Opinion
No. 113689/07.
2010-08-9
MASTER PAINTING & ROOFING CORP. d/b/a Master General Contractors, Plaintiff, v. NEW YORK CITY HOUSING AUTHORITY, Defendant.
Marvin Schechter and Frank Ribaudo, Esqs., Tunstead & Schechter, Jericho, for Plaintiff. Stephen W. Goodman, Esq., of counsel, New York City Housing Authority, New York, for Defendant.
Marvin Schechter and Frank Ribaudo, Esqs., Tunstead & Schechter, Jericho, for Plaintiff. Stephen W. Goodman, Esq., of counsel, New York City Housing Authority, New York, for Defendant.
BARBARA R. KAPNICK, J.
This is a breach of contract action concerning three New York City Housing Authority (“NYCHA”) contracts with plaintiff Master Painting & Roofing Corp. d/b/a Master General Contractors (“MGC”).
The first, second and third causes of action relate to a September 28, 1999 contract for the sum of $1,650,000.00, in connection with defendant's “Latimer Gardens, Community Center Renovation/Moderation” project in Queens (the “Latimer Contract”). By reason of additions to and deductions from the work required to be performed under the Latimer Contract, the contract price was adjusted and fixed by defendant at the sum of $2,612,787.00, according to the Amended Verified Complaint (“Complaint”) or to $2,614,787.00 according to the Affidavit of George Nistazos, President of MGC, sworn to on March 24, 2009 and submitted in opposition to defendant's motion to dismiss.
Plaintiff also claims that NYCHA is holding $14,398.23 as retainage of contract monies relating to the Latimer Contract.
Plaintiff does not dispute that payments have been made by defendant to plaintiff on account of the Latimer Contract in the sum of $2,489,944.88, or according to Mr. Nistazos' Affidavit in the sum of $2,562,443.82, but alleges in the Complaint that there is due and owing:
(a) a contract balance for work performed in the sum of $122,842 .12 (first cause of action);
Defendant has withdrawn its motion with respect to the first cause of action, noting that said claim appears to be on its way to resolution, since plaintiff admits that the amount owed is significantly less than the amount originally alleged.
(b) the sum of $37,575.50 for extra work requested by defendant and performed by plaintiff (second cause of action); and(c) increased costs and damages in the sum of $772,651.03 which were allegedly the result of delays caused by defendant redesigning plans while construction was in progress, failing to properly manage and coordinate the other prime contractors on the project, failing to timely approve payment of requisitions and change orders, and other breaches of the contract (third cause of action).
The fourth, fifth and sixth causes of action relate to a December 11, 2001 contract for the sum of $1,418,838.00, in connection with defendant's “Independence Towers Community Center Renovation & Expansion” project in Brooklyn (the “Independence Contract”).
The Independence Contract was ultimately adjusted and fixed by the defendant at the sum of $1,669,732.00, according to the Complaint, or $1,679,561.00 according to Mr. Nistazos' Affidavit.
Plaintiff does not dispute that payments have been made by defendant to plaintiff on account of the Independence Contract in the sum of $1,651,641.47, or according to Mr. Nistazos' Affidavit, in the sum of $1,679,561.00, but alleges in the Complaint that there is due and owing:
(a) a contract balance for work performed in the sum of $18,090.53 (fourth cause of action);
Plaintiff concedes that the contract balance for the Independence Contract has now been paid in full. Thus, the fourth cause of action is now moot.
(b) the sum of $7,740.37 for extra work requested by defendant and performed by plaintiff (fifth cause of action); and
(c) increased costs and damages in the sum of $647,142.35 which were allegedly the result of delays caused by defendant performing modifications to the project when construction had already begun, failing to properly manage and coordinate the work of the HVAC and other prime contractors, failing to timely approve payment of requisitions and change orders, and other breaches of the contract (sixth cause of action).
The seventh, eighth, ninth and tenth causes of action relate to an August 22, 2001 contract for the sum of $2,096,940.00, in connection with defendant's “Renovation and Extension of Saratoga Community Center” project at 33–35 Saratoga Avenue, in Brooklyn (the “Saratoga Contract”).
