New York State Court of Claims

New York State Court of Claims

AMG INDUSTRIES, INC. v. THE STATE OF NEW YORK, #200-028-0507, Claim No. 102053, Motion Nos. M-62230, CM-62357


Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
Motion number(s):
Cross-motion number(s):
Claimant's attorney:
Defendant's attorney:
BY: Reuben Goldwaser, Esq. Assistant Attorney General
Third-party defendant's attorney:

Signature date:
January 4, 2001

Official citation:

Appellate results:

See also (multicaptioned case)


The following papers were read on the parties' cross-motions for summary judgment.

1. Notice of Motion and Supporting Affidavit of Joel L. Lindy, Esq., filed Aug. 23, 2000, with annexed Exhibits A - F ("Lindy affidavit"), with annexed Affidavit of Charles H. Barber ("Barber affidavit I"), annexed Affidavit of John O'Konski ("O'Konski affidavit") and Memorandum of Law ("memorandum of law")

2. Notice of Cross-Motion and Supporting Affidavit of Robert E. Larsen, filed Sept. 13, 2000, with annexed Exhibits A - D ("Larsen affidavit")

3. Reply Affidavit in Opposition to the Cross-Motion of Charles H. Barber, filed Sept. 18, 2000, with annexed Exhibits A - C ("Barber affidavit II")

4. Tape recording of oral argument

Filed papers: Claim, filed March 3, 2000; Answer, filed April 12, 2000

In 1994, claimant corporation contracted with the State of New York Office of General Services ("OGS") to install boilers and perform certain other work at Clinton Correctional Facility. Among other requirements, the contract between the two parties contained the following provision:

The design, construction and materials selections shall be for a 250 pslg design pressure boiler and conform to the ASME Power Boiler Code, latest revision and manufactured/assembled in the United States.

(Motion, Exh. C.) Elsewhere, the contract provides as follows:

The Contractor agrees, that if the value of this contract exceeds $100,000 all structural steel, reinforcing steel and other major steel items to be incorporated in the Work of the Contract shall be produced and made in whole or substantial part in the United States, its territories or possessions.

(Larsen affidavit, Exh. B.)

Claimant arranged for the purchase of two IBW boilers from Trojan Energy Systems, Inc. ("Trojan Energy") but, it is alleged, OGS refused to accept that product. The boilers that claimant ultimately purchased from another supplier cost $300,000 more than the one that could have been obtained from Trojan Energy. In its first cause of action, claimant seeks the sum of approximately $400,000 as damages arising from OGS' refusal to accept the Trojan Energy boilers.

By the instant motion and cross-motion, each party seeks judgment in its own favor on that cause of action. Both parties acknowledge that the steel used in the Trojan Energy boilers was manufactured in the United States, while the boilers themselves were assembled in Canada (Lindy affidavit, ¶12; O'Konski affidavit, ¶7; Larsen affidavit, ¶ 6). Claimant contends that the boilers supplied by Trojan Energy would have satisfied the contractual requirement, and that OGS wrongfully refused to accept it. Defendant takes no position on whether the Trojan Energy boilers would have been acceptable under the contract and argues that it never accepted or rejected the product, because claimant failed to make a "formal detailed submission including the system specifications" (Larsen affidavit, ¶ 8).

Central to resolution of these motions is the issue of when and how OGS "rejected" or "refused to accept" the Trojan Energy boilers. Robert E. Larsen, Principal Engineer within the OGS Design and Construction Group, states in an affidavit that claimant never submitted the product for approval by the contracting party (AMG) and, thus, OGS never made any decision as to its suitability (Larsen affidavit, ¶7). In fact, when AMG eventually "proposed" the product for submission in November 1994, it was given preliminary approval by OGS, together with a reminder that "Final action depends on receipt and review of a complete job specific submission" (Larsen affidavit, Exh D, letter from AMG to OGS and OGS response forms).

Claimant asserts that the Trojan Energy boilers were flatly rejected by OGS in June 1994 at a meeting between a subordinate of Larsen's at OGS, Bernard Jaracz, and the president and vice-president of Trojan Energy Systems. The information conveyed at this meeting has been characterized in several different ways. On the day of the meeting, June 8, 1994, Trojan Energy's vice-president, Glenn Godell complained to AMG about Jaracz's "senseless disqualification of our boiler," which was explained as follows:

The only real point Bernie made was whether the boiler is manufactured in the United States. . . . All the steel for the IBW Boiler is purchased in the United States but Bernie said this is difficult to trace.

Godell concluded, however, that "[w]e still hope the IBW Boiler, the lowest bid boiler, will still be accepted at this jobsite" (Barber affidavit I, Exh 1.) The following day, Godell wrote to Larsen at OGS, informing him that Jaracz, described as "your consultant," had "insisted" that he would not accept the IBW boiler because it had not been built in the United States. Godell presented some more information about the origin of the steel, etc. and concluded, "[I]t is our intention to see our IBW Boiler reach the jobsite with the full cooperation of your office" (O'Konski affidavit, Exh 2).

