go into Markos Bahas' office and give him a "shorter version of what the specs described and where the project was located, and what the square footage of the project was" (T:185). Markos Bahas would then punch numbers into a handheld calculator and then, based on the square footage, he would calculate the bid amount.
Nachreiner explained that when Erie did not receive a response from its February 5, 2014 letter to the State, Erie continued to blast and paint the additional square meters of the bridge because they did not want to be in breach of the contract. Additionally, it would have been very costly to Erie, Servidone and the State if Erie had dismantled the platform and demobilized the work site instead of continuing with the additional work while the platform and the containment were in position (T:205-206).
Nachreiner calculated the compensation for the additional work to be $1,574,473.44 based upon the daily MURK sheets and that calculation was submitted to the State (T:207-209; Ex. 41). Nachreiner noted that the State did not raise any issues with the MURK sheets or challenge the number of hours or the math submitted at the meeting with the State on August 6, 2014 (T:209-210, 214).
Nachreiner was questioned about the handwritten notes of the meeting, "Markos/Plans 2, 600 s m - 3 jobs with NYSDOT right now [,] not whole bridge painted [,] it is not unusual for State to tell contractor how many sf/sm area only" (T:211-212; Ex. WW). Nachreiner recalled that the notes referred to what Markos Bahas had raised at the meeting with the State (id.). The State asked Erie for more information to support Erie's claim so that the State could get federal money to pay Erie's claim (T:214). Nachreiner and Leontios Bahas found the bid documents in storage and sent them to the State (Ex. 48; T:236-239). Nachreiner was not surprised that there were no handwritten notes or takeoffs in the bid folder because the quantity of square meters had been included in the contract (T:240).
Nachreiner testified as to how he calculated Erie's costs for the additional work, which he submitted to the State in September 2014, by taking the information off the MURK sheets. Nachreiner's September 2014 submission was revised from the June 19, 2014 submission because the September submission covered only the extra work beyond the 2,600 meters for a sum of $856,563.00 for the time period of February 5, 2014 to May 4, 2014 (T:214- 223; Ex. 44, pp 78, 82; Ex. 41).
After the September 2014 submission, Erie received corrections from the State. In response, Erie made further revisions to reflect a reduction in Erie's damages claim to account for the work that Erie performed on the initial 2,600 square meters from February 5th to May 4th that had been included in its claim for the work on the additional square meters (T:224-233; Exs. 41, 43, p 2416; Ex. 114). Nachreiner reviewed the MURK forms with Toptsidis and compared them to the quality control records and was reasonably certain that every credit was factored into Erie's final number (T:233). Prior to the close-out meeting with the State on March 30, 2015, Nachreiner sent the State two large binders of supporting proof pertaining to the dispute, which included all the invoices, the MURK sheets, the daily reports, the weekly summations, the monthly summations, the letters to the State and the RFIs (T:233-234).
The State challenged Erie's rate of payment for Workers' Compensation (T:234). Erie responded with a letter from its insurance carrier which satisfied the State (T:235, 244-246; Ex. 117, p 50; Ex. 118). The State did not question any other documentation in the binders (T:236). There was no resolution of the dispute at the close-out meeting. The State did not raise any issues with the bid documents or request any further information (T:240).
Additional excerpts of Hallios' testimony were read into the record regarding Erie's bid methodology and bid documents. Hallios testified that when finished his analysis of the project and the square meters, Markos Bahas came up with a unit price based upon his experience (T:488-489). Hallios printed out the Shapebook summary of the calculations generated and saved it in the paper file on Erie's computer (T:490, 500). Hallios also prepared an Excel spreadsheet that was saved on Erie's computer and in the paper file at Erie's office (T:501-502). There were no other written materials on Erie's pricing (T:490).
When Hallios left his employment at Erie, he did not take the paper copy of the Shapebook summary or the Excel spreadsheet and he did not remove that information from Erie's computer (T:502). No one from Erie contacted Hallios to ask if he had copies of those documents or the paper file from the project (T:502-503).
The State's Motion for Summary Judgment
At the conclusion of claimant's case, the State moved for summary judgment arguing that claimant is not entitled to any payment for the alleged extra work for three reasons (T:362).
The Court notes that the State incorrectly denominates its trial motion as a motion for summary judgment.
First, the State argues that the contract clearly and unambiguously establishes that the parties intended that Erie was to rely upon its own personal investigation, which included reviewing the plans and verifying the conditions and dimensions affecting the work and that Erie did not make a reasonable inspection of the Plan Sheets or of the job site in preparing its bid. In support of its position, the State argues that Mark Sweeney, Servidone's project manager and estimator, "admitted that there was enough information contained in the plans to estimate the job" and that Erie "could've looked into plans and figured it out" (T:362-363). Thus, the State maintains that the alleged extra work resulted solely from Erie's failure to perform it's contractual duties.
Second, the State argues that the contract provides that Erie was not to "merely rely upon... one error in a note in the plans" (T:362-363).
Third, the State maintains that Erie is deemed to have knowledge of the facts based upon having conducted a reasonable site inspection and the State maintains that Erie did not do a reasonable site inspection. Therefore, Erie cannot recover absent a showing of fraud or misrepresentation by the State.
Claimant opposed the State's motion and countered the State's three arguments.
First, claimant disputes the State's characterization of Sweeney's testimony as an admission that Erie did not review the plans and that, had Erie conducted a reasonable inspection of the plans, Erie would have been able to estimate the job. Rather, claimant argues that Sweeney merely testified that a review of the plans was sufficient to come up with a "ball park" or an "approximation" of the total amount of square meters (T:363-364).
Second, claimant argues that Erie did not unreasonably rely solely upon one note on the State's Plan Sheet No. 782 as a basis for preparing its bid. To support its position, claimant cites to the testimony of Christopher Nachreiner, Erie's project manager and estimator, and Markos Bahas, Erie's President, to establish that Erie's bid estimator reviewed the Plan Sheets, the specifications and the contract documents, and then met with Markos Bahas to calculate the bid (T:363).
