Opinion
No. A114–13.
04-22-2016
ANDRON CONSTRUCTION CORP., Plaintiff, v. DORMITORY AUTHORITY OF the STATE OF NEW YORK, Defendant.
Harold J. Gabriel, General Counsel, Golden's Bridge, Attorney for Andron Construction Corp. Gibbons P.C., (Robert J. MacPherson and Philip W. Lamparello, of counsel), Newark, NJ, Co-counsel for Andron Construction Corp. Eric T. Schneiderman, Attorney General, (Cornelia Mogor, of counsel), Albany, Attorney for Dormitory Authority of the State of New York.
Harold J. Gabriel, General Counsel, Golden's Bridge, Attorney for Andron Construction Corp.
Gibbons P.C., (Robert J. MacPherson and Philip W. Lamparello, of counsel), Newark, NJ, Co-counsel for Andron Construction Corp.
Eric T. Schneiderman, Attorney General, (Cornelia Mogor, of counsel), Albany, Attorney for Dormitory Authority of the State of New York.
RICHARD M. PLATKIN, J.
In this commercial construction dispute, defendant Dormitory Authority of the State of New York (“DASNY”) moves for partial summary judgment, seeking the dismissal of plaintiff's claims for delay and acceleration damages. Plaintiff Andron Construction Corp. (“Andron”) opposes the motion and cross-moves for partial summary judgment on its first cause of action, seeking to recover an unpaid contract balance.
BACKGROUND
This action arises out of a construction project at the New York State Office of Mental Health (“OMH”), Rockland Children's Psychiatric Center, New Inpatient Building—Package B (“Project”). On or about November 1, 2007, the parties entered into a written agreement (“Contract”) for Andron to serve as a prime contractor for general construction work on the Project.
The Contract consists of the signed instrument entitled “Contract”, as well as all of the other instruments set forth in the definition of the term “Contract Documents” in section 1.01 of the General Conditions of the Contract, including the General Conditions and the Supplemental General Conditions.
The original contract price was $15,642,000. According to DASNY, the net effect of approved change orders was to increase this sum to $19,059,881.62, of which Andron was paid $18,814,165.01. DASNY's computation reflects a backcharge of $758,341 for certain punch-list work that was deleted from the Contract (“Deleted Work”) and allegedly performed by Jemco Electric, Inc. (“Jemco”), a job order contractor to DASNY. Andron asserts that the Deleted Work had a value of no more than $42,677.36, and, in any event, the illegality of the job order contract between DASNY and Jemco precludes the imposition of the backcharge.
Andron's first cause of action seeks to recover the unpaid contract balance prior to the Jemco backcharge ($19,818,222.62), reduced by the alleged fair value of the Deleted Work ($42,677.36), leaving a remaining balance of $961,380.26. The second through fifth causes of action seek delay and acceleration damages of approximately $3.4 million.
DASNY raises three principal arguments in moving for dismissal of the causes of action seeking damages for delay and acceleration: (1) the claims are barred by the Contract's “no damages for delay” clause; (2) the claims also are barred by Andron's failure to comply with the notice provisions of the Contract; and (3) Andron's use of the “total cost method” for computing damages is improper. Andron opposes the motion and cross-moves for partial summary judgment on its first cause of action, seeking to recover the unpaid contract balance.
Discovery is complete, a trial-term Note of Issue has been filed, and the action has been assigned a day certain for trial of May 11, 2016. The pending motions were made returnable on February 29, 2016, and oral argument was held on April 1, 2016. This Decision & Order follows.
DELAY DAMAGES
DASNY argues that any claim by Andron for delay damages (including acceleration, disruption, inefficiency, lost productivity, cost overruns and the like) is barred by Section 11.02 of the General Conditions of the Contract. The operative contractual language, commonly known as a “no damages for delay” clause, reads as follows:
Andron does not allege that DASNY directed it to complete the project before the date fixed by the Contract. As such, Andron's claim is one for “constructive' acceleration, to the extent such a claim even exists” (Bovis Lend Lease [LMB], Inc. v. Lower Manhattan Dev. Corp., 108 A.D.3d 135, 148, 966 N.Y.S.2d 51 [1st Dept 2013] ).
No claims for increased costs, charges, expenses or damages of any kind shall be made by the Contractor against the Owner for any delays or hindrances from any cause whatsoever, provided that the Owner, in the Owner's discretion, may compensate the Contractor for any said delays by extending the time for completion of the Work as specified in the Contract.
A “no damages for delay” clause that “exculpates a contractee from liability to a contractor for damages resulting from delays in the performance of the latter's work” generally is enforceable (see Corinno Civetta Constr. Corp. v. City of New York, 67 N.Y.2d 297, 309 [1986] ; Tougher Indus., Inc. v. Dormitory Auth. of the State of NY, 130 A.D.3d 1393, 1393–1394, 15 N.Y.S.3d 262 [3d Dept 2015] ). Such a clause bars “claims for damages resulting from a delay of the project beyond the scheduled completion date” as well as “[claims] for increased costs in labor, materials, and equipment occurring prior to the expiration of the contract period” (Corinno, 67 N.Y.2d at 313–314, 502 N.Y.S.2d 681, 493 N.E.2d 905 ). As the Court of Appeals has explained:
All delay damage claims seek compensation for increased costs, however, whether the costs result because it takes longer to complete the project or because overtime or additional costs are expended in an effort to complete the work on time. It is of no consequence that the obstruction, whatever its cause, occurs during the term of the contract or afterwards or whether it disrupts the contractor's anticipated manner of performance or extends his time for completion. The claims are claims for delay and the exculpatory clause was drafted and included in the contract to bar them. (Id. ).
New York law does, however, recognize four exceptions to enforcement of a no-damages-for-delay clause: “(1) delays caused by the contractee's bad faith or its willful, malicious, or grossly negligent conduct, (2) uncontemplated delays, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee, and (4) delays resulting from the contractee's breach of a fundamental obligation of the contract” (Clifford R. Gray Inc. v. City School Dist. of Albany, 277 A.D.2d 843, 844, 716 N.Y.S.2d 795 [3d Dept 2000] ; see Corinno, 67 N.Y.2d at 309, 502 N.Y.S.2d 681, 493 N.E.2d 905 ).
