Opinion
2015-07-30
TOUGHER INDUSTRIES, INC., Appellant, v. DORMITORY AUTHORITY OF the STATE of New York, Respondent. (And a Third–Party Action.).
Robinson & Cole, LLP, New York City (Thomas J. Donlon of counsel), for appellant. Eric T. Schneiderman, Attorney General, Albany (Owen Demuth of counsel), for respondent.
Robinson & Cole, LLP, New York City (Thomas J. Donlon of counsel), for appellant. Eric T. Schneiderman, Attorney General, Albany (Owen Demuth of counsel), for respondent.
Before: GARRY, J.P., EGAN JR., ROSE and LYNCH, JJ.
GARRY, J.P.
Appeal from an order of the Supreme Court (Platkin, J.), entered March 18, 2014 in Albany County, which, among other things, granted defendant's motion for partial summary judgment dismissing the complaint.
In April 2001, plaintiff contracted with defendant to be the prime contractor in charge of installation of heat, ventilation and air conditioning (hereinafter HVAC) during a major renovation project at a state psychiatric center. Plaintiff's completion of the work was significantly delayed by a multitude of design errors and other issues. As a result, plaintiff commenced the instant action asserting breach of contract and several other causes of action. Following extensive discovery, defendant moved for partial summary judgment seeking, as relevant here, to dismiss plaintiff's causes of action seeking damages for delay and extra work. Supreme Court granted the motion, finding that these claims were barred by a mandatory notice provision and a no-damages-for-delay clause in the parties' contract. Plaintiff appeals.
As a general rule, “contract clauses exculpating the contractee from liability to the contractor for damages resulting from delays in performance of the contract work” are valid and enforceable (Harrison & Burrowes Bridge Constructors, Inc. v. State of New York, 42 A.D.3d 779, 782, 839 N.Y.S.2d 854 [2007]; see Kalisch–Jarcho, Inc. v. City of New York, 58 N.Y.2d 377, 384, 461 N.Y.S.2d 746, 448 N.E.2d 413 [1983] ). However, even where the contract contains such a clause, there are several recognized exceptions. As relevant here, a contractor may still recover for “delays caused by the contractee's bad faith or its willful, malicious, or grossly negligent conduct” ( Corinno Civetta Constr. Corp. v. City of New York, 67 N.Y.2d 297, 309, 502 N.Y.S.2d 681, 493 N.E.2d 905 [1986]; accord Plato Gen. Constr. Corp./EMCO Tech Constr. Corp., JV, LLC v. Dormitory Auth. of State of N.Y., 89 A.D.3d 819, 823, 932 N.Y.S.2d 504 [2011], lv. denied19 N.Y.3d 803, 2012 WL 1592167 [2012]; Clifford R. Gray, Inc. v. City School Dist. of Albany, 277 A.D.2d 843, 844, 716 N.Y.S.2d 795 [2000] ). A defendant seeking summary judgment dismissing a claim for delay damages “bears the initial burden of demonstrating prima facie that none of the exceptions to the ‘damages for delay’ clause are present” (Blue Water Envtl., Inc. v. Incorporated Vil. of Bayville, N.Y., 44 A.D.3d 807, 810, 843 N.Y.S.2d 681 [2007], lv. denied10 N.Y.3d 713, 861 N.Y.S.2d 274, 891 N.E.2d 309 [2008]; see Fowler, Rodriguez, Kingsmill, Flint, Gray & Chalos, LLP v. Island Props., LLC, 38 A.D.3d 831, 833, 833 N.Y.S.2d 146 [2007] ). Here, the parties do not dispute that defendant met this initial burden; rather, plaintiff argues that it successfully demonstrated the existence of triable issues of fact as to whether defendant's conduct constituted gross negligence or bad faith. We disagree, and find no error in Supreme Court's grant of summary judgment.
