Opinion
118230/99.
Decided on January 30, 2009.
The City of New York: Kay M. Edwards, Esq.
Melcara Corp.: Jose A. Aquino, Esq.
Superb General Contracting Co.: Robert C. Buff.
Plaintiff, Superb General Contracting Co. ("Superb") brings this action for damages allegedly incurred when it was prevented from timely completing renovation work on the premises known as 59-67 West 87th Street in the County and State of New York. Specifically, Superb alleges that, pursuant to its contract, all of its work would be completed within 365 days of the date of the agreement and it was to be awarded the contract price of $2,272,000.00. However, Superb alleges that due to uncontemplated delays, it did not complete its work on the project until more than four years after the contemplated completion date. The damages claimed by Superb are for "wage escalation, material escalation, labor inefficiencies, additional bond premium, additional insurance, additional equipment, extended field overhead, and extended home office overhead," for a total claim of $3,715,109.00. Defendant the City of New York ("City") moves for summary judgment pursuant to CPLR 3212. Defendant Melcara Corp. ("Melcara") moves for summary judgment, dismissing the second, third and fourth causes of action as against it. Superb opposes City's and Melcara's motions and cross-moves for summary judgment as to the first cause of action as against Melcara. Melcara opposes Superb's cross-motion. SMB General Contracting Corp. ("SMB") does not submit papers.
The total amount was subsequently adjusted by Superb during the course of the action to $2,724,184.44.
SMB has not appeared in the action.
Initially, the identity of the parties and their respective agreements are as follows:
On July 24, 1990 Department of Housing Preservation and Development ("HPD") entered into an agreement with Ralph Langsam Associates, Inc. ("Langsam"), by which, consistent with the goal of "preserving the existing housing stock in distressed areas of the City . . . through which tenant associations, individuals, and community based groups lease and maintain such dwellings . . ." Langsam was hired as a construction manager to render supervisory, technical and administrative services. The scope of services is described in Exhibit A of the agreement and begins as follows:
Upon the request of HPD, the Construction Manager shall inspect buildings in the Division of Alternative Management Programs (DAMP) in order to identify or determine or verify that certain building systems require replacement or substantial repair and those apartments or structural defects which require renovation ("Rehabilitation Work"). HPD shall select the buildings and set the guidelines under which the Construction Manager shall conduct inspections.
December 27, 1990, Langsam, with City's consent, assigns its July 24, 1990 contract to SMB.
On March 9, 1993, SMB enters into a subcontract with Superb, engaging Superb to "supervise and direct work, furnish labor, materials, equipment, and other appurtenances necessary and required to complete the Work," and specifically describing the scope of such subcontract as pertaining to a "project (Project') for the General rehab located at 59-67 West 87th St., in the Borough of Manhattan, City and State of New York."
On June 14, 1994 City, by and through HPD, enters into a contract with Melcara, which, by its terms commences June 15, 1994, to act as a construction manager and to render supervisory, technical and administrative services with regard to rehabilitating DAMP buildings which HPD shall assign. The scope of services is similar to that described in the City and Lagnsam contract referred to above as the July 24, 1990 contract.
On December 29, 1994 SMB assigns to Melcara Corp. the July 24, 1990 contract, which, according to the assignment, was due to expire December 31, 1994. That assignment provides for Melcara to assume stated subcontracts, including the subcontract with Superb dated March 9, 1993. The assignment also refers to the June 14, 1994 contract between City and Melcara as commencing January 1, 1995.
City in support of its motion, submits: the contract between HPD and Langsam; "an amendment to the contract between bid proposer SMB and City; a copy of the subcontract between SMB and Superb, dated March 9, 1993; a copy of Superb's "form of bid," dated December 3, 1992; a copy of the contract between City and Melcara, dated June 14, 1994; a copy of the "Assignment and Assumption Agreement," dated December 29, 2004 between SMB and Melcara; a letter from SMB to Superb, dated December 30, 1994, informing it of the assignment; a copy of the subcontractor's "scope of work;" a copy of an invoice approved by HPD, dated September 3, 1998; a copy of the complaint, along with the answers of City and Melcara; a copy of Superb's reply to City's counterclaim; and a portion of the deposition transcript of Giuseppe Passanante, President of Superb.