Subsequently, after some additional communication between OGS and Trojan Energy, Richard E. Thomas, Executive Director of OGS's Design and Construction Bureau, wrote to Godell to stress three main points, which can be summarized as follows:
  1. The State's contract was with AMG, not Trojan Energy, and only AMG could submit a product for approval and review of a product.
  1. AMG never submitted a formal application seeking approval of the Trojan Energy boiler.
  1. The meeting between OGS and Trojan Energy was no more than an informal discussion of "the general parameters of a review which would be conducted on any submission made by the contractor."

With respect to the June 8th meeting, Thomas stated that from OGS's point of view the primary purpose of the meeting was to advise Trojan Energy "that, based upon the State Finance Law as restated in the Contract General Conditions, any boiler submitted would be required to be of United States manufacture"(O'Konski affidavit, Exh 2, letter dated September 27, 1994). The letter concluded with a statement that the confusion and misunderstanding appeared to have resulted from "my engineering staff's extension of an inappropriate courtesy to your firm in meeting with your representatives, although no submission had been received from the contractor for this project."

AMG was not a participant in the June 8th meeting but received Godell's report and, on June 15, informed Trojan Energy that in view of "the complexities that you have run into," AMG would purchase from another source boilers that met the State's specifics exactly (O'Konski affidavit, Exh 2 [last page]). Apparently on September 14, 1994, AMG made a formal submission ("Submittal No. 94-3109") for boilers from another supplier, Babcock & Wilcox and subsequently issued a purchase order to this firm (Barber affidavit II, Exh C, letter from AMG to OGS, dated Nov. 4, 1994).

In an October 1994 letter to OGS, Barber made the following statement to explain why his company had not been able to keep to its original schedule:

This whole schedule was shattered when OGS engineer, Mr. Bernie Jaracz, rejected our first boiler selection in May 1994. Mr. Jaracz sited [sic] a new "made in the USA" clause in the Watertube specification as the reason for rejecting our selection of Trojan Energy Systems, Inc. as our lead supplier.

(Barber affidavit II, Exh A.) Despite this characterization, however, it was not until November 2, 1994 that OGS was asked to approve or reject the Trojan Energy product. On that date, Barber wrote to Jaracz to inform him that AMG was "again considering submitting IBW Watertube Boilers" for the project; Barber asked that he be informed by fax by Nov. 4, 1994 "whether these submittals will be accepted and whether these boilers would receive preliminary approval for fabrication" (id, Exh B). It was in response to this request that OGS designated the request "Submittal No. 94-3971" and issued the preliminary approval referred to above, reminding the AMG that it would have to submit a "complete job specific submission" before final action would be taken (Larsen affidavit, Exh D, supra).

Upon receipt of the OGS communication, Barber stopped the approval process, stating to Larsen that his company was unable to get out of its commitment to the alternative (and more expensive) supplier, Babcock & Wilcox, and thus would not be pursuing its effort to obtain the boilers from Trojan Energy (Barber affidavit II, Exh C). Barber continued to complain, however, about OGS's "unjustified initial disapproval of the IBW boilers for the subject project."

In its claim, AMG alleges in its first cause of action that "in breach of the contract between the parties, OGS, through its authorized representative, refused to allow AMG to provide the boilers it intended due to the fact that they were assembled in Canada" (claim, ¶13). However, the record reflects that OGS did not reject an AMG request to allow it to use the Trojan Energy boilers, for the simple reason that AMG never requested that the product be accepted.

It is evident from the record that the contract between AMG and OGS required that

certain formal steps be carried out in order for a product to be either approved by OGS as

complying with the contract's specifications or rejected for use in connection with the construction project. The first of these steps was submission of a written application by AMG to OGS, as occurred when AMG sought approval of the U.S.-manufactured Babcock & Wilcox boilers ("Submittal No. 94-3109") and when AMG wrote in November 1994 to indicate that it was again considering the Trojan Energy product ("Submittal No. 94-3971"). An additional submission, a "complete job specific submission", was also required, as OGS reminded claimant

in connection with the November request.

In contrast to the written submittal process that was at least begun in November 1994, there is no evidence or claim that AMG communicated with OGS about the Trojan Energy boilers

during the period of May and June 1994, when the alleged breach is said to have occurred. It is true that AMG discussed possible use of the product with Trojan Energy (see, Barber affidavit I, ¶ 4 and Exh 1; O'Konski affidavit, ¶ 4 and Exh 2) and that Trojan Energy met with OGS to find out whether approval was likely to be granted. AMG, however, made no move to obtain permission to use the Trojan Energy product, nor is there any assertion, or evidence, that Trojan Energy was somehow acting as the contractor's agent. In any event, neither the contractor nor the vendor made a written request for approval, the necessary first step of the submittal process,

and certainly no "complete job specific submission" was tendered, either at this time or later in November. To put the issue in its most simple terms, claimant cannot prove that defendant breached the terms of the contract by rejecting a certain product when, in fact, defendant was never asked – in the manner required by the contract – to accept that product.

For the reasons set forth above, claimant's motion for summary judgment is denied, defendant's motion for summary judgment is granted, and the first cause of action of Claim No. 102053 is hereby dismissed.

January 4, 2001
Albany, New York

Judge of the Court of Claims