This contract was ultimately adjusted and fixed by the defendant at the sum of $2,251,575.00, according to the Complaint, or to $2,271,096.00 according to Mr. Nistazos' Affidavit.
Plaintiff does not dispute that payments have been made by defendant to plaintiff on account of the Saratoga Contract in the sum of $1,982,640.55, according to the Complaint, or in the sum of $2,128,673.31, according to Mr. Nistazos' Affidavit, but alleges in the Complaint that there is still due and owing:
(a) a contract balance for work performed in the sum of $268,934 .45 (seventh cause of action);
Defendant has also withdrawn its motion with respect to the seventh cause of action, since these claims also appear to be on their way to resolution.
(b) change order work totaling $6,811.77 (eighth cause of action);
(c) the sum of $9,617.85 for extra work requested by defendant and performed by plaintiff (ninth cause of action); and
(d) increased costs and damages in the sum of $622,636.18 which were allegedly the result of delays caused by defendant (tenth cause of action).
Plaintiff also claims that NYCHA is holding $32,362.35 as retainage of contract monies relating to the Saratoga contract.
According to plaintiff, the fair and reasonable value of the labor furnished and materials supplied by MGC for the extra and additional work on the Projects is $54,933.72, which sum is the total of its second, fifth and ninth causes of action in the Complaint.
Defendant now moves for an order pursuant to CPLR § 3211(a)(1), (5) and (7) dismissing the Amended Verified Complaint, except as previously noted.
Defendant argues that: (i) most of plaintiff's remaining claims must be dismissed for failure to file a Notice of Claim under Public Housing Law § 157; and (ii) all of plaintiff's claims must be dismissed for failure to file timely Notices of Claim under the Contracts.
Public Housing Law § 157 provides, in relevant part, as follows:
1. In every action or special proceeding, for any cause whatsoever, prosecuted or maintained against an authority, other than a claim arising out of a condemnation proceeding, the complaint or necessary moving papers shall contain an allegation that at least thirty days have elapsed since the demand, claim or claims upon which such action or special proceeding is founded were presented to the authority for adjustment and that it has neglected or refused to make an adjustment or payment thereof for thirty days after such presentment [emphasis supplied].
“[F]ailure to allege a timely filing of a notice of claim ... rendered [the] complaint legally insufficient and justified its dismissal for failure to state a cause of action (citation omitted).” Reaves v. City of New York, 177 A.D.2d 437 (1st Dep't 1991). While plaintiff makes this allegation in its Complaint, “the failure to serve a notice of claim in the manner and method prescribed by the statute upon the person designated by law” has been held to be a “fatal defect (citations omitted).” Matter of Moore v. New York City Hous. Auth., 35 A.D.2d 553 (2nd Dep't 1970).
Section 23 of the General Conditions of the Contracts provides, in relevant part, as follows:
(a) If the Contractor claims that any instructions of the Authority, by drawings or otherwise, involve Extra Work entailing extra cost, or claim compensation for any damages sustained by reason of any act or omission of the Authority, or of any other persons, or for any other reason whatsoever, the Contractor shall, within twenty (20) days after such claim shall have arisen, file with the Authority written notice of intention to make a claim for such extra cost or damages, stating in such notice the nature and amount of the extra cost or damages sustained and the basis of the claim against the Authority. [emphasis supplied].
(b) The filing by the Contractor of a notice of claim within the time limited herein, shall be a condition precedent ... to the Contractor's right to resort to any proceeding or action to recover thereon, and failure to do so shall be deemed to be a conclusive and binding determination on the Contractor's part that he/she has no claim against the Authority for compensation for Extra Work or for compensation for damages ... and shall be deemed a waiver by the Contractor of all claims for additional compensation or for damages. The Appellate Division, First Department has strictly enforced the exact notice provision at issue here, Section 23 of NYCHA's General Conditions, dismissing claims by this same contractor who did not comply with it. See Master Painting & Roofing Corp. v. New York City Hous. Auth., 258 A.D.2d 275 (1st Dep't 1999). In Bat–Jac Contr. v. New York City Hous. Auth., 1 AD3d 128, 129 (1st Dep't 2003), the First Department affirmed the decision of the lower court dismissing the complaint because “[p]laintiff failed to file a timely notice of claim, which is expressly made a prerequisite to recovery under the parties' contract and which is subject to strict construction as a matter of public policy,” citing A.H.A. Gen. Constr. v. New York City Hous. Auth., 92 N.Y.2d 20, 33–34 (1998).
