Opinion
2003-2312.
Decided on September 2, 2004.
KAVINOKY COOK, LLP, Samuel L. Shapiro, Esq., Scott C. Becker, Esq., Marilyn A. Hochfield, Esq., Of Counsel, Buffalo, NY, Attorneys for Plaintiff.
HODGSON RUSS LLP, Kevin D. Szczepanski, Esq., of Counsel, Buffalo, New York, Attorneys for Defendant.
This matter came before the Court on a motion by Defendant Frank L. Ciminelli Construction Co., Inc. (Ciminelli) to dismiss the complaint pursuant to CPLR 3211 (a) (5), based upon the running of the statute of limitations.
In support of the motion, Ciminelli submitted the affirmation of Kevin D. Szczepanski, dated January 6, 2004, with exhibits; the affidavit of John L.Walker, sworn to on April 10, 2003, with exhibits; and a memorandum of law dated January 6, 2004.
In opposition to the motion, Plaintiff Menorah Campus, Inc. (Menorah Campus) submits the affidavit of Scott C. Becker, Esq., sworn to on May 27, 2003; the affidavit of David M. Dunkleman, sworn to on May 22, 2003, with exhibits; a memorandum of law dated May 27, 2003 and a supplemental memorandum of law dated April 8, 2004. Ciminelli submitted a reply memorandum of law.
Prior to oral argument on May 5, 2004, the Court requested that the parties submit a complete set of the contract documents at issue in the case, and, if desired, a separate rendering of the provisions of those documents upon which the parties intended to rely. Both parties submitted a set of contract documents on or about April 22, 2004; Ciminelli submitted an amended set of contract documents on April 26, 2004; Menorah Campus submitted a responding letter dated April 30, 2004; and, Ciminelli submitted a letter dated May 3, 2004 along with a replacement to Exhibit A of its amended set of contract documents.
For the reasons that follow, the Court denies the motion to dismiss.
BACKGROUND
Menorah Campus is a not-for-profit corporation which owns and operates an "extensive campus of elder care facilities designed to provide residents with differing levels of care" (hereinafter the Premises) ( see Dunkleman Affid. Exhibit A, Amended Complaint [hereinafter AC]) ¶ 4). The Premises are located on North Forest Road in Amherst, New York (AC ¶ 3). The parties entered into a contract in 1991 for Ciminelli to construct three different facilities on the Premises: the Forest Creek Apartments, the Dosberg Manor, and the Rosa Coplon Living Center, along with other improvements, including an access road (hereinafter "the Project") (AC ¶ 5). The contract price was over Twenty Eight Million Dollars ($28,000,000.00) plus change orders (AC ¶ 5).
The Contract Documents for the Project include the Construction Contract Cost Plus Agreement (HUD Form 92442A), executed July 31, 1991 (Cost Plus Agreement). The Cost Plus Agreement provides that the Contract Documents consist also of the General Conditions of the Contract for Construction (American Institute of Architects Document A201, 1987 Edition) (hereinafter the General Conditions); the Supplementary Conditions of the Contract for Construction (HUD Form 2554); and drawings and specifications (the latter two of which are not before the Court). The parties also executed a Modification to General Conditions and Supplementary Conditions, on July 31, 1991 (hereinafter Modification Agreement) ( see Index to Attached Contract Documents, submitted by Menorah Campus, with Tabs 1-4; Amended Contract Documents, submitted by Defendant, plus amended Exhibit A).
Included in the record on this motion to dismiss are affidavits from John L. Walker, Ciminelli's Project Manager for the Project, and from David M. Dunkleman, the President of Menorah Campus. According to Walker, work on the Project commenced almost immediately after execution of the contracts; and Ciminelli completed its work ahead of the January 31, 1993 deadline, because the Project was substantially completed in December 1992 ( see Walker Affid. ¶ 5). Certificates of substantial completion were executed by Dunkleman on January 15, 1993 ( see Walker Affid. Ex. B).
According to the Amended Complaint, beginning in 1997, Menorah Campus began to notice problems with the flooring in the Dosberg Manor; Menorah Campus notified Ciminelli of the problems in June 1997, and demanded that Ciminelli repair the problems (AC ¶ 28, 53). Ciminelli allegedly refused "to make its work and materials conform to the requirements of the Contract Documents", i.e. to correct the problems (AC ¶ 54). Thereafter, Menorah Campus had the flooring partially repaired at the cost of One Hundred and Twenty-Seven Thousand and One Hundred and Sixty-Three Dollars ($127,163.00) (AC ¶¶ 55-56).