City argues that Superb's complaint should be dismissed as against it because Superb lacks privity of contract with City. Alternatively, City claims that even if there were privity, Superb's allegations must fail because Superb is barred by the no damages for delay provision of its subcontract. Further, City argues that Superb has failed to comply with the applicable notice and documentation of claims provision set forth in the subcontract and that Superb's use of a total cost methodology for the computation of these alleged delay damages is impermissible. With respect to the third cause of action, Superb's claim for additional work cannot stand because it failed to comply with the applicable notice and documentation of claims provisions. Finally, City claims, to the extent that the third and fourth causes of action sound in quasi contract and quantum meruit, those claims must also fail as Superb was a party to a valid and enforceable written contract.
Superb, in opposition, submits: a document titled "Prior to Pre-Construction Meeting;" a portion of the deposition transcript of Peter Clements, a non-party witness; a portion of the deposition transcript of Howard Morgan, an Architect hired by the United Tenants Association("UTA"); a copy of the recording of a bond; copies of various correspondence between the parties; a copy of Superb's "Proposed Construction Schedule for Job;" a copy of Superb's "Project Summary Schedule; a letter from City to Gladys Rodriguez, Director of MHA regarding "Tenant Relocation;" a copy of the deposition transcript of Yvette Shiffman, employee of HPD; a memorandum from Melcara to HPD, attaching a "change order" for an extension of time; a letter from Melcara to the United Tenants Association; a departmental memorandum from John Wallstein, Assistant Commissioner of DAMP to A. Sandra Abramson, Director of Operations Rehab Operations; a letter from Superb to Mr. William Hirmes; and a copy of the notes from the "bi-weekly meeting follow-ups."
Superb argues that even though it did not contract directly with City, it and City had the "functional equivalent of privity." Superb claims that the damages it seeks were a direct result of City's delay in relocating the tenants of the subject buildings. It claims that the relocation process prior to Superb's commencement of the renovation, was an essential condition and fundamental obligation of the construction contract.
City seeks to enforce its valid contract with Langsam, which was assigned and binding upon SMB (SMB stepping into the shoes of Langsam), and will hereinafter be referred to as "the contract." Superb readily admits that a valid agreement between it and SMB represents the understanding of those parties, which was assigned and binding upon Melcara (Melcara stepping into the shoes of SMB), and shall hereinafter be referred to as "the subcontract."
Melcara, in support of its motion, submits the following exhibits, to the extent that they are not duplicative of the other party's submissions: a copy of a document titled "Itemized Statement of Claim Total Cost Method;"Melcara's answer; a copy of a so-ordered stipulation dated April 15, 2008; a copy of a document titled: "Bidder Qualification Statement, dated December 2, 1992;"and a copy of the contract between Superb and Olympic Electrical Wiring Corp., dated February 8, 1993. Melcara argues that it is not responsible in any way for the delayed start date of the project. In support of its claims, Melcara points to the Bidder Qualification Statement which states that the start date listed is an "estimate only." Further, Melcara asserts that City was responsible for any tenant relocation that allegedly caused the delays. The remainder of Melcara's arguments mirror City's claims.
The proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law. That party must produce sufficient evidence in admissible form to eliminate any material issue of fact from the case. Where the proponent makes such a showing, the burden shifts to the party opposing the motion to demonstrate by admissible evidence that a factual issue remains requiring the trier of fact to determine the issue. The affirmation of counsel alone is not sufficient to satisfy this requirement. ( Zuckerman v. City of New York, 49 NY2d 557). In addition, bald, conclusory allegations, even if believable, are not enough. ( Ehrlich v. American Moninger Greenhouse Mfg. Corp., 26 NY2d 255). ( Edison Stone Corp. v. 42nd Street Development Corp., 145 AD2d 249, 251-252 [1st Dept. 1989]).