Plaintiff contends that it has satisfied its obligations under Public Housing Law § 157(1) and Section 23 of the General Conditions of the Contracts, and further argues that equity demands that NYCHA should be estopped from asserting notice defenses to plaintiff's claims as a result of NYCHA's conduct through the entire time that plaintiff was performing work on the projects (1999 through 2007), i .e., in ensuring plaintiff that payment for extra work and delays would be made. Plaintiff asserts that there was constant contact between the parties over the years, orally and in writing, whereby plaintiff notified NYCHA of its claims for delays and of extra and additional work.
However, the contract contains at least three provisions that render any purported oral representations by NYCHA unenforceable.
Section 58 of the General Conditions, entitled “Modification of Contract,” provides that: “[n]o modification of, or change in, the Contract shall be valid or enforceable against the Authority unless it is in writing and signed by the Authority.” Section 59 of the General Conditions, entitled “Communications,” provides at subsection (a) that “[a]ll notices, demands, requests, instructions, approvals, claims and orders between the Authority and the Contractor must be in writing,” and Section 62 of the General Conditions, entitled “No Estoppel or Waiver,” subsection (b), provides that “[n]o act done or permitted to be done by any member, officer, agent or employee of the Authority at any time shall be deemed to be a waiver of any provision of the Contract, excepting only a resolution of the members of the Authority providing expressly for such waiver.”
In Huff Enters. v. Triborough Bridge & Tunnel Auth., 191 A.D.2d 314 (1st Dep't 1993), the Appellate Division reversed the lower court and granted partial summary judgment to the agency dismissing a contractor's delay damages claim. The Court found that the “clear and unambiguous terms of the subject agreement,” requiring strict adherence to notice of claim provisions and precluding oral modifications, eliminated any triable issues of fact regarding the contractor's reliance on alleged oral modifications as grounds for failure to file a timely notice of claim. Id. at 315. The Appellate Division noted that “[t]he courts, in construing similar contractual terms, have held that the purpose of compelling the contractor to furnish written notice and to prevent oral modification by any of [the agency's] agents or employees ... is to obviate any issue as to the credibility of either the contractor or the [agent] as to what was or what was not said by either of them .' (citation omitted).” Id. at 316–17.
In addition, the Court recognized that notice of claim requirements serve salutary purposes in public works contracts and merit strict enforcement. Id. at 316–17. The Court concluded that “[t]o enable plaintiff [contractor] to succeed in attempting to circumvent having to give written notice would eviscerate the viability of these clauses in public works projects, and none of the cases cited by plaintiff or relied upon by the Supreme Court compel such a result.” Id. at 317.See also A.H.A. Gen. Constr. v. New York City Hous. Auth., supra. Accordingly, plaintiff's estoppel argument fails.
Second Cause of Action
The second cause of action seeks the sum of $37,575.50 for extra work to the Latimer Contract which consists of (a) total wall material/stucco in the amount of $8,829.52; (b) additional painting in the amount of $10,146.26; and (c) a 2% bonding fee for change order work in the amount of $18,599.72.
With respect to items (a) and (b) of the second cause of action, the Court finds that plaintiff failed to file any notice of claim with NYCHA before commencing this action and failed to comply with the contractual notice requirement. Accordingly, items (a) and (b) of the second cause of action are dismissed.
Item (c) of the second cause of action was a claim for $18,599.72 for a 2% bonding fee for Change Orders 1–24 of the Latimer Contract. Plaintiff argues that MGC's agreed price for the change orders did not include the increased bonding fee associated with the increased value of MGC's work, and that it is entitled to recoup that fee. The Court finds that plaintiff's notice of claim dated August 3, 2006 included this claim, but was untimely.