Similarly, in 1997 Menorah Campus discovered problems with the flooring in the Forest Creek apartments (AC ¶ 57) and notified Ciminelli in June 1997, demanding repairs (AC ¶ 82); in 1994, Menorah Campus noticed problems with the Rosa Coplon kitchen and notified Ciminelli in or about October 1997 (AC ¶¶ 142, 154). In 1997, Menorah Campus noticed problems with the firewalls and with the roof in the Forest Creek Apartments and in Dosberg Manor and notified Ciminelli of same in January 1998 (AC ¶¶ 84, 101, 103, 120, 122, 130, 132, 140). Finally, in 2002, Menorah Campus began to notice problems with the access road (AC ¶ 156).
Ciminelli took no action to correct any alleged problems with the premises. Dunklemen, Menorah Campus's President, asserts in his affidavit:
Following the manifestation of the problems recited in the amended complaint, Menorah Campus gave notice of such problems to Ciminelli, with the exception of the access road problems, which only recently occurred. Following that notice, representatives of Ciminelli and Ciminelli's insurance carrier came to the [Premises] to conduct an investigation as to the problems. Menorah Campus also performed its own investigation and also conducted some of the repairs at its own expense, notwithstanding that Ciminelli was required to make those repairs under the contract
(Dunkleman ¶ 11). Ciminelli declined to correct the problems (AC ¶¶ 83, 102, 121, 131, 141, 155; see Dunkleman Affid. ¶ 12).
Menorah Campus now seeks recovery based upon defects in the materials used in the Project and/or defects in the work on the Project, based upon alleged breaches of warranties, and based upon the failure of the work and materials to conform to the requirements of the Contract Documents. Menorah Campus seeks damages in an amount totaling approximately Three Million Two Hundred and Twenty Five Thousand Dollars ($3,225,000.00).
The original Complaint was filed on March 10, 2003. Ciminelli moved against that Complaint in April 2003. Menorah Campus served an Amended Complaint in May 2003 ( see Dunkleman Affid. Exhibit A, Amended Complaint [hereinafter AC]).
In the Amended Complaint, Menorah Campus asserts twenty-four causes of action, including causes of action for breach of contract based upon Ciminelli's allegedly supplying defective materials during construction and then failing to "correct and complete" the Work when notified of defects ( see AC ¶¶ 164-165; 175-176; 186-187, 197-198, 208-209, 219-220, 230-231, 241-242); causes of action alleging breach of contract by performing defective work and then failing to correct and complete that Work when notified of the defects ( see AC ¶¶ 168-169, 179-180, 190-191, 201-202, 212-213, 223-224, 234-235, 245-246); and causes of action asserting breach of warranties ( see AC ¶¶ 172, 183, 194, 205, 216, 227, 238, 249).
In January 2004, Ciminelli moved to dismiss the Amended Complaint.
THE CONTRACT DOCUMENTS
The parties have identified numerous provisions of the Contract Documents that they assert that the Court must construe in order to resolve the issue of whether Menorah Campus's causes of action are timely: paragraphs 12.2 and 13.7.1 of the General Conditions, entitled respectively "Correction of Work" and "Commencement of Statutory Limitation Period"; in the Modification Agreement, paragraphs 3.5.2 to 3.5.7, concerning warranties and indemnification, and paragraph 3.19.1, entitled "Failure to Discover or Reject Defective Work or Materials". The Court notes that the General Conditions consist of an American Institute of Architects form; in other words, those provisions were not written by the parties. The Modification Agreement, however, consists of provisions specifically negotiated by the parties ( see Modification Agreement, first paragraph).