Claimant maintains that Erie's reliance upon the total quantity of square meters specified by the State on Plan Sheet No. 782 was reasonable because it was the "only way" to bid the job as there was no way to calculate the total quantity of painted structural steel on the bridge based upon the information provided by the State (T:363-364). Specifically, claimant argues that the Plan Sheets do not provide the actual dimensions of the members of steel on the bridge, and that, while the Plan Sheets may provide enough information for an "approximation" or a "ball park" of the dimensions, the information is insufficient to permit a calculation of the total quantity of square meters of painted structural steel on the bridge (T:364). Therefore, claimant argues that Erie had no choice, but to rely upon the States's note that "THERE ARE 2600 SQUARE METERS OF PAINTED STRUCTURAL STEEL ON THE BRIDGE," which was not an approximation or an estimation, but rather a definitive representation of the total amount of square meters of painted structural steel on the bridge (id.; Ex. 22).
Claimant posits that, if there was enough information in the plans to calculate the total quantity of square meters, then why did the State insert a definitive number? Claimant reasons that the State could have let the plans speak for themselves and left the calculation up to the contract bidders or the State could have provided the contract bidders with the as-built and record plans of the bridge to enable an accurate calculation of the total quantity of square meters (T:364-365).
Third, claimant argues that the State's representation on its Plan Sheet No. 782 that there are 2,600 square meters of painted structural steel on the bridge was an affirmative misrepresentation. Stuart Goodrich, the State's design engineer who prepared the Plan Sheet, testified that he chose Note 56 from the State's Bridge Design Manual to insert into the Plan Sheet and that the note called for the actual amount of square meters to be specified and verified to the nearest 10 square meters. Goodrich conceded that 2,600 was an error on the Plan Sheet that should have been corrected because on November 22, 2010, more than a year and a half prior to the advertisement for bids on July 18, 2012, Goodrich calculated the actual quantity to be 7,635 square meters. Accordingly, claimant argues that Erie reasonably relied upon the State's affirmative misrepresentation to Erie's detriment and that the State must be held liable (T:365).
The Court reserved decision on the State's motion.
At the conclusion of the evidence presented at trial, the State renewed its motion and claimant renewed its opposition (T:468). The Court reserved decision.
Claimant's Motion for a Directed Verdict on Liability
Additionally, at the conclusion of the evidence, claimant moved for a directed verdict on the issue of liability (T:472). In support of its motion, claimant argues that the proof establishes that the State breached the contract by its affirmative misrepresentation of a material fact that there are a total of 2,600 square meters of painted structural steel on the bridge at a time when the State knew, based upon the testimony of its design engineer, Stuart Goodrich, that the quantity was far greater (Exs. 38, 56). Goodrich testified that on November 22, 2010, he calculated 7,635 square meters of painted structural steel on the bridge (Exs. 38, 56; T:477). He calculated that amount based upon his review of the record plans and the as-built plans. Goodrich's calculation of 7,635 square meters was not disclosed to the contract bidders and neither the record plans nor the as-built plans were provided to the contract bidders. Hans Priebe, the State's Engineer in Charge of the project, testified that the best method to obtain an accurate calculation for the structural steel on the bridge was to measure it. Upon discovering that the 2,600 square meters was not accurate, Erie and Servidone measured the bridge. Erie and Servidone gave prompt notice to the State of its error and provided the State with the MURK records to support the claimed damages for the extra work.
In conjunction with its motion for a directed verdict on liability, claimant also moved to dismiss the State's affirmative defenses (T:474-476).
The first affirmative defense asserts that the claim fails to state a cause of action. Claimant argues that it established all of the elements of a cause of action for a breach of contract by the State.
The second affirmative defense asserts that the State paid in full for all the work performed under the contract. Claimant argues that the State did not pay for any of the alleged extra work that was necessary to be performed to complete the work under the contract.
The third and the ninth affirmative defenses assert that claimant did not conduct an inspection or a site visit. Claimant maintains that the evidence establishes that an inspection and a site visit were conducted prior to the bid submission.
The fourth affirmative defense asserts that claimant waived its claim by not producing Erie's bid documents as required under the contract specifications. Claimant argues that there was no testimony to establish that Erie failed to produce its bid documents and the State never conducted an audit of Erie's records after the bid documents were produced (T:475).
The fifth affirmative defense was withdrawn by stipulation of the parties (T:475).
The sixth affirmative defense asserts that the claim is barred or limited by the terms of the contract. Claimant argues that those terms were addressed under the previous affirmative defenses.
The seventh and eight affirmative defenses assert a qualified immunity. Claimant aintains that the State is not afforded such immunity in a breach of contract claim.
The State opposed claimant's motion for a directed verdict on liability and for the dismissal of the State's affirmative defenses (T:477). In that regard, the State argues that claimant did not establish that the State breached the contract and therefore claimant is not entitled to any additional payment. The State makes three arguments in support of its opposition.
First, the State argues that the contract clearly and unambiguously establishes that the parties intended for Erie to rely upon its own personal investigation, which included reviewing the plans and verifying the conditions and dimensions affecting the work and that Erie was not to "merely rely upon a single note" on a Plan Sheet provided by the State (T:477-478). The State noted that Section 102-2 of the Standard Specifications anticipates that mistakes or errors in the Plan Sheets may exist and that contract bidders are warned not to "take advantage" of those errors (T:478). Thus, the State maintains that its one error in the plans does not establish a breach of contract by the State (id.).
Second, the State argues that claimant did not investigate and verify the conditions and the dimensions affecting the work and "thereby assumed the risk" (id.). According to the State, Mark Sweeney, Servidone's project manager and estimator, "admitted" that there was enough information contained in the Plan Sheets to estimate the job, that an estimate could be calculated from the drawings provided by the State, and that the job could be estimated by using simple surveyor's tools (id.). The State also argues that the testimony of Scott Geiger, the State's construction manager, establishes that there was a five-week bid period and that it takes less than one week to obtain a work permit and a lane closure, if necessary, yet Erie did not seek a work permit or a lane closure. Thus, the State maintains that the alleged extra work was a result of Erie's reliance upon one error in a note on the State's Plan Sheet and Erie's failure to perform its contractual duties to verify the dimensions listed in that note. The State posits that "[o]ne mistake in the plans does not mean [claimant] wins" as the evidence showed that, had Erie examined the Plan Sheets, the specifications, the contract and, personally inspected the actual location of the work beyond looking to see where the staging might be placed, Erie would have known that there was an error on the Plan Sheet (T:478-479).
