Opinion
No. 2012–148017.
07-17-2014
RESETARITS CONSTRUCTION CORPORATION, Plaintiff, v. CITY OF NIAGARA FALLS, Defendant.
Lipsitz Green Scime Cambria, LLP, Joseph J. Manna, Esq., Of Counsel, Attorneys for Plaintiff. City Of Niagara Falls, Corporation Counsel, Thomas M. O'Donnell, Esq., Deputy Corporation Counsel, Attorneys for Defendant.
Lipsitz Green Scime Cambria, LLP, Joseph J. Manna, Esq., Of Counsel, Attorneys for Plaintiff.
City Of Niagara Falls, Corporation Counsel, Thomas M. O'Donnell, Esq., Deputy Corporation Counsel, Attorneys for Defendant.
TIMOTHY J. WALKER, J.
Plaintiff, Resetarits Construction Corporation, has moved, pursuant to CPLR §§ 3212 and 3126, for summary judgment and, in the alternative, to strike Defendant, City of Niagara Falls' Affirmative Defenses and Counterclaim. Defendant has cross-moved, pursuant to CPLR § 3212, for summary judgment.
This action arises out of the renovation of a building located on Whirlpool Street near the Whirlpool Bridge in the City of Niagara Falls, formerly known as the Customs House (the “Project”). The parties entered into a construction contract pertaining to the Project, dated August 18, 2010 (the “Contract”), and Defendant retained Wendel Duchscherer (now known as Wendel WD Architecture, Engineering, Surveying and Landscape Architecture, PC) (“Wendel”), to provide professional services related to Project design and to administer the Contract and other Project agreements.
Plaintiff's Motion for Summary Judgment and Defendant's Cross–Motion for Summary Judgment
Plaintiff contends that it has “substantially completed” the Project and that Defendant has failed to fully compensate it for the completed work. Defendant has made a partial payment to Plaintiff, but Plaintiff contends that it is owed additional funds for additional work performed under the Contract, and for agreed-upon extras.
The Contract provides that “[b]efore requesting inspection for determining date of Substantial Completion,” Plaintiff must complete, inter alia, the following: “[s]ubmit specific warranties, workmanship bonds, maintenance service agreements, final certifications, and similar documents ... [m]ake final changeover of permanent locks and deliver keys to [Defendant] ... [and][c]omplete startup testing of systems” (Contract, § 01770, Part 1.2[A] ).
In accordance with the Contract and related documents, Defendant provided Plaintiff with “Notice to Proceed” on August 23, 2010, and established a Project completion deadline of April 26, 2011.
It is undisputed that work on the Project was subject to protracted delays. Between December 2010 and January 2012, Plaintiff sought multiple excusable, non-compensable time extensions to complete the Project. Defendant granted such requests through July 30, 2011, but refused to grant any further extensions beyond that date. Plaintiff contends that it is not at fault for the delays.
During this period of time and thereafter, Wendel, as the City's consultant charged with administering the Contract, regularly notified Plaintiff of its failure to have substantially completed the Project, and provided Plaintiff with correspondence detailing the incomplete and/or defective items (see e.g., Field Reports 39–53, dated August 1, 2011 through July 31, 2012, documenting alleged incomplete and defective work; among these Field Reports, Field Report 49, dated November 7, 2011, identifies fifty-eight [58] incomplete or defective items; and Field Report 53, dated July 31, 2012, identifies approximately one hundred fifty [150] incomplete or defective items). On May 3, 2012, Wendel informed Plaintiff and its counsel that it could not recommend to Defendant that Plaintiff had substantially completed the Project.
Defendant also refers to a Punch List, dated May 1, 2012, identifying twenty-three [23] incomplete or defective items, but the Court declines to consider it, because Defendant's motion papers do not include a copy of it.
In addition, between the commencement of work on the Project in August 2010 and May 2012, Plaintiff replaced its Project Manager three times, which Wendel contends contributed to Plaintiff's inability to properly staff, oversee, and timely complete the Project.
Plaintiff contends that Defendant's former City Engineer, Jeffrey Skurka, acknowledged during his deposition that Plaintiff had substantially completed the Project sometime before March 8, 2012. However, as of the date of his deposition on May 14, 2013, Mr. Skurka was no longer employed by Defendant, meaning that his testimony cannot be used as a statement against Defendant's interests (Loschiavo v. Port Authority of New York, 58 N.Y.2d 1040 [1983] [employee's statement is admissible against employer under the admissions exception to the hearsay rule “only if the making of the statement is an activity within the scope of his authority”] ). Moreover, approximately one month later, Mr. Skurka filed a notice of claim against Defendant, which may impact the reliability of his testimony (Thompson v. Korn, 48 A.D.2d 1007 [4th Dept 1975] ; R & R Candy Co., Inc. v. City of New York, 216 A.D. 468 [1st Dept 1926] ).