Defendant has submitted documentation establishing that plaintiff had agreed to final prices for all these change orders, and thus any claims relating to the prices for the change orders arose no later than when plaintiff agreed to them. The documentary evidence submitted reflects that plaintiff agreed to 19 of these change orders in 2005 or earlier, to two more change orders in April 2006, to one more in June 2006, and to the final two change orders on July 13, 2006. Plaintiff's 20 days to file notices of claim relating to these prices thus expired in 2005 or earlier for 19 of these change orders; in May 2006 for two change orders; in June 2006 for one change order; and on August 2, 2006 for the last two change orders. Therefore, plaintiff's notice of claim dated August 3, 2006 was untimely for all 24 change orders. Accordingly, the second cause of action is dismissed in its entirety.
Third Cause of Action
The third cause of action seeks damages of $772,651.03 as a result of delays consisting of the following six items: (a) home office and general administrative costs and profit in the amount of $549,387.80; (b) extended field office costs in the amount of $128,060.00; (c) cost of material escalation in the amount of $61,019.21; (d) cost of change order material escalation in the amount of $10,993.25; (e) financial impact due to late contract payments in the amount of $5,372.87; and (f) financial impact due to late change order payments in the amount of $17,817.90.
A notice of claim was apparently filed on June 7, 2006 with respect to two of the delay items alleged for additional home office and general administrative costs and profit and for additional field office costs. Defendant, however, claims that this notice of claim was untimely because it was filed more than 20 days after any of the alleged delays.
Likewise, defendant argues that two notices of claim which were apparently filed on June 7 and August 3, 2006 with respect to the third item for escalation in the cost of contract materials, were untimely because they relate to delay claims related to the roof design which accrued no later than the end of 2004.
Defendant argues that plaintiff's claim for Item (c) must also be dismissed on the grounds of mootness and accord and satisfaction because NYCHA has already paid plaintiff for this work under Charge Order No. 11 and the parties signed a Stipulation of Agreement on April 27, 2004 in which NYCHA agreed to issue a change order for $375,000 to compensate plaintiff for “expenses associated with delays beyond their control”. Defendant argues that plaintiff admitted in the documents it sent along with the June 7, 2006 letter to NYCHA that NYCHA had fully satisfied this Agreement in two payments on May 10, 2004 and July 19, 2004.
As to item (d), defendant contends that the notice of claim filed on August 3, 2006 was untimely because it had completed the three relevant Change Orders—Nos. 8, 13 and 14—in 2004.
As to item (e), defendant argues that plaintiff's notice of claim filed on June 7, 2006, which included that item, was untimely, because plaintiff had received all those payments long before filing this notice of claim. In addition, defendant claims that interest on late contract payments is barred by Section 6(d) of the General Conditions of The Latimer Contract which provides that “no interest shall be due and payable from the Authority ... for failure to make any partial payments or the Final Payment on the date when any such payments may be due.”
Finally, as to item (f), defendant contends that plaintiff's notice of claim dated June 7, 2006 that included item (f)—a claim for 10% interest on the payments for Change Orders 1–19—was untimely, because plaintiff had received all those payments no later than August 3, 2005, more than ten months before it filed its notice of claim.
The Court finds that plaintiff has failed to show that its June and August 2006 notices of claims were timely for any of the six items listed. While plaintiff claims that it filed an earlier notice of claim, there is no evidence that the purported earlier notice included these items because plaintiff failed to produce a copy of that purported notice. Moreover, plaintiff's reliance on a purported January 2006 notice of claim contradicts its own admission that its first notice of claim for the items in the third cause of action was filed in June 2006. Accordingly, the entire third cause of action is dismissed.
Fifth and Sixth Cause of Action
Plaintiff's fifth cause of action is for two items of purported extra work on the Independence Contract: (a) debris removal work in the amount of $2,679.55; and (b) a 2% bonding fee on change order work in the amount of $5,060.82.