Third, the State argues that Erie had sufficient experience to know that there was an error on the Plan Sheet note simply by looking at the job and "eyeballing it" (T:479). In support of this argument, the State questions the credibility of Pete Toptsidis, Erie's superintendent and job inspector, regarding his testimony that he was not able to look at the bridge and see that the total amount of square meters of painted structural steel was more than twice what was represented by the State on its Plan Sheet (id.).
In further support of its position, the State cites to a 1905 First Department case, Lentilhon v City of New York (102 AD 548, 549 [1st Dept 1905]), for the proposition that a contractor who makes a lump sum bid for the entire performance of given work for a municipality "must assume the risk as to the nature and quantity of the work to be performed, even though approximate estimates of the quantities of such work, prepared by the municipal authorities for the guidance of bidders, prove to be materially incorrect" (id.). The State further argues that, if Erie had done a reasonable inspection of the site or the Plan Sheets, Erie would have discovered the error prior to bidding and could have submitted an RFI or chosen not to bid on the job (id.).
In opposition to claimant's motion to dismiss the State's affirmative defenses, the State maintains that there was no breach of contract because Erie's reliance upon one note in the State's Plan Sheet was not reasonable and that there are no damages because claimant's costs were less than the lump sum bid and claimant was paid in full (T:479-480). Additionally, the State argues that Erie did not conduct a "real" site visit to check the dimensions of the bridge; thus, Erie failed to meet its contractual obligations (T:480). The State also argues that the bid documents provided by Erie to the State were not sufficient because they did not contain any calculations or reference to 2,600 square meters and there was no bid price per square meter (id.).
The Court reserved decision on claimant's motion for a directed verdict on liability and the motion to dismiss the State's affirmative defenses (T:484).
The trial resumed on January 11, 12, 2023 and February 14, 2023.
The Relevant Portions of the Statement of Stipulated Facts, the Exhibits and the Trial Testimony Pertaining to Damages
Claimant then presented the testimony of Christopher Nachreiner, Erie's project manager and estimator, regarding how the alleged damages were calculated. The State presented the testimony of Robert Gardner regarding the State's position that claimant has no damages because claimant's costs were less than claimant's bid and that the State paid claimant in full.
At the conclusion of the proof, the parties rested and claimant renewed its motion for a directed verdict on the issue of liability and the State renewed its opposition to claimant's motion (T:670). The State also renewed its motion for summary judgment dismissing the claim and claimant renewed its opposition (id.). The Court reserved decision on the motions (id.).
The parties then made their summations to the Court. Thereafter, the parties ordered the trial transcripts and submitted post-trial closing briefs of their summations.
Analysis
The Court has carefully considered all the arguments made the parties regarding the motions and opposition thereto, along with all the trial evidence, including the Statement of Stipulated Facts, the exhibits and the testimony of the witnesses. By listening to the witnesses and observing their demeanor as they testified, the Court has assessed the credibility of the witnesses and the weight to be accorded to their testimony. Upon the Court's due deliberation and its findings and analysis of the facts and the law as set forth below, the Court hereby renders its decision on the State's motion for summary judgment dismissing the claim, claimant's motion for a directed verdict on liability and the dismissal of the State's affirmative defenses, and the issue of damages.
The following portions of the Statement of Stipulated Facts are supportive of the Court's findings and relevant to the Court's analysis (Court's Ex. 2).
Paragraph 23 (a) provides in pertinent part:
"[a]rticle 3 of the Contract, entitled 'Examination of Documents and Site'states in full:' The Contractor agrees that before making its proposal it carefully examined the contract documents, together with the site of the proposed work, as well as its surrounding territory, and is informed regarding all of the conditions affecting the work to be done and labor and materials to be furnished for the completion of this contract,... and that its information was secured by personal and other investigation and research' (Def. Trial Ex. A, p 2) (emphasis added)."
Paragraph 23 (b) provides:
"[t]he Bid Proposal contains a Jurat that requires: '[ t]he bidder also hereby declares to have carefully examined the plans, specifications and form of contract, and to have personally inspected the actual location of the work together with the local sources of supply, to be satisfied as to all the quantities and conditions and understands that in signing this proposal waives all right to plead any misunderstanding regarding the same' (Def.Trial Ex. B, p 3) (emphasis added)."
Paragraph 23 (c) provides:
"[s]ection 102-02 of the Standard Specs of the Contract, entitled 'Examining the Contract Documents and the Work Site', requires that the contractor have examined the contract documents and the work site on its own and based its bid upon its review and observations. It also states '[t]he Bidder shall take no advantage of any apparent error or omission in the contract documents' (Def. Trial Ex. Q) (emphasis added)."
Paragraph 23 (d) provides:
"[s]ection 105-04 of the Standard Specs of the Contract states in relevant part that,' [i]n the event the Contractor discovers an error or omission in the contract documents, it shall immediately notify the Engineer. The Engineer will then make such corrections and interpretations as may be deemed necessary for fulfilling the intent of the contract documents' (Def. Trial Ex. Q) (emphasis added)."
Paragraph 23 (g) provides:
"Section 105-14 of the Standard Specs requires the Contractor to continue working during the pendency of any dispute. (Def. Trial Ex. Q)."
Paragraph 23 (i) provides:
"Plan Sheet No. 782 (Clt. Trial Ex. 22) labe[l]ed 'General Notes,' sets forth a number of 'Special Notes' applicable to 'Superstructures' which apply to this the bridge:
(1) SUPERSTRUCTURE NOTES: paragraph 6 - '[t]he structural steel for this bridge shall be completely painted. Finish coat shall be red. The color shall conform to Munsell book notation 7.5R 3/10. The viewing shall be done under north standard daylight. There are 2600 square meters of painted structural steel on the bridge '(Clt. Trial Ex. 22) (emphasis added). "
Paragraph 23 (j) provides:
"[t]he term 'shall' is a mandate to the contractor in the Superstructure Notes (Priebe EBT 80-82)."
Paragraph 23 (k) provides:
"[t]he phrase' there are 2600 square meters of painted structural steel on the bridge' is a definitive statement by the [State] (Priebe EBT 82) (emphasis added)."