Paragraph 12.2 of the General Conditions concerns "Correction of Work". Pertinent subparagraphs provide:
12.2. CORRECTION OF WORK
12.2.1 The Contractor shall promptly correct Work rejected by the Architect or failing to conform to the requirements of the Contract Documents, whether observed before or after Substantial Completion and whether or not fabricated, installed, or completed. * * *
12.2.2 If within one year after the date of Substantial Completion of the work or designated portion thereof, or after the date for commencement of warranties established under Subparagraph 9.9.1 [concerning partial occupancy or use], or by terms of an applicable special warranty required by the Contract Documents, any of the work is found to be not in accordance with the requirements of the Contract Documents, the Contractor shall correct it promptly after receipt of written notice from the Owner to do so unless the Owner has previously given the Contractor a written acceptance of such condition. * * * This obligation under this Subparagraph 12.2.2 shall survive acceptance of the Work under the Contract and termination of the Contract. The Owner shall give such notice promptly after discovery of the condition.
* * *
12.2.6 Nothing contained in this paragraph 12.2 shall be construed to establish a period of limitation with respect to other obligations which the Contractor might have under the Contract Documents. Establishment of the time period of one year as described in Subparagraph 12.2.2 relates only to the specific obligation of the Contractor to correct the Work and has no relationship to the time within which the obligation to comply with the Contract Documents may be sought to be enforced nor to the time within which proceedings may be commenced to establish the Contractor's liability with respect to the Contractor's obligations other than specifically to correct the Work.
(General Conditions paragraph 12.2.1, 12.2.2, 12.2.6 [italics supplied]).
Paragraph 13.7.1 of the General Conditions is entitled "Commencement of Statutory Limitation Period". That paragraph provides in pertinent part:
13.7.1 As between [Menorah] and [Ciminelli]:
.1 Before Substantial Completion. As to acts or failures to act occurring prior to the relevant date of Substantial Completion, any applicable statute of limitations shall commence to run and any alleged cause of action shall be deemed to have accrued in any and all events not later than such date of Substantial Completion. * * * .3 After Final Certificate for Payment. As to acts or failures to act occurring after the relevant date of issuance of the final Certificate for Payment, any applicable statute of limitations shall commence to run and any alleged cause of action shall be deemed to have accrued in any and all events not later than the date of any act or failure to act by the Contractor pursuant to any warranty provided under Paragraph 3.5, the date of any correction of the Work or failure to correct the Work by the Contractor under Paragraph 12.2, or the date of actual commission of any other act or failure to perform any duty or obligation by the Contractor or Owner, whichever occurs last.
(General Conditions paragraph 13.7.1.1 13.7.1.3 [italics supplied]).
Paragraph 3.5 of the General Conditions entitled "Warranty", which is referenced in paragraph 13.7.1.3 above, provides for a warranty by the Contractor which provides:
that the Work will be free from defects not inherent in the quality required or permitted, and that the Work will conform with the requirements of the Contract Documents. Work not conforming to these requirements, including substitutions not properly approved and authorized, may be considered defective
(General Conditions paragraph 3.5). Excluded is damage from abuse or from normal wear and tear ( see id.).
Additional warranties were added through the Modification Agreement. Notably, the Modification Agreement provides in its introductory paragraph:
Notwithstanding any term, provision, covenant or condition contained in the General Conditions to the contrary, the language contained herein shall be given full force and effect
(Modification Agreement, introductory paragraph at 1). Section 2 of the Modification Agreement provides in pertinent part:
Paragraph 3.5, entitled "WARRANTY," is amended by adding the following as Subparagraphs [3.5.2 through 3.5.7]:
3.5.2 The Contractor warrants to the Owner that all materials and equipment furnished under this Contract shall be new. The Contractor also warrants that the Work performed by the Contractor and any Sub-contractors and any Sub-subcontractors has been performed in a good and workmanlike manner and that such work and all materials supplied by the Contractor and by any Subcontractors and any Sub-subcontractors shall be free from faults and defects and in accordance and compliance with the terms contained in the Contract Documents and the means, methods, techniques, sequences and procedures will be in accordance and compliance with all applicable environmental * * *and (without limitation) all other laws rules, regulations, codes, ordinances and interpretations * * *. * * *
3.5.3 The Contractor further warrants to the Owner that Contractor, all Subcontractors and all Sub-subcontractors will each perform their Work in a skillful and competent manner in accordance with the highest standards of care and expertise of their respective industries and/or professions and commensurate with the intended quality of the Project * * *
3.5.5 The Contractor shall be liable to and shall indemnify the Owner * * * for any claims, losses, liabilities, including STRICT LIABILITY IN TORT, repairs, replacements, corrections, damages, costs and expenses, including reasonable attorney's fees, incurred by * * * the Owner * * * as a result of any breach or failure of any of the warranties contained in this Paragraph 3.5. * * *
3.5.6 The warranties contained in this Paragraph 3.5 are not limited by the provisions of Paragraph 12.2.
3.5.7 Nothing hereinabove shall reduce any liability which the Contractor may have to the Owner for the materials, equipment, and work either supplied or performed by Contractor * * *.