However, the January 29, 2012 statement of David Resetarits, Plaintiff's President, may be used as a statement against Plaintiff's interest. On that date, Mr. Resetarits stated the following in an internal email to members of Plaintiff's management team: “In my absence, I am asking for as much help from everyone as possible to get the [Project] completed Monday or Tuesday [January 30 or 31, 2012].... We are looking bad at this point and need to get everything done within the next 48 hours.”
Susan Sherwood, Project Manager, prepared a memorandum, dated June 13, 2012, regarding the Project's status (the “Memorandum”). Plaintiff contends that the Memorandum demonstrates that it substantially completed the Project as of March 8, 2012, because it reflects a substantial completion date of March 8, 2012 several times, including that liquidated damages run from “July 30, 2012 through March 8, 2012 (221 days @ $450/day).” However, the Memorandum also reflects that, as of March 8, 2012, Plaintiff had not provided Defendant with, inter alia, all of the required warranty information and paperwork; the master key to the building; and an underground “Tank Closure Report,” as required by the New York State Department of Environmental Conservation (“NYSDEC”). Plaintiff disregards these (and other) open items as being “miscellaneous items” that do not impact substantial completion. However, the Contract's “Closeout Procedures” provide that the Project may not be considered to be substantially completed until, inter alia, Plaintiff has submitted all warranties and related paperwork, as well as the keys, to Defendant (Contract, § 017700, Part 1.2[A] ).
The reference of a start-date of July 30, 2012 is a typographical error. The correct start-date is July 30, 2011.
Moreover, the Memorandum reflects that the NYSDEC “is now threatening the City with action” regarding Plaintiff's failure to submit the Tank Closure Report (Memorandum, § 7.0).
While, at best, the Memorandum is internally inconsistent, it does not reflect, as a matter of law, that Plaintiff substantially completed the Project by March 8, 2012.
Plaintiff contends that the Court should disregard the Sherwood Affidavit, because Ms. Sherwood is not an expert. However, Defendant has not presented her as an expert witness. Rather, Defendant has presented her as a fact witness pertaining to Defendant's alleged protracted delays. Ms. Sherwood has personal knowledge of the matters contained in, and attached to her affidavit as the Project Manager and an employee of Wendel, and she need not be an expert for the Court to consider her Affidavit.
Finally, Plaintiff contends that, by conducting an “open house,” Defendant waived any argument that Plaintiff failed to substantially complete the Project. However, substantial completion, for purposes of an open house, is not the equivalent of “substantial completion,” as defined by Part 1.2(A) of § 017700 of the Contract.
Turning to Defendant's cross-motion, Plaintiff contends that it is untimely, because Defendant filed it later than one hundred twenty (120) days after Plaintiff filed the trial note of issue, in violation of CPLR § 3212(a). However, Defendant's cross-motion is timely, because Defendant filed it within the time for a cross-motion pursuant to CPLR § 2215 (Osario v. BRF Construction Corp., 23 AD23d 202, 203 [1st Dept 2005] [“The motion court properly considered plaintiff's cross motion for partial summary judgment. Although plaintiff cross-moved after the court's imposed deadline for summary judgment motions, plaintiff made it in response to defendants' still pending, timely summary judgment motions”] [emphasis added] ).Defendant contends that it is owed credits to the Contract in the amount of $61,212 for work not performed, because the scope of work was reduced. Defendant also asserted a counterclaim arising out of credits Plaintiff allegedly owes Defendant for defective work related to windows and doors that require correction by a different contractor. While the City has obtained bids for this work in the approximate amount of $100,000.00 to $150,000.00, it has not otherwise submitted any evidence in admissible form in support of its counterclaim.
Plaintiff's Motion to Strike Defendant's
Affirmative Defenses and Counterclaim
Defendant has asserted three Affirmative Defenses and one Counterclaim. Defendant's submissions reflect that Defendant has withdrawn its First and Third Affirmative Defenses. Defendant's Second Affirmative Defense alleges that Plaintiff failed to mitigate its damages and its Counterclaim is for liquidated damages and related costs due to Plaintiff's alleged failure to timely complete the Project.