Paragraph 24 provides:
"[t]he 'Superstructure Note', cited in subsection (i) above, is taken from section 17 of the DOT's Bridge Manual (Goodrich EBT 33-36); that Manual designates it as 'Note 56' from the Superstructure Notes (Clt. Trial Ex. 23, p.31, note 56). This note was selected from 1 of 5 notes from which the designer must choose to include in the plans for the project."
Paragraph 25 provides:
"[n]ote 56 of the Bridge Manual provides that 'the designer shall indicate area to nearest 10m2 '(Clt. Trial Ex. 23, p.31, note 56). The Bridge Manual also states that the notes 'provide necessary additional information for a project that cannot be easily included in a detail drawing' (Clt. Trial Ex. 23, p. 1).
(1) The term' shall' is a mandate to the designer in the Bridge Manual (Priebe EBT 119).
(2) The [State] did not indicate the area to be painted to the nearest 10-meters squared (Priebe EBT 116).
(3) Mr. Priebe did not calculate the surface area of the diaphragms and lateral bracing to be painted because it would take 'more time and effort' (Priebe EBT 71).
(4) Mr. Priebe could come up with an estimate, but it would not be exact (Priebe EBT 72) (emphasis added)."
Paragraph 26 provides:
"Plan Sheet no. 782 also contained this instruction for 'Cleaning Structural Steel on Bridges': 'It is anticipated that a significant portion of the structural steel in the bridge(s) identified above will require near white metal blast cleaning in accordance with Section 573 of the Standard Specifications. Therefore, bidders should inspect the bridge(s) carefully prior to submitting bids' (Clt. Trial Ex. 22) (emphasis added)."
In light of the aforenoted, the Court finds that the critical issues regarding liability are: (1) whether Erie relied solely on an apparent error in the total quantity of square meters of painted structural steel on the bridge as specified in Note 56 on the State's Plan Sheet No. 782, thereby taking advantage of an apparent error, resulting in a waiver of the right to plead a misunderstanding as to the total quantity of square meters of painted structural steel on the bridge; (2) whether Erie and Servidone met the contractual obligations of carefully examining the Plan Sheets, the standard specifications, and the job site, prior to making a lump sum bid or unreasonably relied upon the State's error in Note 56 on the State's Plan Sheet No. 782 as to the total quantity of square meters of painted structural steel on the bridge; and (3) whether the State's conceded error in Note 56 on the State's Plan Sheet No. 782 as to the total quantity of square meters of painted structural steel on the bridge constitutes an actionable affirmative misrepresentation by the State.
In support of its position, the State invokes a general rule set forth in the 1905 First Department case of Lentilhon (102 AD 548). In that case, the Court held that a contractor who makes a lump sum bid for the entire performance of given work for a municipality" must assume the risk as to the nature and quantity of the work to be performed, even though approximate estimates of the quantities of such work, prepared by the municipal authorities for the guidance of bidders, prove to be materially incorrect (emphasis added)" (id. at 549). The very quote invoked by the State distinguishes Lentilhon from the case at bar as set forth below.
In the case at bar, the State chose Note 56 to insert into Plan Sheet No. 782, which requires the State to provide a definitive number of the total quantity of square meters. According to the State's Bridge Manual, the notes inserted by the State into a Plan Sheet "provide necessary additional information for a project that cannot be easily included in a detail drawing" (Court Ex. 2, ¶ 25). Additionally, the State's Bridge Manual mandates that when the State's designer inserts Note 56 into the State's Plan Sheet, "the designer shall indicate area to the nearest 10 m2 (emphasis added)" (Ex. 23, p 31; Court Ex. 2, ¶ 25). The State inserted 2,600 into Note 56 on the State's Plan Sheet, which the State's engineers, Scott Geiger and Hans Priebe, concede is not an estimate or an approximation (T:264, 465). The State further concedes that 2,600 does not indicate area to the nearest 10 square meters (Ex. 23, p 31; Court's Ex. 2, ¶ 25 [2]). The correct quantity calculated by the State on November 22, 2010, is 7,635 square meters, which Stuart Goodrich, P.E, the State's designer and job manager who prepared Plan Sheet No. 782, concedes is "substantially" more than the 2,600 square meters represented by the State on its Plan Sheet (Court Ex. 2, ¶¶ 47, 54, 56; T:342).
Thus, the Court finds that Lentilhon (102 AD 548) is clearly distinguishable from the case at bar. In the instant case, the Court finds that the total quantity of 2,600 square meters set forth by the State in Note 56 on the State's Plan Sheet was not an "approximate estimate[s] of the quantit[y]" merely for "the guidance of bidders," as in Lentilhon (102 AD at 549). Rather, the Court finds that 2,600 square meters is a definitive representation of the quantity of the total amount of painted structural steel on the bridge. Additionally, the amount represented by the State in Note 56 is mandated by the State's Bridge Manual to be accurate to the nearest 10 square meters (Ex. 23, p 31; Court Ex. 2, ¶ 25). Therefore, this Court is not led to the same conclusion as in Lentilhon, i.e., that claimant" must assume the risk" that the State's representation as to the quantity of the work to be performed would prove to be materially incorrect (Lentilhon, 102 AD at 549). Rather, on the facts presented in the instant case, this Court finds that claimant is not held to have assumed the risk that the State's definitive representation of 2,600 square meters as the total quantity of painted structural steel on the bridge, as set forth in Note 56 on the State's Plan Sheet, would prove to be materially incorrect.
The facts of Lentilhon and the First Department's reasoning further distinguishes Lentilhon from the case at bar. In Lentilhon (102 AD at 553), the First Department noted that there was no definitive representation of the quantity of material to be removed or the quantity that might be utilized for ground fill. Rather, the plans upon which the contractor had relied proved to be inaccurate with regard to the angle of the slope depicted. Additionally, the First Department noted that, prior to the contractor's bid, the contractor was referred to a letter published in the City Record from the Board of Park Commissioners concerning the preliminary estimates for the work of removing the reservoir where the Board explains the "difficulty of making an accurate estimate for work of this character, for which there is no precedence (emphasis added)" and its estimates are qualified as "figuring as near as we can from the existing plans (emphasis added)" (Lentilhon 102 AD at 554). The First Department reasoned that while the contractor may have been misled by the angle depicted in the plan drawing,
"the contractor in the circumstances was scarcely justified in relying upon the plan for quantities. There was no representation that it was made from an actual survey and in fact the letter published in the City Record which [the contractor] had read rather indicated the contrary.... We are of the opinion that there was no warranty or guaranty in law as to the correctness of the plan as a basis for ascertaining the quantity of material to be removed by the contractor. The plan was designed to indicate the location of the walls that were to be removed and the levels and extent of excavation and the levels to which hollows were to be filled; but we think it was not intended as a basis upon which bidders were to figure the quantities of material to be removed, and that the express provisions of the contract and specifications requiring the removal of the entire reservoir structure were controlling (emphasis added)"(id. at 556-557).