(Modification at para 2, adding to General Conditions subparagraphs 3.5.2 through 3.5.7 [italics supplied]).
Menorah Campus also relies upon paragraph 3.19 of the Modification Agreement, which was added to Article 3 of the General Conditions (an Article entitled "Contractor"). Paragraph 3.19 provides in pertinent part:
3.19 "FAILURE TO DISCOVER OR REJECT DEFECTIVE WORK OR MATERIALS".
3.19.1Failure of [Menorah Campus] or the Architect during the progress of the Work to discover or reject defective Work or materials, or Work or materials not in accordance with the Contract Documents, shall not be deemed an acceptance thereof nor a waiver of [Menorah Campus's] rights to a proper execution of the Work * * * or of receipt of proper materials. No partial or final payment or partial or entire occupancy of the Project by Owner shall be construed to be an acceptance of the Work or materials which are not strictly in accordance with the Contract Documents, nor a waiver of [Menorah Campus's] rights to full and complete performance of the contract Documents. * * * Acceptance by [Menorah Campus] shall not relieve [Ciminelli] of its obligations to perform the Work or supply the materials as required by the Contract Documents.
(Modification Agreement paragraph 3.19.1 [italics supplied]).
DISCUSSION
Case Law on Motion to Dismiss
On a motion to dismiss under CPLR 3211 (a) (5) on Statute of Limitations grounds, a court should not dismiss the complaint as time-barred unless it is "conclusively established when the causes of action accrued" ( Dabb v NYNEX Corp., 262 AD2d 1079 [4th Dept 1999]; see also Airco Alloys Div., Airco Inc. v Niagara Mohawk Power Corp., 76 AD2d 68, 80-81 [4th Dept 1980]). The Court must "liberally construe the complaint * * * and accept as true the facts alleged in the complaint and any submissions in opposition to the dismissal motion," according Menorah Campus "the benefit of every possible favorable inference" ( 511 West 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 151-152 [internal quotation marks omitted]). Contentions of Parties
Ciminelli contends that, under paragraph 13.7.1.1 of the General Conditions, as to all alleged acts or failures to act by Ciminelli that occurred before substantial completion of the Project, the statute of limitations accrued on the date of substantial completion. Ciminelli further asserts that, under the common law, in cases against contractors the accrual date of a cause of action concerning the work performed is the date upon which the contractor completes its performance, no matter how the complaint characterizes the claim. In addition, Ciminelli asserts that there is no "discovery rule" with respect to accrual of claims involving construction defects. Thus, according to Ciminelli, the statute of limitations ran, at the latest, six years from substantial completion of the Project in December 1992, or until December 1998 more than four years prior to the commencement of the instant action ( see Ciminelli Reply Memo at 6-7).
Menorah Campus does not dispute Ciminelli's statement of the common law concerning the accrual of causes of action arising out of construction projects generally. However, Menorah Campus contends that its causes of action did not accrue until Ciminelli refused to correct the alleged defects complained of, following notice of those alleged defects by Menorah Campus ( see Menorah Campus Supp Memo at 3-7). In other words, under Menorah Campus's calculations, its causes of action on the earliest-discovered defects in Dosberg Manor accrued no earlier than June 1997, and the summons and complaint were served on Ciminelli less than six (6) years later, in March 2003 ( see Menorah Campus Memo at 16-17).
Accrual of Construction Claims Generally
The parties agree that the six-year statute of limitations governing causes of action based upon contractual obligations applies to this case ( see CPLR 213).
In its reply memorandum, Ciminelli asserts that the causes of action concerning defective materials, in addition to the other breach of contract and breach of warranty causes of action, are all governed by a six-year statute of limitations ( see Reply Memorandum at 7). It has relinquished its earlier position that a four-year statute of limitations applies to the supplying of materials in the Project.