Plaintiff contends that Defendant's Second Affirmative Defense and Counterclaim should be stricken, because Defendant failed to comply with this Court's May 1, 2013 Order granting Plaintiff's motion to compel discovery (the “May 1, 2013 Order”). The May 1, 2013 Order granted the motion consistent with the Court's April 17, 2013 bench decision, which provided, in relevant part, as follows:
The [D]efendant shall have 45 days from the date hereof to respond to the outstanding discovery items to the extent it can do so, as the information is within [D]efendant's direct control. Defendant can satisfy those response obligations with an affirmation from an officer, director, etc., with knowledge that all of the responses given are true and accurate to the best of their knowledge, information and belief, all of the documents produced for inspection are all the documents that pertain to this agreement between the parties on this particular [P]roject, and that a due diligence search has been conducted and that there's no further information that can be provided. With respect to the [D]efendant's response to [P]laintiff's notice to admit, ... [s]ame thing, get the appropriate officer ... within the [C]ity to verify the responses.
Plaintiff contends that Defendant failed to provide it with follow-up discovery within forty-five (45) days of the May 1, 2013 Order, or at any time thereafter. During oral argument on the motion and cross-motion, Defendant contended that it did timely respond, but acknowledged that it failed to address its compliance with the May 1, 2013 Order in its submissions.
After oral argument on June 16, 2014, Defendant submitted a copy of a letter from Defendant's attorney to Plaintiff's attorney, dated May 30, 2013 (the “May 30, 2013 Letter”), transmitting Defendant's responses to the May 1, 2013 Order. Such responses included, inter alia, a revised Notice to Admit, signed by Defendant's Administrator; an affidavit from a Clerk in Defendant's Engineering Department; and “documents related to the Open House and other Tours of the Custom House Project and a copy of the Grant Agreement with the State Historic Preservation Office related to the Project.” Plaintiff has neither acknowledged, nor responded to Defendant's submission.
The Court shall accept the May 30, 2013 Letter in connection with the motion. It demonstrates that Defendant complied with the May 1, 2013 Order. To the extent Plaintiff is dissatisfied with the quality of such response, Plaintiff failed to move to compel a more sufficient one, and the time to do so has long expired—and shall not be extended.
Plaintiff also seeks to strike that portion of Defendant's Counterclaim for liquidated damages, because the liquidated damages section of the Contract amounts to a penalty.
The Counterclaim also includes a claim for credits for work not performed by Plaintiff and reimbursement of a delay claim by the electrical prime contractor.
It is well settled that liquidated damages constitute
“an estimate, made by the parties at the time they enter the agreement, of the extent of the injury that would be sustained as a result of breach of the agreement” (Crown IT Services, Inc. v. Koval–Olsen, 11 AD3d 263, 265–66 [1st Dept 2004], quoting Truck Rent–A–Center, Inc. v. Puritan Farms 2nd, Inc., 41 N.Y.2d 420, 424 [1977] ).
The parties may freely enter into such an agreement, as long as the liquidated damages provision is “neither unconscionable nor contrary to public policy” (Truck Rent–A–Center, Inc., 41 N.Y.2d at 424 ).
Here, in the event Plaintiff failed to complete the work on time, it shall pay Defendant: (i) the sum of $150.00 per day for the costs of Defendant's staff and administration and (ii) $300.00 per day as liquidated damages (Contract, § 4–d–General Specifications). The Court is unable to conclude, as a matter of law, that the liquidated damages provision of the Contract is “plainly or grossly disproportionate to the probable loss ...” (Id., at 425 ; see also, Blue Heron Construction Co., LLC v. Village of Nunda, 63 AD3d 1694 [4th Dept 2009] ).
Liquidated damages in the amount of $300.00 per day are payable when the “Original Contract Amount” is “From $500,000 to $2,000,000.” The Original Contract Amount of the Project was $1,838,250.00.
Based on the foregoing record, numerous issues of fact exist which preclude the Court from determining whether Plaintiff substantially completed the Project in accordance with the Contract as of March 8, 2012, sometime thereafter, or at all (Brill v. City of New York, 2 NY3d 648 [2004] ). The May 30, 2013 Letter belies Plaintiff's contention that Defendant failed to comply with the May 1, 2013 Order.
Accordingly, it is hereby
ORDERED, that Plaintiff's motion for summary judgment is denied; and it is further
ORDERED, that Plaintiff's motion to strike Defendant's Counterclaim and Second Affirmative Defense is denied; and it is further
ORDERED, that Plaintiff's motion to strike Defendant's First and Third Affirmative Defenses is denied as moot, because Defendant has withdrawn them; and it is further
ORDERED, that Defendant's cross-motion for summary judgment is denied; and it is further
ORDERED, that a telephone conference with the Court (the Court shall place the call), for the purpose of rescheduling jury selection and the trial of this action shall be conducted on July 31, 2014, at 10:00 a.m.
This constitutes the Decision and Order of this Court. Submission of an order by the Parties is not necessary. The delivery of a copy of this Decision and Order by this Court shall not constitute notice of entry.