In the case at bar, the contract bidders were not referred to a letter, as in Lentilhon (102 AD 548), which expressly warned of the difficulty in making an accurate "estimate," for which there was no precedence, and which estimate was qualified by a statement explaining that the estimate was formulated by "figuring as near as we can from the existing plans (emphasis added)" (Lentilhon 102 AD at 554). Another distinguishing factor is that in Lentilhon the contract bidders were not assured of the correctness of the plan as a basis for ascertaining the quantity of material to be removed (id. at 557).
By contrast, in the case at bar, Stuart Goodrich, P.E, the State's designer and job manager who prepared Plan Sheet No. 782, testified that a contract bidder could reasonably rely upon the number of square meters as specified in Note 56 on the State's Plan Sheet that "THERE ARE 2600 SQUARE METERS OF PAINTED STRUCTURAL STEEL ON THE BRIDGE" (T:328). Thus, the Court concludes that the State's reliance upon Lentilhon is wholly misplaced because the State's representation in Note 56 on the State's Plan Sheet is not an estimate or an approximation, but rather, an affirmative and definitive representation of a material fact upon which contract bidders could reasonably rely (Exs. 21, 22).
Significantly, the State was not mandated to insert Note 56 from the Bridge Manual into the State's Plan Sheet. The State had multiple other options which did not require the State to provide a definitive number of the total quantity of square meters, which was required by the State's Bridge Manual to be accurate to the nearest 10 square meters. The State freely selected Note 56 to be inserted into the State's Plan Sheet and therefore the Court finds that it was incumbent upon the State to comply with the applicable mandate of the State's Bridge Manual that the number inserted into Note 56 be accurate to the nearest 10 square meters and for the State to confirm that the State's representation was accurate.
The Court finds that it is disingenuous of the State to choose Note 56 and then to argue that it is unreasonable for a contract bidder to rely upon the State's definitive quantity because it is the contract bidders that are charged with the responsibility of uncovering the State's error in a multiple-step process. In that regard, the State's attorney directed Mark Sweeney, Servidone's project manager and estimator, through multiple steps and mathematical calculations using the figures depicted on the State's Plan Sheet No. 788, along with the scale on Plan Sheet No, 779. The State's attorney endeavored to convince the Court that anyone, even the State's attorney, who is admittedly not an engineer or an estimator, could easily calculate a portion of the job from the information provided by the State's Plan Sheets and then, compare that calculated portion to the total amount of square meters specified by the State on Plan Sheet No. 782, to uncover that the State's error was apparent (T:121-127). Thus, the State's attorney argues that the evidence clearly establishes that the State's error was, or should have been, apparent to Servidone and Erie.
The Court is not persuaded by the efforts of the State's attorney to establish that the State's misrepresentation, in Note 56 of the State's Plan Sheet, of the critical calculation of the total quantity of square meters of painted structural steel on the bridge, was or should have been apparent to the contract bidders. Rather, the Court finds that the State's error as to the total quantity was not apparent. Additionally, the Court finds that the State's design engineer and project manager, Stuart Goodrich, P.E., who selected Note 56 to be inserted into the State's Plan Sheet and who was charged with the professional duty to accurately reflect the total quantity of square meters of painted structural steel on the bridge to the nearest 10 square meters as mandated by the Bridge Manual, was completely derelict in his duties for which he possesses a professional degree and expertise (T:321-323, 330-332).
Notably, Goodrich testified that a contract bidder could reasonably rely upon the total quantity that Goodrich had inserted into Note 56 on the State's Plan Sheet (T:321-323, 328, 330-332). Goodrich stamped the Plan Sheet with his engineer's seal and he conceded that the number he inserted into Note 56 should have been verified for accuracy. Yet, despite the check by John Reilly and a subsequent review by the State's Design Quality Assurance Bureau, the 2,600 that Goodrich inserted into Note 56 of the State's Plan Sheet was "overlooked" and the error, which was discovered by Goodrich on November 22, 2010, was never corrected on the Plan Sheet before it was released to the contract bidders (T:321, 333, 335-338, 342).
The Court finds that Goodrich's testimony conveyed an unprofessional and cavalier disregard for the mandates of the State's Bridge Manual and the reasonably foreseeable impact that the State's error could have on a contract bidder competing for the State's contract. It is further disconcerting to the Court that the State's Design Quality Assurance Bureau, which is charged with the final review of the entire bid package, failed to discover and rectify the State's error in Note 56 on the State's Plan Sheet before the bid package was released to the contract bidders. The undisputed trial testimony of the State's engineers Stuart Goodrich and Hans Priebe and the documentary evidence shows that, as of November 22, 2010, more than a year and a half prior to the State's advertisement for contract bids, the State knew that the 2,600 that it inserted into Note 56 on the State's Plan Sheet was a substantial error and the State did nothing to alert the contractor bidders of the State's error (T:276-279, 282-283,336-337; Ex. 38).