On a motion for summary judgment, the moving party bears the initial burden of establishing that no material issues of triable fact exist and that it is entitled to judgment as a matter of law (see Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 [1986] ; Zuckerman v. City of New York, 49 N.Y.2d 557, 562 [1980] ). If the moving party meets its initial burden, the nonmoving party must produce sufficient proof, in admissible form, to demonstrate that a material issue of fact exists to defeat summary judgment (see Alvarez, 68 N.Y.2d at 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 ; Zuckerman, 49 N.Y.2d at 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 ).
As the party seeking the summary dismissal of the claims for delay and acceleration damages, DASNY bears the initial burden of demonstrating that the exculpatory clause bars the claims and that no exception to enforcement is applicable (Tougher, 130 A.D.3d at 1394, 15 N.Y.S.3d 262 ). Nonetheless, the “party seeking to invoke any of the exceptions to the general rule that no damages for delay clauses are enforceable bears a heavy burden” (Bovis, 108 A.D.3d at 147, 966 N.Y.S.2d 51 ).
Andron makes four principal allegations in support of its claims for delay and acceleration damages: (1) DASNY's refusal to grant, or even consider in good faith, extensions of Andron's completion date for excusable delay is a breach of the Contract that falls within the Corinno exceptions for bad-faith and uncontemplated conduct; (2) DASNY's failure to timely turn over the work site to Andron represents a breach of a fundamental, affirmative obligation of the Contract; (3) DASNY's failure to produce a coordinated set of mechanical, electrical and plumbing (“MEP”) drawings constitutes a breach of a fundamental contractual obligation, as well as bad-faith and uncontemplated conduct; and (4) DASNY's accelerative directives are breaches of the Contract that fall within the Corinno exception for uncontemplated delay.
A. Refusal to Grant Extensions of Time
1. Andron's Contentions
Andron alleges that DASNY's refusal to extend its completion date for excusable delay is a breach of the Contract that caused it to sustain monetary damages. In seeking to avoid application of the exculpatory clause, Andron argues that DASNY's conduct was undertaken in bad faith and was not reasonably contemplated.
According to Andron, “[t]he contract not only contemplated it required that DASNY would grant [extensions of time for excusable delay] but DASNY refused with a willful disregard for the disruption to Andron's work plan and financial burdens that the refusal would cause” (Memorandum of Law in Opposition to Defendant's Motion for Partial Summary Judgment and in Support of Plaintiff's Cross-motion [“MOL”], at 3). In this connection, Andron maintains that “Section 11.02 shields DASNY from claims for damages due to delay, but only on the condition that DASNY grant extensions of time commensurate with the delay of the project critical path” (id., at 14, 502 N.Y.S.2d 681, 493 N.E.2d 905 ). Thus, it is Andron's contention that DASNY's refusal to grant time extensions “constitute[s] bad faith ... as a matter of law” (id., at 3, 502 N.Y.S.2d 681, 493 N.E.2d 905 ). Andron further contends that DASNY's conduct was not within the contemplation of the parties when the Contract was made.
Relatedly, Andron argues that “DASNY concealed the fact that there would be no extensions of time due to OMH's need to have the buildings by the original contract date ...” (MOL, at 9). Andron alleges that DASNY knew (or believed) that OMH's funding for the Project was contingent upon the Project being completed by April 29, 2009, and, for that reason, continually advised Andron that requests for extensions of time could not be granted (Winter Aff. [January 28, 2016], ¶ 9[b] ). Thus, “the bad faith [also] was [the] inclusion in the bid documents of a provision for time extension due to excusable delay, while knowing that no such extensions would be given” (MOL, at 10).
In making these arguments, Andron first cites the delays it encountered in obtaining access to the work site. Andron's work was scheduled to commence on December 3, 2007, after completion of the concrete foundations, structural steel, and related Package A work. However, Andron alleges that the Package A contractor already was six to eight weeks behind schedule when Andron's December 3, 2007 start date was fixed, and, as a result of further delays by the Package A contractor, the site was not turned over to Andron until March 3, 2008. Given that its bid for the project was premised upon an assumption that “DASNY already knew to be false, [namely] that [Andron] could start work when shown on the ... bid schedule” (Winter Aff., ¶ 9[a] ), Andron argues that DASNY acted in bad faith by refusing to extend its completion date by 13 weeks.
Andron further alleges that DASNY knew that the Package A contractor's work was not only late, but also defective. Plaintiff cites, among other things, the need for repairs to the steel trusses before Andron's work on the roof deck could commence. Pursuant to change orders issued by DASNY, Andron completed the truss repairs by May 20, 2008. Andron claims that DASNY should have extended the contract time by an additional 11 weeks based upon the defective precedent work, but instead acted in bad faith by threatening to terminate Andron's contract if it failed to meet its original completion date.
Andron also points to defects in the ductwork above the ceiling that delayed its performance. Specifically, Andron alleges that DASNY's agent with respect to monitoring this work, Aramark Facility Services (“Aramark”), informed DASNY in December 2008 of major defects in the MEP work that left Andron unable to proceed. “Though fully aware of this issue and of the need to extend the time [for] Andron's work, DASNY concealed the true cause of the delay and instead blamed Andron for slow progress” (Winter Aff., ¶ 9[d] ). Andron claims that, instead of extending its time for performance, DASNY “accelerated [the work] and directed [Andron] to work out-of-sequence, ... in complete disregard of the orderly sequence of work contemplated by the bid documents” (id. ).
In arguing that DASNY acted in bad faith by refusing to grant extensions of time for the excusable delay, Andron expressly disclaims any contention that its damages resulted from the underlying delays it cites, including the delayed turnover of the work site, the poor performance of the Package A contractor, and any shortfalls in contract administration by DASNY or its agents (MOL, at 2). In other words, it is plaintiff's claim that “the delays themselves did not cause damage to Andron; rather, the cause of Andron's damage was DASNY's reckless refusal to extend the contract time for excusable delay” (id., at 2, 14, 502 N.Y.S.2d 681, 493 N.E.2d 905 ).