Under New York Law, a cause of action against a contractor for defective construction generally accrues upon completion of performance, in other words, upon "actual physical completion of the work" ( Forest Med. Professional Condominium v Tiburzi, 214 AD2d 962, 963 [4th Dept 1995]; see City School Dist. of City of Newburgh v Hugh Stubbins Assoc., Inc., 85 NY2d 535, 538; State of NY v Lundin, 60 NY2d 987, 989; Cabrini Med. Ctr. v Desina, 64 NY2d 1059, 1061). There is no "discovery rule" with respect to accrual of claims involving construction defects ( see e.g. Gelwicki v Campbell, 275 AD2d 601 [2nd Dept 1999]). These precepts apply where the parties have not otherwise agreed on a continuing duty by the contractor, for example, to correct defects ( see Forest Med. Professional Condominium, 214 AD2d at 963, citing Matter of Pigott Constr. Int'l. v Rochester Inst. Of Technology, 84 AD2d 679, 680 [4th Dept 1981]). Menorah Campus asserted at oral argument, however, that that protection is precisely what Menorah Campus contracted for, but only as to latent defects.
Interpretation of the Contract Documents
It is the province of the Court to interpret the language of a contract, if the contract is unambiguous ( see Chimart Assoc. v Paul, 66 NY2d 570, 572-573; Jellinick v Joseph J. Naples Assoc., Inc., 296 AD2d 75, 78 [4th Dept 2002]). "[W]hen parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms. Evidence outside the four corners of the document as to what was really intended but unstated or misstated is generally inadmissible to add to or vary the writing" ( W.W.W. Assocs., Inc. v Giancontieri, 77 NY2d 157, 162).
What is clear about the contracts at issue here is that the interrelationship among them is highly complex. Whether or not they are ambiguous is a question of law to be resolved by this Court ( see W.W.W. Assoc., 77 NY2d at 162). As stated by the Court of Appeals,
Ambiguity is determined by looking within the four corners of the document, not to outside sources * * *. * * * [I]n deciding whether an agreement is ambiguous courts "should examine the entire contract and consider the relation of the parties and the circumstances under which it was executed. Particular words should be considered, not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby. Form should not prevail over substance and a sensible meaning of words should be sought"
( Kass v Kass, 91 NY2d 554, 566 [internal citations omitted]). Finally, "[t]he proper inquiry in determining whether a contract is ambiguous is whether the agreement on its face is reasonably susceptible of more than one interpretation" ( Jellinick v Joseph J. Naples Assoc., Inc., 296 AD2d 75, 78 [4th Dept 2002] [internal quotation marks omitted]).
Paragraph 13.7.1
The Court first construes paragraph 13.7.1, entitled "Commencement of Limitation Period". Ciminelli contends that 13.7.1.1 provides that, as to all causes of action concerning its performance of work prior to substantial completion of the Project — i.e. the supplying of defective materials and/or the performance of defective work during construction those causes of action accrued under paragraph 13.7.1.1 no later than December 1992, and are barred by the six-year statute of limitations ( see Ciminelli Memo at 6-7, citing paragraph 13.7.1.1).
Ciminelli's briefs do not separately analyze subparagraphs 13.7.1.2 and 13.7.1.3; Menorah Campus' briefs do not analyze paragraph 13.7.1.1.
The Court agrees with Ciminelli's interpretation of paragraph 13.7.1.1. However, that does not require dismissal of the complaint.
Menorah Campus contends that, under Modification Agreement provisions specifically negotiated between the parties, in the event that defects in the work or materials were discovered following final payment, Ciminelli had a separate duty to correct the defects in order to make the work conform to the contract documents, regardless of the time frame of the discovery ( see Menorah Campus Supp Memo at 6-7). By refusing to correct the defects when notified of them, Menorah Campus contends, Ciminelli breached its obligations under General Conditions paragraph 3.19.1 and under the warranties contained in paragraph 3.5 ( see id.) Apparently in relation to those contentions, Menorah Campus cites paragraph 13.7.1.3, which provides in pertinent part:
.3 After Final Certificate for Payment. As to acts or failures to act occurring after the relevant date of issuance of the final Certificate for Payment, any applicable statute of limitations shall commence to run and any alleged cause of action shall be deemed to have accrued in any and all events not later than the date of any act or failure to act by the Contractor pursuant to any warranty provided under Paragraph 3.5, the date of any correction of the Work or failure to correct the Work by the Contractor under Paragraph 12.2, or the date of actual commission of any other act or failure to perform any duty or obligation by the Contractor or Owner, whichever occurs last.