Despite the State's error in its affirmative and definitive representation in Note 56 on the State's Plan Sheet of the total quantity of square meters of painted structural steel on the bridge and the State's awareness of its substantial error for more than a year and a half prior to the State's advertisement for contract bids, the State attempts to absolve itself from responsibility for its egregious error by attacking the credibility of Pete Toptsidis, Erie's superintendent and job inspector, who had 40 years of experience in the bridge painting business. Specifically, the State argues that Erie's reliance upon the State's erroneous representation as to the total quantity of square meters was unreasonable because Erie had sufficient experience to determine, simply by "eyeballing" the bridge, that the quantity specified by the State was an apparent error (T:479). The Court finds the State's attack upon the credibility of Toptsidis to be unavailing. Rather, the Court finds Toptsidis to be forthright and credible in his testimony that he could not tell merely by looking at the bridge, and not measuring it, that the painted structural steel on the bridge totaled more than 2,600 square meters (T:53-54). Toptsidis testified that he was not an estimator and was not involved in the bidding process and that one cannot tell the square meters of the bridge without measuring it (T:54). He testified that, "I never measured by my eye. I go up there and measure it" (id.). Toptsidis further testified that an accurate measurement of the total quantity of square meters of painted structural steel on the bridge required access to the bridge via a constructed platform, which was not in place at the bidding phase and was not constructed until after the contract was awarded.
Additionally, the Court credits the testimony of Leontios Bahas, Erie's Vice-President, who worked on hundreds of bridges painting and blasting and who assisted in estimating jobs. He testified that it was "not possible" to "eyeball" a bridge for an estimate of the square meters, "[y]ou need to actually physically measure the bridge to get an accurate measurement" (T:144).
The Court further notes that the State did not provide the contract bidders with the as-built or the record plans, which contained the actual measurements of the bridge, nor did the State provide the contract bidders with a copy of the State engineer's calculations addressing the State's error in Note 56 on the State's Plan Sheet (T:192). Notably, Hans Priebe, a licensed civil engineer and the State's Engineer in Charge of the project, conceded that there was insufficient information provided by the State to the contract bidders to calculate the total square meters of painted structural steel on the bridge and he disagreed with the State's position that the Plan Sheets contained enough information to compute the actual amount of square meters (T:266-275; Exs. 27, 36). Additionally, the State's construction manager and licensed professional engineer, Scott Geiger, conceded that the Plan Sheets would allow a bidder to come up with an approximation, but not the actual area to be painted (T:438-439, 442).
Christopher Nachreiner, Erie's project manager and estimator, testified that he was not able to calculate the total square meters of structural steel from the plans (T:189). He noted that there was nothing on Plan Sheet No. 779 regarding the steel measurements and he would "never use the scale to come up with an approximate number... because everything we do is based off of square footage of actual structural steel and using that scale, you can't accurately tell how much steel is there" (T:189-190; Ex. 20). In reviewing Plan Sheet No. 788, Nachreiner noted that an approximate length of the bridge and the steel girders could be determined but that you could not determine the area of the end diaphragm pieces, the intermediate diaphragm pieces, or the lateral braces because the Plan Sheet indicates N.T.S. (Not To Scale) (T:189-192; Ex. 21).
The State argues that Mark Sweeney, Servidone's project manager and estimator, "admitted that there was enough information contained in the plans to estimate the job" and that Erie "could've looked at the plans and figured it out" (T:363). The Court does not find the State's argument to be compelling. The Court listened to the witness testify and observed his demeanor as he did so, and finds that Sweeney's responses to the pointed questioning by the State's attorney were ineffective in having the witness concede anything beyond, "[a]t some point, I guess the answer's yes but it's not realistic" (T:121).
Markos Bahas, Erie's President, provided compelling testimony in a forthright manner regarding his experience of over 40 years in preparing bids and his continued reliance upon the State's specified numbers without any occurrence of error. Additionally, the Court finds that the testimony of Markos Bahas as to his long-standing experience with the State and his preparation of bids would not lead him in this matter to engage in the multi-step process to uncover the State's error as posited by the State's attorney. Specifically, the Court finds that, on the facts presented in the instant case, it is incredulous to argue that a contract bidder was required to calculate a portion of the project from the Plan Sheets and then compare that calculated portion to the total number of square meters specified by the State in Note 56 on the State's Plan Sheet, in an attempt to uncover whether the State had committed an error in its definitive and affirmative representation of the total quantity in Note 56 on the State's Plan Sheet.
In sum, the Court finds that the evidence establishes that the State made an affirmative and definitive representation as to the total quantity of square meters of painted structural steel on the bridge and that, despite the State's arguments to the contrary, that the State's error was not an apparent error which was, or should have been, apparent to Erie or Servidone. The Court further finds that Erie's reliance upon the State's affirmative and definitive representation of the total quantity of square meters was reasonable in light of the State's failure to provide the contract bidders with sufficient information in the Plan Sheets, copies of the as-built or record plans, or a copy of the State engineer's calculations, to permit an independent calculation of the total quantity of square meters by the contract bidders. Thus, the Court finds that claimant did not waive its right to plead a misunderstanding of the same and that claimant did not assume the risk that the total quantity represented by the State would prove to be materially incorrect (cf. Dean v Mayor of City of NY, 167 NY 13, 16-17 [1901] ["(u)pon the face of this plan appeared figures, showing estimates relating to the work to be done and... [t]hese figures as to quantities were stated to be approximate only;" the Court of Appeals held that "[a]s the figures of estimates...were approximate only it was not a controlling circumstance that they were inaccurate..." and the bidders were held to the contractual duty of satisfying themselves as to the stated quantities] [emphasis added]; Sullivan v Village of Sing Sing, 122 NY 389, 393-394, 396 [1890] [(t)he contract specifications expressly stated "(t)he following is an approximate estimate of the quantities" and "NOTE-The above quantities are approximate only... the Board of Trustees do not hold themselves absolutely bound by them" and the Court of Appeals held that the contract specifications "quite clearly" indicated that "it was the intention of the parties... not to regard the quantities named as furnishing anything more than defendants' estimate"][emphasis added]).
The Court further finds that the evidence establishes that, due to the State's failure to provide sufficient documentary information to calculate the total quantity of painted structural steel on the bridge, the only way to accurately calculate the total quantity was to measure it from a constructed platform. While such efforts may be necessary to undertake when the State does not provide a definitive quantity and leaves the calculations to the contract bidders, here the State affirmatively chose to insert a total quantity and did not provide sufficient documentary information to permit an independent calculation of the total quantity by the contract bidders. Contrary to the State's arguments, the Court finds that, on the facts presented, neither Servidone nor Erie was required to obtain a work permit and a lane closure for a closer inspection of the bridge to satisfy its contractual obligations and to determine whether the State's definitive number inserted in its Plan Sheet was in fact an error. The Court finds that such efforts to uncover the State's "apparent error" defies the ordinary meaning of apparent as was intended by the standard specifications of the contract (Ex. Q, p 26). The Court further notes that the testimony of Leontios Bahas establishes that, "[t]ypically the industry standard is the State provides a lane closure prior to the bid for all bidding... contractors... so everybody could see everything equally and fairly. But... there was no option in the proposal to request for a lane closure permit" (T:170).