2. Relevant Contractual Provisions
The parties agreed that Andron's “Work shall be completed no later than the time of completion specified in the Contract” (General Conditions § 9.01[A] ). It was further “understood and mutually agreed ... that the time for completion of the Work ... [was] an essential condition of the Contract”, “the time for completion of the Work ... [was] a reasonable time for completion”, “that time [was] of the essence for each and every portion of the Work” and that Andron was obliged to prosecute the work “at such rate of progress as [would] insure [sic ] full completion thereof within the time specified (id., [B], [C], [F] ). “The time for completion [could] be extended only by change orders approved by [DASNY]” (id., [G] ).
The Contract subjected Andron to liability for damages if it failed to complete the work within the allotted time. Specifically, DASNY was permitted to impose liquidated damages on Andron for the loss of the beneficial use of the Project and to pursue any other damages actually sustained by reason of Andron's delay in completion of the work (id., [H] ). However, delay damages were not available where Andron was “without fault and ... the delay in completion” was due to: (1) orders of the federal or state government; (2) unforeseeable causes beyond Andron's control, as approved by DASNY; or (3) delays of subcontractors or suppliers occasioned by the foregoing factors (id., [F] ).
The Contract also recognized that there could be circumstances in which the “approved Project schedule [would need to] be revised to meet the requirements of the Contract, time limits or milestone compliance” (Supplemental General Requirements § 01 32 16, subsection 1.06 [“Subsection 1.06”] [C] ). In such circumstances, plaintiff was obliged to “supply information to [DASNY] indicating the action to be taken by [Andron] to reestablish the approved Project schedule milestones and completion dates” (id. ). Additionally, Andron was obliged to “furnish sufficient forces, construction plant, shift work, concurrent operations and equipment to insure execution of the Work in accordance with the approved Project schedule” (id., [D] ).
In the event that Andron “fail[ed] to perform the Work in accordance with the approved Project schedule”, the Contract required Andron “to submit an accelerated schedule indicating the manner in which the rate of Work progress will be accelerated to assure [sic ] compliance with the approved Project schedule” (id., [E] ). However, the submission of such a proposal did not “operate to relieve [Andron] of its obligation to complete the Work ... in accordance with the ... time limitations contained in the Contract” (id., [G] ). In the event of any dispute concerning planning or scheduling, DASNY was “the deciding party to determine the plan, sequence and schedule to be implemented”. Moreover, Andron acknowledged and agreed that it was not entitled to any “additional compensation ... for any alterations to its planned construction sequence to accommodate such revisions” (id., [H] ).
Finally, Section 11.02 of the General Conditions, the no-damages-for-delay clause, provided that DASNY, “in [its] discretion, may compensate [Andron] for ... delays by extending the time for completion of the Work as specified in the Contract”.
3. Analysis
In evaluating Andron's claim that DASNY acted in a bad-faith and/or an uncontemplated manner by refusing to grant, or to consider in good faith, requests for extensions of time, the Court first must examine the source, nature, and extent of the contractual duty alleged by plaintiff. In its written submissions in opposition to DASNY's motion and at oral argument, Andron identifies three potential sources of such a contractual duty.
First, at oral argument, Andron relied principally upon General Conditions § 9.01(F) (“Section 9.01[F]”). This provision, quoted above, relieved Andron of liability for delay damages if two conditions are met: (1) Andron is not at fault for the delays; and (2) the delays fall within one of three, specified categories. But DASNY has not sought to impose damages upon Andron for failing to meet the contractual completion date, and there is nothing in the text of Section 9.01(F) that imposed an affirmative duty upon DASNY to extend the completion date. Moreover, if Section 9.01(F) were construed as implicitly obliging DASNY to extend Andron's time for completion for delays of the types described therein, it would render superfluous the express terms of that provision relieving Andron of liability for delay damages. Accordingly, Section 9.01(F) cannot be construed as the source of an obligation on the part of DASNY to grant extensions of time for excusable delay.
Second, Andron argues in its written submissions that it was entitled to an extension of time under Subsection 1.06(E) because it was not “a primary cause of the schedule delay”. While recognizing that Subsection 1.06 allowed DASNY to direct acceleration of the work to ensure compliance with the approved project schedule, Andron argues that the provision also provided for it to be compensated, through an extension of time or additional funding, where it was not the primary cause of the delays.
Subsection 1.06 (E) allowed DASNY to impose upon Andron “all costs incurred in the preparation and subsequent execution of an accelerated schedule” where Andron was “a primary cause of the schedule delay”, but the converse does not follow. Like Section 9.01(F), Subsection 1.06(E) is a limitation on Andron's liability to DASNY, not the source of an affirmative duty owed by DASNY to Andron. This is apparent from Subsection 1.06(G) and (H), which obliged Andron to meet the contractual completion date and denied Andron an entitlement to any additional compensation for changes in the plan, sequence or schedule of the work.
Finally, Andron relies upon General Conditions § 11.02 (“Section 11.02”), the no-damages-for-delay clause, as a source of DASNY's alleged duty to grant extensions of time for excusable delay. Andron argues that “Section 11.02 shields DASNY from claims for damage due to delay, but only on the condition that DASNY grant extensions of time commensurate with the delay to the project critical path” (MOL, at 14; see also Winter Aff., ¶ 11). Thus, as construed by Andron, Section 11.02 would deny DASNY the protection of the exculpatory clause if it failed to grant extensions of time for excusable delay.
The Court is unconvinced by this argument. Section 11.02 begins by insulating DASNY from “claims for increased costs, charges, expenses or damages of any kind ... for any delays or hindrances from any cause whatsoever”. The independent clause that follows states “that [DASNY], in [its] discretion, may compensate [Andron] for any said delays by extending the time for completion of the Work as specified in the Contract”. There is nothing in the text of Section 11.02 that imposed a mandatory duty on DASNY to grant extensions of time for delays that would otherwise be actionable. Instead, the plain language of Section 11.02 is permissive and simply recognized DASNY's discretion to extend Andron's completion date for excusable delay. Nor is there anything in Section 11.02 that rendered the exculpatory clause conditional in nature or denied DASNY the protection of the exculpatory clause where it exercised its discretion in favor of maintaining the completion date established in the Contract.