It is well settled that "a subcontractor may not recover from an owner, absent a contractual relationship between the parties, for claims of losses occasioned by delays or hindrance of progress." ( Kelly Masonry Corporation v. Presbyterian Hospital in the City of New York, 160 AD2d 192,193[1st Dept. 1990]) (see also; Bovis Lend Lease LMB Inc., v. GCT Venture, Inc., 285 AD2d 68 [1st Dept. 2001]). Here, the sub-contract contains a clause which expressly precludes contractual liability on the part of the owner. Courts have not permitted such actions to go forward. (see; Eastern States Electrical Contractors, Inc. v. Crow Construction Co., 153 AD2d 522 [1st Dept. 1989]). In Braun Equipment Co. Inc. v. Borelli Associates, 220 AD2d 312 [1st Dept. 1995], the court found that a subcontractor had no recourse against an owner where the subcontract expressly precluded third-party privity. ( Id).
Superb is expressly precluded from bringing any claim against City. Section 11.4 of the subcontract states:
No Claim Against Officers, Agents or Employees: No claim whatsoever shall be made by the Contractor against any officer, agent or employee of the City and/or CM for or on account of anything done or omitted to be done in connection with this contract.
Although Superb concedes that it did not have contractual privity with City, it asserts that Melcara acted as City's agent, thereby obviating the need for privity. Superb's argument is meritless as the contract language defining the construction manager's role in the project is unambiguously stated. Section 17.18 of the contract states:
Contractor Not an Agent. Nothing in this Contract shall be deemed to appoint Contractor as an agent for or representative of the City or HPD and Contractor is not authorized to act on behalf of the City or HPD with respect to any matters except those specifically set forth in this Contract. Neither the City nor HPD shall have any liability or duty to any person, firm corporation, or governmental body for any act, of omissions or commission, liability or obligation of Contractor, whether arising from Contractor's action under this Contract or otherwise . . .
Further, Article 23 of the contract states, in relevant portion:
Independent Contractor Status. The Construction Manager and the City agree that the Construction Manager is an independent contractor, and not an employee of HPD or the City of New York, and that in accordance with such status as independent contractor, the Construction Manager covenants and agrees that neither it nor its employees or agents shall hold themselves out as, nor claim to be officers or employee of the City of New York . . .
Superb's second cause of action as against Melcara, for delay damages allegedly sustained due to the failure to relocate tenants, must also fail because Superb does not allege that Melcara was the cause of such delay. Mr. Passanante, Superb's president, admits that the City was solely responsible for any delay due to failure to timely relocate tenants. Mr. Passanante affirms that ". . . there is no question that the City's tenants had to be relocated from each building before the contract work could be done and that HPD assumed full responsibility for the necessary tenant relocations . . ."
Melcara is also entitled to dismissal of Superb's third cause of action, in which Superb seeks damages for "additional work." As a condition of the subcontract, Superb must comply with notice requirements before it can recover for damages incurred as the result of having to perform extra work. Section 6.3 of the subcontract states, in relevant part:
Disputed Work.
(a) If the Contractor is of the opinion (I) that any Work which the CM orders to be performed as Contract Work is Extra Work and not Contract Work, or (ii) that any determination or order by the CM violates the terms and provisions of this Contract, it must promptly, and before proceeding with such Work or complying with such determination or order, or simultaneously therewith, notify HPD in writing of the reasons for its opinion with respect thereto, and request a final determination thereon. Such determination shall be rendered by HPD within a reasonable time.
Section 6.4 of the subcontract states, in relevant part:
Performance of Extra or Disputed Work.
(a) While the contractor . . . is performing Extra Work ordered by the CM . . . or is performing disputed Work or complying with a determination or order under protest in accordance with Section 6.3, the Contractor shall . . . furnish the CM daily with three (3) copies of written statements signed by the Contractor's representatives at the Site showing (I) the name and number of each workman employed on such Work or engaged in complying with such determination or order, the number of hours employed thereon, and the character of the Work each is performing, and (ii) the nature and quantity of any materials, plant, and equipment furnished or used in connection with the performance of such Work . . .
Mr. Passanante testifies about the "additional work:"
Q: Now your claim, as I understand it, is additional — for additional costs that you incurred?
A: Yeah.
Q: Part of your claim?
A: Yes, yes.
Q: As the project was progressing, did you ever give notice to the city that you were incurring these additional costs?
A: As I said before, no, I don't think so, I don't think it was.
Q: Did you ever provide any calculation or summary of these additional costs to the city during the course of the project, or to the construction manager?
A: I don't think so.