Accordingly, the Court finds that claimant is not precluded from recovery for failing to obtain a lane closure and constructing a platform to measure the bridge during the five-week period between the advertisement for bids and the opening thereof (see County Asphalt v State of New York, 40 A.D.2d 26, 30-31 [3d Dept 1972] [A contractor was permitted to recover for the State's omissions and misrepresentations regarding the subsurface conditions of the soil which was not reflected in the information provided by the State to the prospective bidders; the Court held that the prospective bidder should not be forced to rely upon any inspection that could possibly have been made within the three-week period between the advertisement for bids and the opening thereof, over the misleading information supplied by the State]).
Additionally, the Court finds that the evidence establishes that Servidone and Erie met the contractual obligations of carefully examining the contract documents, the Plan Sheets, the specifications, the site of the proposed work, and the bridge, prior to making its bid and that Erie reasonably relied upon the State's representation in Note 56 on the State's Plan Sheet of the total quantity of square meters of painted structural steel on the bridge.
The Court rejects the State's arguments that the evidence established that Erie unreasonably relied solely upon an apparent error in the quantity of square meters represented in one note on the State's Plan Sheet and took advantage of an apparent error thereby waiving the right to plead a misunderstanding of the same. Rather, as set forth above, the Court finds that the evidence establishes that the error was not apparent and that neither Servidone nor Erie waived the right under the contract to bring a claim for damages regarding the State's conceded error in Note 56 on the State's Plan Sheet and the State's failure to correct the error when it was discovered on November 22, 2010, more than a year and a half before the State's Plan Sheet was released to the contract bidders.
The Court further finds the testimony of Markos Bahas, Leontios Bahas and Christopher Nachreiner to be forthright and credible regarding Erie's bidding methodology and its reliance upon the State's affirmative representation on its Plan Sheet of 2,600 as the definitive quantity of the total amount of square meters of painted structural steel on the bridge. In that regard, it was established that Markos Bahas calculates the bid proposal by a standard custom and practice of doing mostly everything in his head because he does not read or write well and he does not have any computer knowledge (T:140-141, 143). The contract documents are read by Erie's estimator who then communicates the details to Markos Bahas verbally (T:141-142). Leontios Bahas performs an inspection of the site and then reports back to Markos Bahas verbally (T:142-143). Markos Bahas then calculates a price per square meter in his head (T:141-142). He then multiplies that price, using a handheld calculator, by the quantity of the square meters of the job (T:156).
Leontios Bahas testified that he complied with the State's request for all the bid documents by producing Erie's bid folder which contained Google images of the bridge, a copy of an email between Nick Hallios and Servidone dated April 14, 2012, a copy of an email from Nachreiner regarding the cost per gallon for paint to cover 2,600 square meters, a copy of an email from June 2013 between Nachreiner and Sweeney confirming the price of $1,229,800 and the bid tabulation sheet and the bid sheet that Erie had submitted to Servidone (T:151-161). The bid sheet submitted to Servidone was also found on Erie's server and listed all of Erie's pay items and the bid amount for each item (T:155; Ex. 48, p 2352). Leontios Bahas explained that the handwriting on the bid sheet and the notation "Revised" indicated that Erie and Servidone had made a deal to revise the bid amount because Erie had agreed to build the platform (T:155-156; Ex. 48, p 2352). Leontios Bahas testified that the bid sheet was a form document that Erie used (T:156). He explained that his father, Markos Bahas, does not use the form (T:156). Rather, Markos Bahas tells the estimator the price per square meter and then to multiply that number by the number of square meters on the bridge (id.). The numbers are then plugged into the form (id.). Leontios Bahas explained that the bid sheet indicated a price per square meter of $414.00 (T:156-157; Ex. 48, p 2352).
Leontios Bahas testified that he was not surprised that the folder did not contain any other information such as "take-off sheets" as the contents in the folder were "common... for a job that you would bid that the square meters or square footage were given to you" (T:154). Nachreiner also testified that he was not surprised that there were no handwritten notes or takeoffs in the bid folder because the quantity of square meters had been included in the contract (T:240).
All the documents found in the bid folder were sent to the State in April 2015 (Ex. 48; T:154-155, 161). Thereafter, the State never contacted Erie regarding an audit or an examination of the project file maintained in Erie's office nor did the State ever indicate that the information supplied by Erie was insufficient to support Erie's reliance upon the 2,600 meters specified by the State (T:161-162). Leontios Bahas assumed that the State's silence indicated that Erie had satisfied the State's request (T:162). The State did not present any testimony regarding any request made for any additional bid information from Erie. Accordingly, the Court finds that Erie produced sufficient bid documentation to establish Erie's reasonable reliance upon the State's representation on its Plan Sheet of the total quantity of 2,600 square meters.
Next, the Court rejects the State's argument that, under the terms of the contract, claimant waived its right to seek damages against the State for the State's conceded error on its Plan Sheet contained within the contract documents provided to the contract bidders (see Jackson v State of New York, 210 AD 115, 119 [4th Dept 1924], affd on opinion below, 241 NY 563). In that regard, the Court finds the holding and reasoning of the Court in Jackson to be instructive. In Jackson (210 AD 115), the State had knowledge that the contract material was more difficult and expensive to excavate than the material represented on the State's plans. Thus, in Jackson (210 AD 115) the Court held that the State had misrepresented a material fact entirely contrary to the actual fact known by the State when the State's representation was made. Therefore, the Jackson Court held that, the State could not induce a party to enter into the contract to its damage, and then protect itself from the legal effect of such misrepresentation by invoking an exculpatory clause in the contract. The contract provision invoked by the State in Jackson (210 AD 115) provides that the contractor must be satisfied by its own investigation and research regarding the materials and necessary labor and shall make no claim against the State because any of the State's representations of any kind affecting the work may prove to be erroneous. The Jackson Court reasoned that if the effect of misrepresentation and fraud could be easily avoided by the contract provision invoked by the State, then the implied covenant of good faith and fair dealing in every contract would cease to exist.