(General Conditions paragraph 13.7.1.3 [italics supplied]).
Ciminelli points out, however, that paragraph 12.2.2 of the General Conditions limits Ciminelli's obligations to correct defects to those of which Menorah Campus had provided it notice within one year of substantial completion of the Project ( see Ciminelli Reply Memo at 7-10).
Menorah contends in essence that paragraph 3.5.6 and 3.19.1 of the Modifications extend that one-year time period. The Court will therefore construe paragraphs 12.2.2 and 3.5.6, along with 13.7.1.
Paragraph 12.2.2
The operative language of 12.2.2 provides that "[i]f within one year after the date of Substantial Completion of the Work or designated portion thereof, or after the date for commencement of warranties established under Subparagraph 9.9.1 [concerning partial occupancy or use], or by terms of an applicable special warranty required by the Contract Documents, any of the work is found to be not in accordance with the requirements of the Contract Documents, the Contractor shall correct it promptly * * *" (emphasis supplied).
The Court construes this provision to require a Contractor to correct promptly work found not to be in accordance with the requirements of the Contract, under the terms of an applicable special warranty, which special warranties are not subject to the one-year rule. The Court reaches this interpretation by construing the plain language of the subparagraph: with respect to work substantially completed, or work with respect to which there are warranties under subparagraph 9.9.1 (concerning partial occupancy or use), the contract uses the word "after": "If within one year after the date of Substantial Completion of the work or designated portion thereof, or after the date for commencement of warranties established under Subparagraph 9.9.1 [concerning partial occupancy or use], * * * any of the work is found to be not in accordance with the requirements of the Contract Documents, the Contractor shall correct it promptly" (General Conditions § 12.2.2 [emphasis supplied]). However, the phrase concerning work to which special warranties apply does not contain the word "after" (i.e. "* * * or by terms of an applicable special warranty required by the Contract Documents, any of the work is found to be not in accordance with the requirements of the Contract Documents, the Contractor shall correct it promptly * * *"), thus indicating that that phrase is not subject to the one-year rule. Other provisions of the contract documents cited by Menorah Campus harmonize with the Court's interpretation of paragraph 12.2.2.
Paragraph 3.5.6
The parties disagree about the meaning of paragraph 3.5.6 of the Modification Agreement, which provides that "[t]he warranties contained in this Paragraph 3.5 are not limited by the provisions of Paragraph 12.2 [of the General Conditions]".
Menorah Campus asserts that the only limitation in paragraph 12.2 is the one-year period in which Menorah Campus had to give notice of defects to Ciminelli, and that paragraph 3.5.6 eliminates that limitation ( see Menorah Campus Supplemental Memo at 5). Ciminelli, on the other hand, asserts that Menorah Campus's construction of paragraph 3.5.6 is "strained and unreasonable", affording a perpetual statute of limitations. Rather, Ciminelli asserts that the purpose of paragraph 3.5.6 is to ensure that the obligation to correct work includes the broadened warranties Modification Agreement paragraphs 3.5.2 through 3.5.7 provide including, e.g., warranties on work performed by subcontractors not to eliminate the one-year period in which Menorah Campus had to give notice of defects ( see Ciminelli Reply Memo at 9-10).
Initially, the Court determines that paragraphs 3.5.6 and 12.2.2, read together are not ambiguous, because the language is not "reasonably susceptible of more than one interpretation" ( Jellinick v Joseph J. Naples Assoc., Inc., 296 AD2d at 78 [internal quotation marks omitted]). Rather, the provisions read together are unambiguous. The Court determines that Ciminelli's interpretation of paragraph 3.5.6 does not square with the language of that subparagraph. That language is that "[t]he warranties contained in this Paragraph 3.5 are not limited by the provisions of Paragraph 12.2" (emphasis supplied). That language clearly refers to the entire paragraph 3.5, not just to the subparagraphs added by the Modification Agreement.