Melcara has established that it is not liable for the damages claimed by Superb, shifting the burden to Superb to raise an issue of fact regarding the second, third and fourth causes of action as against Melcara. It fails to do so.
Finally, the existence of a valid and enforceable contract precludes any claims sounding in quantum meruit. ( Aviv Const., Inc. v. Antiquarium, Ltd., 259 AD2d 445 [1st Dept. 1999]); (see also, Schuit v. Tree Line Management Corp. , 46 AD3d 405 [1st Dept. 2007]). There is no dispute that Superb's subcontract was valid and enforceable.
Superb, in support of its cross-motion, submits: the pleadings; a copy of a document titled "Application and Certification for Payment," signed and notarized on August 31 1998; an invoice stamped received by DAMP on September 3, 1998; a copy of a check from Melcara to Superb dated December 3, 1998 in the amount of $120,026.16; a requisitions, and a billing and payment record starting on May 26, 1993 and ending on August 30, 1998. Superb argues that it is entitled to summary judgment on its first cause of action against Melcara because it never received payment in the amount of $120,026.16 for the contract balance. Superb asserts that it sent Melcara its requisition for retainage on August 31, 1998 and that on September 1, 1998 an invoice prepared by Melcara was approved by the City. On November 19, 1998, the City issued a check payable to Melcara for the amount of the contract balance. On December 3, 1998 Melcara drafted a check payable to Superb, but Superb claims that it never received the payment.
Melcara, in opposition, submits the following: a letter from Melcara to Superb dated December 8, 1998 along with a "waiver and release of lien" form; a letter from Melcara to Superb dated April 13, 1999; and a copy of a postal "return receipt"dated April 13, 1999 . Melcara argues that Superb's cross-motion should be denied because it failed to perform the steps necessary to complete the payment for the contract balance.
By way of reply, Superb argues that Melcara had no legal right to insist that it sign the release as a condition of receiving final payment. The "general release" form that Melcara requested be signed before releasing the money owed to Superb states, in relevant portion:
To all whom these Presents shall come or Concern Know That Super[b] General Contracting Co., Inc. . . ., as releasor, releases and discharges Melcara Corp., H.P.D., and the City of New York . . . from all actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and demands whatsoever, in law, admiralty or equity which against the RELEASEE, the RELEASOR . . . ever had, now have or hereafter can, shall or may, have for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the day of the date of this release . . . With this payment of $120,026.16, Melcara has paid the sum of $1,450,957.76 representing full and final payment of General Construction at the job known as 59-67 West 87th Street, New York, NY.
Section 9.4 of the Superb subcontract states:
Final Payment.
(a) Upon completion of the Work, the Contractor shall submit all required certificates and documents, together with a requisition for the balance claimed to be due pursuant to this Contract.
Section 9.5 of the subcontract states, in relevant part:
Acceptance of Final Payment.
(a) The acceptance by the Contractor . . . of the final payment, whether such payment be made pursuant to the judgment of any court, or otherwise, shall constitute and operate as a release of the CM from any and all claims of any liability to the Contractor . . .
Section 9.4 and Section 9.5, when read together, evidence the parties' intent that Superb release Melcara and City from any claim arising under the contract as a condition of receiving final payment. Superb has failed to comply with the terms and conditions set forth in the subcontract, and must do so before receiving such payment.
Wherefore it is hereby
ORDERED that defendant the City of New York's motion is granted and the complaint is hereby severed and dismissed as against defendant the City of New York, and the Clerk is directed to enter judgment in favor of said defendant; and it is further
ORDERED that the Trial Support Office is directed to reassign this case to a non-City part and remove it from the Part 5 inventory. Plaintiff shall serve a copy of this order on all other parties and the Trial Support Office, 60 Centre Street, Room 158. Any compliance conferences currently scheduled are hereby cancelled; and it is further
ORDERED that defendant Melcara Corp.'s motion for summary judgment is granted as to the second, third and fourth causes of action and those causes of action are hereby severed and dismissed as against defendant Melcara Corp., and the Clerk is directed to enter judgment in favor of said defendant; and it is further
ORDERED that Superb General Contracting Co.'s cross-motion for summary judgment is denied; and it is further
ORDERED that the remainder of the action shall continue.
This constitutes the decision and order of the court. All other relief requested is denied.