Plaintiff's sixth cause of action is for seven items of alleged delay damages on the Independence Contract: (a) home office and general administrative costs and profit in the amount of $391,357.26; (b) extended field office damages in the amount of $169,430.61; (c) cost of material escalation in the amount of $39,783.22; (d) change order material cost escalation in the amount of $23,592.65; (e) financial impact due to late contract payments, in the amount of $3,591.92; (f) financial impact due to late change order payments, in the amount of $5,571.13; and (g) more financial impact due to late change order work, in the amount of $13,815.56.
In its moving papers, NYCHA argues that all nine items in these two causes of action must be dismissed because plaintiff failed to file any notice of claim for them, thus failing to comply with the statutory or contractual notice requirements.
Plaintiff, however, claims that Exhibit E to its Affidavit is that notice of claim and was filed in 2006. Defendant argues that there is no evidence plaintiff ever filed Exhibit E with NYCHA. Yaacov Michelson, a Design Project Manager in NYCHA's Capital Projects Department who supervised the Independence Contract, submitted an Affidavit affirmed to on May 15, 2009, in which he stated that he does not recall ever seeing Exhibit E, either in NYCHA's files or elsewhere, before it was shown to him by NYCHA's counsel on May 7, 2009. Counsel further contends that he has personally examined all of NYCHA's files for this contract and has not found an original nor a copy of Exhibit E. Further he contends that Exhibit E lacks any indicia of authenticity because it is not signed, has no date, and does not indicate how it was sent, and plaintiff has not submitted proof of mailing or receipt. While plaintiff claims Exhibit E was submitted to NYCHA in 2006, this cannot be true because Exhibit E refers to events that occurred in 2007. Accordingly, the fifth and sixth causes of action must be dismissed.
Eighth, Ninth and Tenth Causes of Action
Plaintiff's eighth cause of action is for two items of change order work totaling $6,8111.77, which work was extra to the Saratoga Contract, and allegedly approved by defendant: (a) Change Order 20 for a Roof Top A/C Catwalk in the amount of $5,690.00; and (b) Change Order 22 for steam pipe enclosure and through FL slab and wall openings in the amount of $1,121.77.
Plaintiff's ninth cause of action is for two more items of purported extra work on the Saratoga Contract: (a) a bonding fee for change order work in the amount of $3,092.70; and (b) additional finish door hardware in the amount of $6,525.15.
Plaintiff's tenth cause of action is for five items of alleged delay damages on the Saratoga Contract: (a) home office and general administrative costs and profit in the amount of $399,576.88; (b) extended field office damages in the amount of $216,388.80; (c) financial impact due to purported late contract payments in the amount of $1,333.45; (d) financial impact due to purported late change order approvals in the amount of $3,321.13; and (e) financial impact due to purported late change order payments in the amount of $2,015.92.
In its moving papers, NYCHA argues that all nine items in these three causes of action must be dismissed because plaintiff failed to file any notice of claim, thus failing to comply with the notice requirements of Public Housing Law § 157 and Section 23 of the General Conditions of the Contract.
Plaintiff, however, claims that Exhibit F to its Affidavit is that notice of claim and was filed in 2006. Defendant, on the other hand, argues that there is no evidence plaintiff ever filed Exhibit F with NYCHA. Forde A. Coppin, a Design Project Manager in NYCHA's Capital Projects Department, who supervised the Latimer and Saratoga Contracts, states in his Affidavit, sworn to on May 15, 2009 that he does not “recall ever seeing Exhibit F, either in NYCHA's files or elsewhere, before NYCHA's counsel showed it to [him] on May 7, 2009, attached to plaintiff's papers”. Counsel also argues that Exhibit F lacks any indicia of authenticity because it is not signed, is not addressed to NYCHA, has no date, and does not indicate how it was sent. Furthermore, there is no proof of mailing or receipt. While plaintiff claims Exhibit F was submitted to NYCHA in 2006, again, this cannot be true because Exhibit F refers to several events that occurred in 2007. Accordingly, the eighth, ninth and tenth causes of action must be dismissed.
This constitutes the decision and order of the Court.