Based on the foregoing, the Court concludes that Andron has failed to identify a mandatory contractual duty on the part of DASNY to extend its completion date for excusable delay.
But this is not the end of the inquiry. Section 11.02 recognized that DASNY may, in its discretion, compensate Andron for delays that otherwise would be actionable by granting an extension of time. When read in light of the covenant of good faith and fair dealing implicit in every contract (New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 318 [1995] ), a reasonable contractor in Andron's position would be justified in interpreting Section 11.02 as a commitment by DASNY to exercise its discretionary power to grant extensions of time in good faith (see 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 153 [2002] ). In fact, DASNY's counsel acknowledged as much at oral argument (Oral Argument Transcript, at 21).
In that regard, DASNY argues that it did act in good faith, alleging that it “grant[ed] two time extensions to Andron without the imposition of liquidated damages” (Defendant's Memorandum in Support of Motion for Partial Summary Judgment, at 4). According to the affidavit of Mauro Lapetina, Andron's time for completion of the work was extended “in the field” on two occasions: first to May 25, 2009; and then to July 12, 2009 (see Lapetina Aff., ¶ 9). DASNY also emphasizes the provisions of the Contract fixing a firm completion date, making time of the essence, and subjecting Andron to liability for delay damages if it failed to meet the agreed upon deadline. DASNY also cites Andron's obligation to conduct due diligence regarding the Project and its actual or constructive knowledge of the Package A contractor's delays.
In opposition, Andron denies that DASNY issued any change orders extending the completion date. It cites General Conditions § 9.01(G), which provides that “[t]he time for completion can be extended only by change orders approved by [DASNY]”. Andron does acknowledge that DASNY issued several schedule updates showing additional time for completion of its work, but observes that these schedule changes did not insulate it from liability to DASNY for liquidated damages. Andron cites an August 20, 2009 letter directing completion of the work by September 1, 2009, which warned Andron that liquidated damages could be imposed for the period from April 29, 2009 through September 1, 2009.
Andron further relies upon proof of statements by DASNY and its agents that extensions of the completion date were impossible (see Winter Aff., ¶ 9). Andron also submits at least some circumstantial evidence suggesting that DASNY entered into the Contract with knowledge of its inability to extend Andron's completion date, and that it concealed from Andron a predetermined intention not to grant extensions of time.
Given the limited and conflicting proof adduced by the parties, the Court concludes that DASNY has failed to meet its burden of demonstrating entitlement to summary judgment. If the proof adduced by Andron in opposition to the motion is fully credited and Andron is given the benefit of all reasonable inferences, the trier of fact could find that DASNY entered into the Contract with a concealed, predetermined intention to deny requests for extensions of time, regardless of the circumstances presented, and that DASNY failed to give good-faith consideration to requests by Andron to extend the completion date for excusable delay. The trier of fact further could find that such conduct on the part of DASNY amounted to bad faith or fell outside the reasonable contemplation of the contracting parties.
To be sure, Andron bears a heavy burden in at least three critical respects. To show that DASNY abused its broad discretion with respect to the scheduling of the work, Andron “has the heavy burden of showing that no possible exercise of reasonable judgment or fair dealing” supported DASNY's refusal to extend the completion date (Tippetts–Abbett–McCarthy–Stratton v. New York State Thruway Authority, 18 A.D.2d 402, 404, 239 N.Y.S.2d 732 [3d Dept 1963], affd 13 N.Y.2d 1091 [1963] ). Further, as the party seeking to avoid application of the exculpatory clause, Andron bears a “heavy burden” in demonstrating the applicability of a Corinno exception (Bovis, 108 A.D.3d at 147, 966 N.Y.S.2d 51 ). Finally, the exception for bad-faith conduct relied upon by Andron requires proof a “sinister intention”, “dishonest purpose” or other conduct on the part of DASNY tantamount to intentional wrongdoing (Tougher, 130 A.D.3d at 1396, 15 N.Y.S.3d 262 ). Nonetheless, the Court's focus at this juncture “must be on issue identification rather than issue determination” (Tanzman v. La Pietra, 291 A.D.2d 703, 705, 737 N.Y.S.2d 444 [3d Dept 2002] ), and the present record does not conclusively defeat Andron's claim as a matter of law.
For the reasons stated immediately below, however, the Court does conclude that Andron has waived the portion of this claim seeking recovery for denials of extensions of time prior to the execution of Change Order No. 4. The release given by Andron therein encompasses the delayed turnover the work site and delays attendant to correcting the Package A contractor's steel work.
B. Delayed Turnover of the Work Site
Andron alleges that DASNY's failure to turn over the work site until March 3, 2008, a three-month delay, represents a breach of a fundamental, affirmative obligation of the Contract from which DASNY is not shielded by the exculpatory clause.
In seeking dismissal, DASNY contends that Andron waived this claim by signing Change Order No. 4, a “no cost, no time” change order that was executed on May 13, 2008, after the delayed turnover of the work site and following most of Andron's remediation of the Package A contractor's steel work. In executing the change order, which conformed and reconciled the “[b]id document baseline schedule ... with actual contract award date and established completion date of 30 April 2009”, Andron “release[d] and forever discharge[d] [DASNY] from any and all actions, causes of action, claims and demands whatsoever ... which [Andron] ever had, now has or may have against [DASNY] in any way arising out of this change.”
Relatedly, DASNY submits a letter dated March 2, 2010 from Andron's senior project manager, Matthew A. Winter, stating that a revised schedule maintaining the April 29, 2009 completion date “was do-able and [Andron] accepted it” (Ex. 11 to Winter Aff.). In addition, DASNY submits proof that Andron signed a revised schedule date July 9, 2008, which did not change the completion date on account of any issues or concerns existing at such time. However, the Court need not and does not rely upon this proof in determining DASNY's motion for summary judgment.