Gross negligence differs in kind from claims of ordinary negligence, and requires a showing of “conduct that evinces a reckless disregard for the rights of others or smacks of intentional wrongdoing” (Soja v. Keystone Trozze, LLC, 106 A.D.3d 1168, 1170, 964 N.Y.S.2d 731 [2013] [internal quotation marks and citations omitted]; accord Finsel v. Wachala, 79 A.D.3d 1402, 1404, 915 N.Y.S.2d 323 [2010]; see Abacus Fed. Sav. Bank v. ADT Sec. Servs., Inc., 18 N.Y.3d 675, 683, 944 N.Y.S.2d 443, 967 N.E.2d 666 [2012] ). Here, plaintiff claims that defendant was grossly negligent in permitting plaintiff to bid on the project when it knew of and failed to disclose defects in the HVAC design that would necessarily cause problems and delays. Plaintiff relies upon the testimony of an engineer who was employed by defendant to monitor the adequacy of the HVAC design work being performed by plaintiff's consultant, Crandell Associates, Architects and Facility Planners, P.C. According to plaintiff, reports completed by defendant's engineer at various stages of Crandell's design work reveal that he identified, but nonetheless recklessly failed to address, several potential design flaws, including spatial limitations that could—and later did—interfere with fitting HVAC ducts into interstitial ceiling spaces. However, the engineer testified that his role was limited to “identify[ing] the deficienc[ies],” rather than “mandat[ing] recommendations to [the] consultants.” Further, his reports reveal that he relied on representations by Crandell's subconsultant that it would investigate the issues that he had identified.
Even if the engineer or defendant had a duty to follow up on these representations and ensure that the design flaws were corrected, their failure to do so cannot be said to meet the standard of “evinc[ing] a reckless disregard for [plaintiff's] rights” (Soja v. Keystone Trozze, LLC, 106 A.D.3d at 1170, 964 N.Y.S.2d 731). This is particularly true because an additional provision of the contract expressly charged plaintiff with the responsibility of examining the project site and satisfying itself “as to the nature and materials likely to be encountered, ... the general and local conditions, and all other materials or items which may affect the [w]ork.” Thus, plaintiff failed to demonstrate that the deficiencies in question were more than “design defects based on faulty architectural drawings [which were] ‘precisely within the contemplation of the [no-damages-for-delay] clause [ ],’ ” and the proof did not give rise to issues of fact as to defendant's gross negligence (LoDuca Assoc., Inc. v. PMS Constr. Mgt. Corp., 91 A.D.3d 485, 486, 936 N.Y.S.2d 192 [2012], quoting Gottlieb Contr. v. City of New York, 86 A.D.2d 588, 589, 446 N.Y.S.2d 311 [1982], affd. 58 N.Y.2d 1051, 462 N.Y.S.2d 642, 449 N.E.2d 422 [1983] ).
Next, plaintiff contends that defendant's efforts to schedule and coordinate the work of the numerous contractors involved in the project were so incompetent that they evinced a reckless disregard for the delays that were bound to result. As plaintiff contends, the contract required defendant to facilitate the preparation of a “critical path method” work schedule that was to be released shortly after construction began. This schedule was not implemented until five months after construction started, and it ultimately proved to be so inadequate that defendant abandoned it. The record reveals that significant delays resulted from these failures. However, it also reveals that it was the contractual responsibility of the general contractor, not defendant, to finalize and update the schedule, and that defendant made proactive efforts to coordinate the work, including holding weekly progress meetings for purposes of scheduling and coordination. The contract contains a provision expressly exculpating defendant from liability resulting from “delays attendant upon any construction schedule approved by [defendant],” in addition to the no-damages-for-delay clause. Given the scope of the contract's several exculpatory clauses, defendant's scheduling failures demonstrate, at worst, “inept administration or poor planning” and do not constitute gross negligence (Commercial Elec. Contrs., Inc. v. Pavarini Constr. Co., Inc., 50 A.D.3d 316, 318, 856 N.Y.S.2d 46 [2008]; see Plato Gen. Constr. Corp./EMCO Tech Constr. Corp., JV, LLC v. Dormitory Auth. of State of N.Y., 89 A.D.3d at 823, 932 N.Y.S.2d 504; T.J.D. Constr. Co. v. City of New York, 295 A.D.2d 180, 180, 743 N.Y.S.2d 111 [2002] ).
We reject plaintiff's contention that the cumulative effect of defendant's errors is sufficient to demonstrate gross negligence. Gross negligence cannot be demonstrated merely by accumulating a sufficient number of “garden variety” failures (Corinno Civetta Constr. Corp. v. City of New York, 67 N.Y.2d at 313, 502 N.Y.S.2d 681, 493 N.E.2d 905). Here, each of the alleged errors has been shown to fall short of gross negligence and to be within the contemplation of the contract's exculpatory clauses ( see Bovis Lend Lease [LMB], Inc. v. Lower Manhattan Dev. Corp., 108 A.D.3d 135, 147, 966 N.Y.S.2d 51 [2013]; Burt Welding & Automotive Repair v. U.W. Marx, Inc., 272 A.D.2d 737, 738, 707 N.Y.S.2d 548 [2000] ). Thus, regardless of the number of plaintiff's allegations, it has not met its burden to establish that any of defendant's actions “went beyond ordinary negligence and satisfied the gross negligence standard” (Princetel, LLC v. Buckley, 95 A.D.3d 855, 856, 944 N.Y.S.2d 191 [2012], lv. dismissed20 N.Y.3d 994, 959 N.Y.S.2d 123, 982 N.E.2d 1256 [2013] ).