Ciminelli's quotation of this paragraph in its reply memo at page 8 leaves out the language ("this Paragraph 3.5"), substituting in brackets a recital of the subparagraphs of 3.5 added by the Modification Agreement.
In addition, the Court agrees with Menorah Campus that the only "limitation" (Modification Agreement paragraph 3.5.6) found in paragraph 12.2 is the one-year time limitation. Further buttressing the Court's interpretation is the language of paragraph 12.2.6 of the General Conditions, which uses the phrase "period of limitation" to refer to the one-year time period for notification of and correction of defective work. The use of the word "limitation" within the form paragraph to be construed is a key to the meaning of the term, which in this case refers to the one-year period during which Menorah Campus would otherwise have had to give notice.
It therefore is the determination of the Court that paragraph 3.5.6 eliminated the one-year limitation period during which Menorah Campus had to notify Ciminelli of "work * * * found to be not in accordance with the requirements of the Contract Documents" (General Conditions paragraph 12.2.2). The parties are left with the General Conditions statute of limitations in paragraph 13.7.1.3, which, under the circumstances, the Court determines to be ambiguous.
Paragraph 13.7.1 provides in pertinent part:
13.7.1 As between [Menorah] and [Ciminelli]:
* * *.3 After Final Certificate for Payment. As to acts or failures to act occurring after the relevant date of issuance of the final Certificate for Payment, any applicable statute of limitations shall commence to run and any alleged cause of action shall be deemed to have accrued in any and all events not later than the date of any act or failure to act by the Contractor pursuant to any warranty provided under Paragraph 3.5, the date of any correction of the Work or failure to correct the Work by the Contractor under Paragraph 12.2, or the date of actual commission of any other act or failure to perform any duty or obligation by the Contractor or Owner, whichever occurs last.
(General Conditions paragraph 13.7.1.1 13.7.1.3 [italics supplied]).
The Court agrees with Ciminelli that it would be an unreasonable interpretation of the contract documents to construe paragraph 13.7.1.3 to allow Menorah Campus an unlimited amount of time in which to notify Ciminelli of defects in the work, after which time, if Ciminelli failed to correct the defects, a cause of action would accrue and the statute of limitations would commence to run. Given the elimination of the one-year period for notification of defects (under paragraph 12.2) by the Modification Agreement, negotiated by the parties, the parties' intentions concerning how long Menorah Campus had to notify Ciminelli of latent defects are unclear, and the contract is therefore ambiguous on that point. Thus, interpretation of the contract will require the submission of extrinsic evidence, and the motion to dismiss on the basis of the statute of limitations must be denied.
Paragraph 3.19.1
On the same point, Menorah Campus contends that, as asserted in the Amended Complaint and therefore to be taken as true, in this procedural posture the parties' intentions in agreeing to the provisions of the Modification Agreement adding paragraph 3.19.1, were that in the event latent defects were discovered following Menorah Campus's occupancy and final payment, Ciminelli would have a continuing obligation to correct the defects and conform the work to the Contract documents, notwithstanding the time of the discovery ( see Menorah Campus Supplemental Memorandum at 5-6). Menorah Campus asserts that the language of section 3.19.1 is clear and unambiguous, and that paragraph 3.19.1 was specifically negotiated and drafted for the purposes of this particular construction contract, explicitly reserving Menorah Campus's rights to a Project completed in accordance with the contract documents, notwithstanding that the deviations were not discovered prior to the time of final payment ( see Menorah Campus Memo at 21).
Ciminelli, on the other hand, asserts that paragraph 3.19.1 does not extend the statute of limitations; rather, it merely provides that the failure of Menorah Campus to discover defective work does not constitute a waiver of its right to complain about that work and obtain repairs within the one-year period provided in paragraph 12.2.2 or to sue within six years after substantial completion.
The Court determines that paragraph 3.19.1 is ambiguous concerning how long a period Menorah Campus had to notify Ciminelli of latent defects, and the Court declines to construe the paragraph in the absence of extrinsic evidence of the parties' intent.
ORDER OF THE COURT
The motion to dismiss is denied. Counsel for the parties are directed to appear at a preliminary conference to establish a scheduling order on September 30, 2004 at 11:00 a.m. in Part 33, Ninth (9th) Floor, of the City Court Building, Buffalo.
This Memorandum Decision shall constitute the Order of this Court.