Andron does not dispute that it was a signatory to Change Order No. 4, but it does argue that the Court should decline to allow DASNY to rely upon the unpleaded affirmative defenses of waiver and release. Andron claims that the belated disclosure of these defenses has denied it the opportunity to depose a high-ranking DASNY official who allegedly told Andron that the issues of time extensions and acceleration costs would be addressed at the end of the project (Winter Reply Aff., ¶ 3). Further, Andron argues that it would have been a “futile and useless act” to insist upon extending the original completion date: “We had no choice but to accept the schedule” (Winter Aff., ¶ 21).
Andron recognizes, as it must, that summary judgment may be denied on the basis of an unpleaded affirmative defense in the absence of surprise or prejudice (see Perelman v. Snowbird Ski Shop, 215 A.D.2d 809, 810, 626 N.Y.S.2d 304 [3d Dept 1995] ; see also Comsewogue Union Free School Dist. v. Allied–Trent Roofing Sys., Inc., 15 A.D.3d 523, 524, 790 N.Y.S.2d 220 [2d Dept 2005] ). Indeed, if the opposing party has not been misled to its prejudice, a court may go so far as to grant summary judgment on the basis of an unpleaded defense (Stiber v. Cotrone, 153 A.D.2d 1006, 1006, 545 N.Y.S.2d 625 [3d Dept 1989] ; see also Boyle v. Marsh & McLennan Cos., Inc., 50 A.D.3d 1587, 1588, 856 N.Y.S.2d 428 [4th Dept 2008] ).
Andron argues that additional discovery into Change Order No. 4 “would raise material issues of fact as to the intent of the parties in [its] execution” (Memorandum of Law in Further Opposition to the Motion for Partial Summary Judgment by DASNY and in Reply to DASNY's Opposition to Andron's Cross-motion for Partial Summary Judgment, at 2–3). The Court disagrees. The clear and unambiguous language of Change Order No. 4 operated to release DASNY from any and all claims arising out the parties' agreement to maintain Andron's original completion date. There is no ambiguity in the writing that would permit the consideration of extrinsic evidence (see Rubycz–Boyar v. Mondragon, 15 A.D.3d 811, 812, 790 N.Y.S.2d 266 [3d Dept 2005] ).
Accordingly, Andron's claimed need for an additional deposition does not represent prejudice sufficient to preclude DASNY from relying on Change Order No. 4. Moreover, Andron had a full opportunity to take disclosure on all matters germane to this litigation, and it cannot credibly claim to be surprised by DASNY's submission of a signed change order that bears directly on the factual allegations raised in the complaint.
Given Andron's agreement to maintain the original completion date with full knowledge of delays encountered up to that point and its broad waiver and release of any claims against DASNY regarding the same, there is no merit to Andron's argument that the delayed turnover of the work site is an actionable breach of contract for which delay damages may be recovered.
C. MEP Coordination Drawings
Andron alleges that DASNY's failure to produce a coordinated set of MEP drawings is a breach of the Contract that falls within three of the Corinno exceptions: breach of a fundamental affirmative obligation; a source of uncontemplated delays; and bad-faith conduct on the part of DASNY.
According to Andron, “[c]oordinated drawings for the MEP space requirements are a critical resource for proper completion of the MEP and general trades work on any project, and especially this one” (Winter Aff., ¶ 16). “Without coordination drawings, the MEP trades could not install their equipment above the ceiling correctly so that there would be no conflicts with other work and so that Andron could close the ceilings, start the finishes work, and complete it in the contemplated manner” (MOL, at 22).
Andron asserts that the Contract “contemplated an orderly process for the preparation of the coordinated drawings, and put that process squarely under the control of DASNY's construction manager”:
The process began with base drawings with architectural and structural information onto which each trade contractor would plot information for its own work, one after the other in a series of specified steps. Although each trade contractor was responsible to plot its own work on the base drawings, and to resolve conflicts with other trades if they arose, the contract contemplated that the construction manager would oversee the process step-by-step ... and would approve final coordinating drawings. The MEP trades and Andron would then use these final drawings in the installation of the physical work. Andron submitted our review of the base drawings on March 3, 2008. Under the timetable in the Supplementary General Requirements, the construction manager should have distributed final drawings by September–October 2008.
(Winter Aff., ¶ 17).
While recognizing that the Contact required each prime contractor to prepare its own segment of the coordinated drawings, Andron argues that “the responsibility to schedule and oversee the process belonged to DASNY through its construction manager, Jacobs Engineering Group (“Jacobs”) (id., ¶ 18, 502 N.Y.S.2d 681, 493 N.E.2d 905 ).
DASNY does not dispute that its participation in the coordination process is a fundamental affirmative obligation imposed by the Contract, but argues that Andron's contentions disregard its own responsibility as a prime contractor. Specifically, DASNY emphasizes Andron's obligation under the Contract to participate in the production of coordinated drawings and to work with the other prime contractors in updating the coordinated drawings.
In assessing the parties' contentions, the Court begins with the pertinent contractual language. The Contract specifically informed Andron that, “[d]uring the progress of the Work, other contractors may be engaged in performing work. The Contractor shall coordinate the Contractor's Work with the work of said other contractors in such a manner as the Owner may direct” (General Conditions § 13.01[A] ). Andron further recognized that DASNY “[could not] guarantee the responsibility, efficiency, unimpeded operations or performance” of its contractors, and Andron agreed to “bear the risk of all delays including ... delays caused by the presence or operations of other contractors” (id. ).
Under the Supplemental General Requirements applicable to the project, Jacobs was responsible for “monitor[ing the] progress of Coordination Drawings, coordinat[ing] and schedul[ing] review meetings and protocol for all contractors, and distribut[ing coordination] information” (Supplemental General Requirements § 01 33 13, subsection 1.02 [“Subsection 1.02”] [A]; see also id. [L] [requiring Jacobs to develop “coordinated drawing schedule”] ).
All prime contractors, including Andron, were obliged to prepare shop drawings “for incorporation into the coordination drawings” (id., [C] ). “The initial coordination drawing(s) w[ere to] be produced by [Andron] starting with the Base' CAD background drawings supplied by [Jacobs]” (id., [D] ), and then passed from contractor to contractor through a prescribed process of updating and revision (id., [E] ). “Any conflicts, etc. discovered in the coordination stage prior to Contractor(s) sign-off ... [were to] be brought to the attention of [Jacobs] for immediate resolution”, and conflicts “discovered after coordination sign-off and during installation of the Work [were] the responsibility of the Contractor(s) to resolve with the approval of [Jacobs]” (id., [I–J] ).