Plaintiff also contends that the no-damages-for-delay clause does not bar its claim because of issues of fact as to whether defendant dealt with plaintiff in bad faith. In support of this argument, plaintiff primarily relies upon opinions expressed in a single email sent by an employee of defendant, who later passed away. We agree with Supreme Court that the document was inadmissible as plaintiff failed to lay a foundation for its admission as a business record in accord with the established statutory requirements ( seeCPLR 4518; State of New York v. 158th St. & Riverside Dr. Hous. Co., Inc., 100 A.D.3d 1293, 1297, 956 N.Y.S.2d 196 [2012], lv. denied20 N.Y.3d 858, 2013 WL 452396 [2013] ).
The mere fact that the email was originally produced by defendant during discovery does not, as plaintiff contends, alter that requirement. Further, even assuming that the email had been admissible, the statements of its author fell well short of evidencing any “sinister intention” or “dishonest purpose” ( Kalisch–Jarcho, Inc. v. City of New York, 58 N.Y.2d at 385, 385 n. 5, 461 N.Y.S.2d 746, 448 N.E.2d 413) on defendant's part. As plaintiff offered no other evidence of bad faith, it has failed to demonstrate a triable issue of fact as to this exception to the no-damages-for-delay clause.
Plaintiff argues that defendant waived this argument by failing to timely object. However, the record reveals that plaintiff did not declare its intention to admit the document as a business record until after defendant objected to its admission on the ground that the email's author was deceased. Defendant objected at its first opportunity when the business record theory was raised.
Plaintiff's allegations that defendant manifested bad faith by favoring another contractor at plaintiff's expense constitute nothing more than speculation or examples of “inept administration or poor planning” that, as previously noted, do not constitute gross negligence (Commercial Elec. Contrs., Inc. v. Pavarini Constr. Co., Inc., 50 A.D.3d at 318, 856 N.Y.S.2d 46). The further contention that the email constituted a party admission, raised for the first time on appeal, is unpreserved.
Finally, plaintiff attempts to claim compensation for tasks that allegedly constituted “extra work” beyond the scope of the parties' contract. However, a provision in the contract required plaintiff to notify defendant that it considered a task to constitute extra work within 15 working days after being ordered to undertake the task or beginning to perform it. Here, plaintiff concedes that it did not notify defendant of this claim until five months after it began performance of the disputed task. Thus, “[d]efendant established its entitlement to summary judgment by submitting proof that [plaintiff] did not comply with the condition precedent” by providing timely notice (Fahs Constr. Group, Inc. v. State of New York, 123 A.D.3d 1311, 1311–1312, 999 N.Y.S.2d 244 [2014], lv. denied25 N.Y.3d 902, 2015 WL 1471636 [2015]; see A.H.A. Gen. Constr. v. New York City Hous. Auth., 92 N.Y.2d 20, 30–31, 677 N.Y.S.2d 9, 699 N.E.2d 368 [1998] ). We reject plaintiff's contention that issues of fact exist as to whether defendant waived the notice provision by allowing contractors to perform work pursuant to change orders before receiving approval as required by another contract provision. Even if defendant did so, plaintiff's submissions demonstrate that it did nothing to identify the work contained in the change orders as extra contractual ( see Fahs Rolston Paving Corp. v. County of Chemung, 43 A.D.3d 1192, 1194, 841 N.Y.S.2d 404 [2007] ). Accordingly, even upon viewing the facts in the light most favorable to plaintiff, the record does not reveal that defendant's actions “ ‘evince[d] an explicit, unmistakable, and unambiguous waiver’ ” of the notification requirement (Fahs Constr. Group, Inc. v. State of New York, 123 A.D.3d at 1312, 999 N.Y.S.2d 244, quoting Matter of Chenango Forks Cent. School Dist. v. New York State Pub. Empl. Relations Bd., 95 A.D.3d 1479, 1484, 944 N.Y.S.2d 665 [2012], affd. 21 N.Y.3d 255, 970 N.Y.S.2d 900, 993 N.E.2d 386 [2013]; see Sicoli & Massaro v. Niagara Falls Hous. Auth., 281 A.D.2d 966, 966, 722 N.Y.S.2d 442 [2001] ).
ORDERED that the order is affirmed, without costs.