While "[i]t may be conceded that... the contract would afford protection to the state on a claim for damages because of an innocent mistake in the plans upon which bids were received... and had not had in its possession other information which disclosed that [which]... was different than shown on said sheets, then there might not be any liability on the part of the state" (Jackson, 210 AD at 120). Here, however, the State knew on November 22, 2010, that the quantity of total square meters of painted structural steel on the bridge that the State represented in Note 56 on the State's Plan Sheet and submitted to the contract bidders on July 18, 2012 was in error. The error was a significant misrepresentation of a material fact to the contract. Thus, the Court finds in the instant case that the State's error in Note 56 on the State's Plan Sheet "was a representation of a fact entirely contrary to the actual fact known by the state when the representation was made" and the State, despite its knowledge of its error on November 22, 2010, did nothing during the more than a year and a half before the State's Plan Sheet was released to the contract bidders on July 18, 2012, to address the State's error (id. at 119). The State affirmatively represented the total amount of square meters of structural steel listed in Note 56 on the State's Plan Sheet and admittedly did not correct its error when it had knowledge and the opportunity to correct it. The Court finds that such conduct by the State was "a representation of a fact entirely contrary to the actual fact known by the state when the representation was made" and thus constitutes an affirmative misrepresentation by the State (id.).
As stated by the Court in Jackson (210 AD 115), "[a] party to a contract cannot, by misrepresentation of a material fact, induce the other party to the contract to enter into it to [the party's] damage, and then protect [itself] from the legal effect of such misrepresentation by inserting in the contract a clause to the effect that [the offending party] is not to held liable for the misrepresentation which induced the other party to enter into the contract" (id.). Thus, the Court finds that, in the case at bar, the State's exculpatory clauses in the contract do not insulate the State from liability for its affirmative misrepresentation of a material fact and that the claimant did not waive its right to seek damages against the State for its affirmative material misrepresentation of a material fact (id.; see Grow Constr. Co. v State of New York, 56 A.D.2d 95, 97 [3d Dept 1977] [In a highway construction contract with an exculpatory clause, the Court found that "the State was guilty of supplying misleading bidding information" which the State should have known was misleading and that the State's misrepresentation resulted in its liability to the contractor for a percentage of the resulting increased costs to the contractor]; Rusciano Constr. Corp. v State of New York, 37 A.D.2d 745, 746 [3d Dept 1971] ["The exculpatory clauses in the contract and in the invitations to bid do not insulate the State from liability where the conditions are not as represented in the contract and inspection by the contractor would not reveal the representation to be false"]; Tully & Di Napoli v State of New York, 34 A.D.2d 439, 443 [3d Dept 1970] ["Despite exculpatory clauses in a contract, the State may be held liable for damages caused by its active interference, misrepresentations, fraud or bad faith"]).
In sum, the Court finds that the credible evidence establishes that, under the circumstances presented, the State is liable for its affirmative misrepresentation in Note 56 on the State's Plan Sheet of the total quantity of 2,600 square meters of painted structural steel on the bridge and that claimant is entitled to an award of damages arising out of Erie's performance of the disputed work that was beyond the 2,600 square meters set forth in Note 56 of the State's Plan Sheet.
The Court is not persuaded by the State's argument that claimant did not any incur damages. In that regard, the Court notes that the State's position is based upon a comparison of the initial bid submitted to the State and the costs incurred by Erie, without taking into consideration that the initial bid was based upon Erie's price per square meter for a total quantity of 2,600 square meters of painted structural steel on the bridge, as reflected in Note 56 of the State's Plan Sheet, and did not include the disputed square meters of painted structural steel on the bridge (T:295-299). Thus, the State's position is flawed.
The Court finds that claimant has demonstrated entitlement to an award of damages pursuant to §105-14 (A) of the contract specifications for the disputed work under both subdivision (1) and (2) (Ex. Q, pp 89-90). Erie's determination of the total amount of damages sustained was reasonable in light of the fact that Erie had blasted, primed and painted the entire bridge in three successive steps rather than completing all the work on the first 2,600 square meters before beginning on the disputed part of the bridge (see J.R. Loftus, Inc. v White, 85 N.Y.2d 874, 877 [1995] [Where the measure of damages is unavoidably uncertain or difficult to ascertain, there must, nevertheless, be a reasonable connection between the proof presented and the award of damages]). The Court is mindful of the difficulties that Erie faced in separating the costs incurred regarding the first 2,600 square meters of painted structural steel on the bridge from the costs incurred regarding the additional square meters of structural steel on the bridge due to the aforenoted method and manner in which Erie addressed the total job, which included the 2,600 square meters and the disputed work. As explained by Erie, the difficulty was exacerbated by the State's silence regarding Erie's question as to how the State wanted Erie to proceed with the disputed square meters and Erie's contractual duty to continue working on the disputed square meters of painted structural steel on the bridge (Ex. BB).
Erie maintained detailed records for the time and materials applicable to the disputed work and the State did not exercise its right to request additional documentation from Erie (Court Ex. 2 ¶¶ 42, 43[a]). The Court finds the testimony of Christopher Nachreiner to be compelling on the issue of damages regarding his calculations and the revisions as supported by the documentary evidence. The Court finds that claimant has demonstrated, by a preponderance of the credible evidence, through trial testimony and documentary evidence, entitlement to an award of damages in the amount of $608,554.09.
Accordingly, the Court DENIES the State's motion for summary judgment dismissing the claim and GRANTS claimant's motion, on the issue of liability, for a directed verdict and GRANTS claimant's motion for the dismissal of all of the State's affirmative defenses.
Additionally, upon due consideration of all the evidence presented, including listening to the witnesses testify and observing their demeanor as they did so, the Court finds that claimant is entitled to an award of $608,554.09, with statutory interest from August 14, 2017, the date of final payment on the contract, to, and thereafter to the date of entry of judgment.
It is further ordered that, to the extent that claimant has paid a filing fee, it may be recovered pursuant to Court of Claims Act §11-a (2).
LET JUDGMENT BE ENTERED ACCORDINGLY.