The Court concludes that the present record is insufficiently developed to resolve Andron's claims regarding the absence of coordinated MEP drawings. While each side casts blame upon the other, DASNY acknowledges that it has not submitted proof in admissible form establishing that Jacobs undertook the monitoring, coordinating and scheduling role contemplated by Subsection 1.02(A) (see Oral Argument Transcript, at 45–48). Andron similarly acknowledges that it has failed to oppose DASNY's motion with proof of its own performance (id., at 44, 502 N.Y.S.2d 681, 493 N.E.2d 905 ).
In this connection, the Court rejects Andron's alternative contention that it need not establish its own performance of the coordination obligations prescribed by Subsection 1.02 because “the ultimate responsibility for coordination belongs to the owner” (MOL, at 23). While the owner of a public project with multiple prime contractors cannot delegate responsibility for supervision and coordination to one of the prime contractors (General Bldg. Contractors, Inc. v. Syracuse, 40 A.D.2d 584, 334 N.Y.S.2d 730 [4th Dept 1972], affd in pertinent part 32 N.Y.2d 780 [1973] ), Andron has failed to identify a legal impediment to a coordination process that requires the active participation of all prime contractors where, as here, the owner retains some responsibility for supervision, monitoring and scheduling.
D. Uncontemplated Acceleration
Finally, Andron argues that, “in a vain effort to recover time lost due to the missing MEP coordination” and its refusal to extend the completion date for excusable delay, DASNY “abandoned [a logical and orderly] work plan and directed Andron to proceed in a piecemeal and inefficient manner” (MOL, at 12). According to Andron, “[t]here is nothing in the contract to suggest that DASNY would take over control of Andron's work, and cause Andron to proceed in a manner materially different from the one contemplated in the bid documents” (id. ). With respect to the bid documents, Andron argues that it was provided a detailed critical path method (“CPM”) schedule showing a logical sequence of work being performed in an orderly manner (Winter Aff., ¶¶ 5–6). DASNY's conduct also is said to be inconsistent with its alleged “contract[ual] promis [e] to compensate Andron for acceleration that resulted from delays beyond Andron's control” (id., at 3, 344 N.Y.S.2d 961, 298 N.E.2d 122 ).
“Delays and obstructions are actionable if they are not within the contemplation of the parties at the time the contract is made, and that contemplation involves only such delays as are reasonably foreseeable” (Peckham Rd. Co. v. State of NY, 32 A.D.2d 139, 141, 300 N.Y.S.2d 174 [3d Dept 1969], affd 28 N.Y.2d 734 [1971] ). “Delays are not considered uncontemplated when they ... are mentioned in the contract” (Bovis Lend Lease [LMB], Inc. v. Lower Manhattan Dev. Corp., 108 A.D.3d 135, 147, 966 N.Y.S.2d 51, supra ).
In support of its motion, DASNY cites provisions of the Contract that expressly contemplated the possibility of constructive acceleration of the work, including: Andron's obligation to provide sufficient labor and equipment to complete the work by the deadline established in the Contract; the prospect of constructive acceleration in the event of delays; DASNY's authority to determine issues of planning, scheduling and sequencing; and Andron's acknowledgment that it would not be compensated for alterations to its planned construction sequence to meet the project schedule (see Subsection 1.06[C–H] [quoted above] ).
Insofar as it is relevant, DASNY also submits proof that directly contradicts Andron's claim that the bid documents included a detailed CPM schedule. Supplemental General Requirements § 01 32 16, subsection 1.02 states that “[a] milestone schedule for the Work has been included in the Contract Documents to establish critical interim dates for Work which must be achieved by the Contractor to successfully complete the Project within the established time limitations.” In contrast, subsection 1.05(a) provides for establishment of the “Project CPM Schedule” based upon DASNY's review of the preliminary schedule plans proposed by each of the prime contractors.
These contractual provisions, which clearly and expressly contemplate the possibility that Andron would be directed to alter its planned sequence of construction and furnish the labor, equipment and materials necessary to meet the original completion date, suffice to demonstrate, prima facie, that the constructive acceleration claimed by Andron was within the reasonable contemplation of the parties. The burden therefore shifts to Andron to raise a triable issue of fact or legal defense to this branch of the motion.
In opposition, Andron maintains principally that the Contract did not contemplate uncompensated acceleration in situations where it was not “a primary cause of the schedule delay” (Subsection 1.06[E] ). As interpreted by Andron, this provision contemplated that Andron “could be directed to accelerate but that resulting costs would be compensated if [it] were not responsible for the delay that caused the need to accelerate. The notion that this provision would expose Andron to unlimited costs of acceleration would have been preposterous to [Andron] as a bidder” (Winter Aff., ¶ 14). For the reasons stated above, however, the Court does not find Andron's reading of Subsection 1.06(E) as the source of an affirmative duty on the part of DASNY to be persuasive.
Based on the foregoing, DASNY has established as a matter of law that the contracting parties expressly contemplated that Andron might have to “proceed in a piecemeal and inefficient manner” to meet the agreed-upon completion date. Accordingly, Andron's claim for acceleration damages must be dismissed due to the no-damages-for-delay clause.
NOTICE OF CLAIM
As a second basis for dismissal of the delay and acceleration claims, DASNY contends that the second through fifth causes of action are barred by Section 11.04(A) of the General Conditions, which requires that “[a]ny claim submitted under [Article 11] for extra work or increased costs, charges, expenses or damages of any kind must be submitted in writing within 30 days of the occurrence”. Such a submission “must include a statement of the nature of the claim, supporting cost data, CPM scheduling analysis, if applicable, and [a contractor affidavit certifying the value of the work performed and material supplied]” (id., [B] ).
DASNY contends that the notice requirement of Section 11.04(A) is a condition precedent to recovery, and Andron's failure to furnish timely and proper notice compels the dismissal of its claims. In opposition, Andron argues that Section 11.04 does not apply to a claim for delay damages, particularly where the claimed breaches of contract arise out of DASNY's failure or refusal to grant extensions of time.
“A condition precedent is an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises” (Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685, 690 [1995] [quotation marks and citations omitted] ). “Express conditions are those agreed to and imposed by the parties themselves. Implied or constructive conditions are those imposed by law to do justice. Express conditions must be literally performed, whereas constructive conditions, which ordinarily arise from language of promise, are subject to the precept that substantial compliance is sufficient” (id. [quotation marks and internal citations omitted] ). In determining whether certain language constitutes a condition precedent, “courts will interpret doubtful language as embodying a promise or constructive condition rather than an express condition” (id., at 691, 636 N.Y.S.2d 734, 660 N.E.2d 415 ).
Applying these principles, the Court concludes that DASNY has failed to establish that compliance with Section11.04 is a condition precedent to Andron's recovery. While the pertinent contractual language required Andron to submit claims in a prescribed format within a specified time, there is nothing in Section 11.04 that expressly conditioned Andron's recovery upon such compliance. In contrast, Section 11.01, governing claims for extra work, deems a contractor's failure to give timely and proper notice “a conclusive and binding determination ... that said [claim] ... does not involve Extra Work” and “a waiver by the Contractor of all claims for additional compensation or damages as a result [thereof]” (General Conditions § 11.01[B] ).
Insofar as substantial compliance may suffice, Andron submits proof that it submitted a verified notice of claim on December 11, 2009.
DASNY also has failed to conclusively demonstrate that Andron's delay and acceleration claims fall within the scope of Section 11.04. As Andron observes, Section 11.04 applies only to claims made by a contractor “under [Article 11]”, and it is unclear from the Contract whether a claim for delay damages, which is flatly prohibited by Section 11.02, is a claim under Article 11 (see Eldor Contr. Corp. v. County of Nassau, 6 A.D.3d 654, 655, 775 N.Y.S.2d 556 [2d Dept 2004] ). Moreover, DASNY has not shown that Section 11.04 applies to Andron's claim that DASNY breached the Contract by failing to grant (or consider) time extensions, inasmuch as Section 11.04 applies only to “claims”, which is defined as a “request or demand ... for money or property” (General Conditions, § 1.01).
Based on the foregoing, DASNY has failed to demonstrate its entitlement to dismissal of the second through fifth causes of action for lack of strict compliance with Section 11.04.
TOTAL COST METHOD
The third and final branch of DASNY's motion argues that the claims for delay and acceleration damages must be dismissed due to Andron's improper application of the “total cost method”. DASNY concedes that the express terms of the Contract do not foreclose a total cost claim, but argues that the itemized claim requirement of Section 11.04 of the General Conditions “is inherently inconsistent with a claim for damages that has been calculated on a total cost basis” (Schiavone Constr. Co., Inc. v. City of New York, 2012 N.Y. Slip Op 33656[U] [Sup Ct, N.Y. County 2012], affd 106 A.D.3d 427, 963 N.Y.S.2d 871 [1st Dept 2013] ). DASNY also submits proof that Andron maintains a comprehensive database of cost data for the Project and, therefore, it is capable of calculating damages in the itemized fashion contemplated by the Contract. Finally, DASNY argues that Andron has failed to link all of its claimed delay and acceleration damages to actionable breaches of contract (see Mid–State Precast Sys. v. Corbetta Constr. Co., 202 A.D.2d 702, 704, 608 N.Y.S.2d 546 [3d Dept 1994] ).
In opposition, Andron argues that the “differences between the conditions contemplated in the contract and the conditions caused by DASNY during performance were material, to the point where it is not possible to establish a causal relationship between a particular disruptive act and a particular cost increase. Yet it is apparent to any reasonable person that disruption and interference of [the magnitude claimed by Andron] must have significantly increased the cost of performance” (MOL, at 24). In such a case, Andron contends, the law allows application of the total cost method (see Thalle Constr. Co., Inc. v. Whiting–Turning Contracting Co., Inc., 39 F.3d 412, 417–419 [2d Cir1994] ). Andron further argues that Schiavone involved a contract that required a detailed itemization of damages, whereas Section 11.04 required a more limited submission.
The Court concludes that the present record fails to establish the unavailability of the total cost method as a matter of law. In particular, the affidavit of Charles Winter submitted in opposition to the motion gives rise to factual questions regarding the feasibility of “tracing particular cost items to the delay caused by the defendant” (Thalle, 39 F.3d at 417 ).
Application of the total cost method is, however, a last resort, and Andron bears the ultimate burden at trial of proving “the extent to which its costs were increased by the improper acts because its recovery will be limited to damages actually sustained” (Berley Indus. v. City of New York, 45 N.Y.2d 683, 687 [1978] ; Clifford R. Gray, Inc. v. City School Dist. of Albany, 277 A.D.2d 843, 847, 716 N.Y.S.2d 795 [3d Dept 2000] ; Mid–State, 202 A.D.2d at 704, 608 N.Y.S.2d 546 ). Thus, even if this is proven to be the rare case in which the total cost method may be applied, Andron's claimed damages must be reduced by any delays that: (a) were not caused by DASNY's breaches of contract; (b) fall within the protection of the exculpatory clause; or (c) were waived by Andron (including the waiver effected by Change Order No. 4). Further, insofar as Andron alleges that DASNY breached the Contract by refusing to grant extensions of time, its damages calculation must reflect any additional costs associated with remaining mobilized on the job site for a longer period of time.
UNPAID CONTRACT BALANCE
Andron cross-moves for partial summary judgment on its first cause of action, which seeks to recover an unpaid Contract balance of $961,380. In arriving at this figure, Andron begins with the original Contract price of $15,642,000. To this it adds the value of approved change orders, bringing the total to $19,818,222.62. Andron then subtracts $42,677.36, which represents its estimate of the value of the Deleted Work (see Winter Aff., ¶ 26; see also General Conditions § 11.03). This leaves a total Contract price of $19,775,545.26, of which Andron has been paid $18,814,165.64.
In arguing that DASNY was not entitled to deduct the $758,341 allegedly paid to Jemco for the Deleted Work, Andron contends principally “that the DASNY/Jemco contract was illegal; therefore, the payments to Jemco were illegal, and Andron cannot be charged for them as a matter of law” (MOL, at 4). More specifically, Andron relies upon DASNY's inability to produce written proof that the job order contract between DASNY and Jemco (“Jemco Contract”) was in effect during Jemco's performance of the Deleted Work.
The Jemco Contract is dated July 5, 2007, and it became effective on July 30, 2007. Jemco agreed to “perform all Work of every kind and nature whatsoever required” pursuant to individual job orders issued by DASNY (¶¶ 2–3). Pricing was based on standard unit prices adjusted by a specified multiplier that varied depending on where and when the job order work was performed (id., ¶ 2). The Jemco Contract had an initial term of one year, but it expressly authorized two, one-year renewal terms where “[b]oth [DASNY] and the Contractor ... mutually agree[d] to extend the contract for an option period” (id., ¶ 4).
Andron's contention that the Jemco Contract had expired by the time that DASNY issued the job orders is based upon a DASNY discovery response stating: “There was no formal written extension of the 2007 contract with JEMCO. However, there were two mutually agreed upon annual extensions of the aforesaid contract”.
The Court concludes that Andron's proof falls short of demonstrating, prima facie, that the Jemco Contract was not in force or effect at pertinent times. There is nothing in the Jemco Contract that required a formal writing to effectuate or memorialize the mutual agreement of DASNY and Jemco to extend the contract for renewal periods. The plain language of the Jemco Contract required only the “mutual agreement” of DASNY and Jemco (¶ 4). It is Andron's burden to support its cross motion with proof in admissible form demonstrating the absence of mutual agreement, and it cannot discharge this burden by pointing to the lack of a formal written extension of a contract that authorized renewal by less formal means. As Andron has failed to meet its initial burden of demonstrating illegality, this branch of the cross motion must be denied “regardless of the sufficiency of the opposing papers” (Alvarez, 68 N.Y.2d at 324, 508 N.Y.S.2d 923, 501 N.E.2d 572, supra ).
In any event, DASNY's opposition to the cross motion includes some proof of the mutual agreement of DASNY and Jemco to renew the contract. In particular, the documentation annexed to the affidavit of Anthony Bianchi, the former manager of DASNY's job order contracting program, shows communications among DASNY, Jemco and a DASNY consultant (Gordian Group) with respect to specifying the pricing multipliers to be used in each of the two renewal years. Mutual assent also can be inferred from the conduct of the contracting parties during the renewal periods, including DASNY's ongoing submission of job orders to Jemco, and Jemco's continuing performance of them.
Andron's remaining claims of illegality or improper conduct merit little discussion. While complaining that DASNY deviated from “the orderly and controlled process contemplated by the [Jemco] contract” by using “the job order system as a means to procure time and material work for an unspecified scope and duration” (MOL, at 5), Andron has not submitted evidence or legal argument to substantiate this claim. The same lack of proof in admissible form is fatal to Andron's contention that DASNY disregarded the detailed practices and procedures for the issuance of job orders. Finally, the Court sees no legal basis for Andron's claim that the Jemco Contract, or DASNY's use thereof, is tantamount to an unauthorized emergency procurement.
The affidavit of Charles Winter submitted in reply to the cross motion is insufficient for Andron to meet its initial burden.
In any event, even if Andron were able to establish the illegality of the Jemco Contract, it would not conclusively resolve the claim for the unpaid Contract balance. Andron's argument that it cannot be backcharged for the payments made to Jemco is based on authority holding that “a third party should not be forced to reimburse a municipality for expenditures it has advanced in connection with a void contract” (D'Angelo v. Cole, 67 N.Y.2d 65, 70 [1986] ). But this is not a cost-recovery action brought by DASNY against Andron; rather, Andron is suing DASNY for breaching the Contract by, inter alia, imposing an excessive backcharge for the Deleted Work. As Andron acknowledged at oral argument, DASNY is entitled to deduct the reasonable value of the Deleted Work without regard to the legality of the Jemco Contract (Oral Argument Transcript, at 85–86), and DASNY's proof of payments made to Jemco for performing the Deleted Work is at least some evidence of the value of this work.
Finally, Andron contends that, even if the Jemco Contract was in effect at pertinent times, the amounts deducted by DASNY are excessive. Andron first cites alleged discrepancies in the multipliers used by DASNY. Andron's argument does not, however, recognize or give effect to the provisions of the Jemco Contract permitting the use of enhanced multipliers in renewal years (see General Conditions § 1A.04 [C] ). Accordingly, Andron has failed to supply an evidentiary basis for concluding that DASNY paid Jemco at a rate in excess of that authorized by the contract, and, in any event, such proof merely would give rise to factual questions regarding the reasonable value of the Deleted Work.
Similarly lacking in merit is Andron's contention that the job orders issued to Jemco by DASNY do not align with the backcharges imposed upon it. A spreadsheet annexed to the affidavit of Andron's treasurer, Donald Benson, purports to demonstrate that “job orders were issued during or even after the dates when work was performed” and the “quantities for labor and material stated in the job order differ from the amounts charged to Andron” (¶ 13). Even assuming that Andron's proof suffices to meet its initial burden, the Bianchi affidavit explains the alleged discrepancies and establishes that Andron was backcharged only a fraction of the sum paid to Jemco for performance of the Deleted Work, thereby giving rise to factual questions.
Accordingly, Andron's cross motion for summary judgment is denied in all respects.
CONCLUSION
Based upon the foregoing, it is
ORDERED that DASNY's motion for partial summary judgment is granted in part and denied in part, in accordance with the foregoing; and it is further
ORDERED that Andron's cross motion for partial summary judgment is denied in all respects.
This constitutes the Decision & Order of the Court. The original Decision & Order is being transmitted to DASNY's counsel. The signing of this Decision and Order shall not constitute entry or filing under CPLR Rule 2220, and counsel is not relieved from the applicable provisions of that Rule respecting filing, entry and Notice of Entry.