New York State Court of Claims

New York State Court of Claims

SERVIDONE v. THE STATE OF NEW YORK, #2001-015-172, Claim No. 103057, Motion No. M-63557


Synopsis


Contractor's failure to satisfy statutory condition precedent to suit under State Finance Law § 145 which required service of a detailed statement of claim upon DOT within 40 days of mailing final payment precluded contractor's recovery of amounts due on interest thereon. Dismissal of the claim is appropriate under these circumstances.

Case Information

UID:
2001-015-172
Claimant(s):
A. SERVIDONE, INC./B. ANTHONY CONSTRUCTION CORP., a Joint Venture
Claimant short name:
SERVIDONE
Footnote (claimant name) :

Defendant(s):
THE STATE OF NEW YORK
Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
103057
Motion number(s):
M-63557
Cross-motion number(s):

Judge:
FRANCIS T. COLLINS
Claimant's attorney:
Donohue, Sabo, Varley & Armstrong, P.C.By: Anthony Rotondi, Esquire
Defendant's attorney:
Honorable Eliot Spitzer, Attorney General
By: C. Michael Reger, EsquireAssistant Attorney General
Third-party defendant's attorney:

Signature date:
August 17, 2001
City:
Saratoga Springs
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)



Decision

Defendant's motion for summary judgment dismissing the claim upon claimant's failure to satisfy a condition precedent to suit contained in § 145 of the State Finance Law thus effecting a release of the State from liability by operation of law is granted. The claim alleges breach of contract asserting delays on the part of the State in processing payment on orders which modified the claimant's original agreement (Contract No. D256840) with the New York State Department of Transportation (DOT) for the reconstruction of Route 59 and Pascack Road in the Village of Spring Valley, New York. Claimant also alleges in the claim that DOT unduly delayed in its computation and measurement of final quantities and in the preparation of the final estimate and final agreement and that such delay constituted a breach of the parties' agreement rendering the State liable in damages to the claimant. The claim filed on September 12, 2000 further alleged that the State failed to pay the sum of $4,234.36 reportedly due on the contract but which remained unpaid as of the date of filing.

Claimant seeks to recover $180,000.00 plus interest and disbursements on the first cause of action, $500,000.00 plus interest and disbursements on the second cause of action, $100,000.00 plus interest and disbursements on the third cause of action and $4,234.36 plus interest and disbursements on the fourth cause of action.

In support of the motion the defendant alleges that the contract between the claimant and the State, acting through the Department of Transportation, incorporated by reference the Department's "Standard Specifications." Article 1. of the Agreement entitled "WORK TO BE DONE" reads as follows:
The Contractor shall (a) furnish all materials, appliances, tools and labor of every kind required, and construct and complete in the most substantial and workmanlike manner, the construction, improvement or reconstruction of the project on or before the completion date of the 31 day of December, 1997 as further described in Article 4, and as generally identified and shown on the plans entitled:

Reconstruction of Route 59 and Pascack Road in the Village of Spring Valley

F.A. PROJ. NO. 33C-5301-303, 368-0028-003

IN THE CO. OF Rockland Co. WHICH CONSTITUTES CONTRACT NO. D256840

in accordance with the "Standard Specifications" of the New York State Department of Transportation, which contain the information for bidders; form of proposal, agreement, and bonds; general specifications and conditions or contract; materials of construction; and payment Items; and (b) do everything required by the Contract (Contract Documents) as defined herein.
Section 109-14 of DOT's Standard Specifications (Exhibit D) provides:
109-14 ACCEPTANCE OF FINAL PAYMENT. The acceptance by the Contractor, or by anyone claiming by or through him, of the final payment shall constitute and operate as a release to the State from any and all claims of any liability to the Contractor for anything theretofore done or furnished for or relating to or arising out of the work done thereunder, and for any prior act, neglect, or default on the part of the State or any of its officers, agents, or employees unless the Contractor serves a detailed and verified statement of claim upon the Department of Transportation not later than 40 days after the mailing of such final payment. Such statement shall specify the items and details upon which the claim will be based and any such claim shall be limited to such items. Should the Contractor refuse to accept the final payment as tendered by the Comptroller, it shall constitute a waiver of any right to interest thereon.
Similar requirements concerning the service of a detailed, verified statement of claim are found in section 145 of the State Finance Law which provides:
§ 145. Acceptance of final payment under a state contract

No provision contained in a construction contract awarded by any state department or agency shall bar the commencement of an action for breach of contract on the sole ground of the contractor's acceptance of final payment under such contract provided that a detailed and verified statement of claim is served upon the public body concerned not later than forty days after the mailing of such final payment. The statement shall specify the items upon which the claim will be based and any such claim shall be limited to such items. Any provision of subdivision four, section ten of the court of claims act to the contrary notwithstanding, an action founded upon such statement of claim shall be filed within six months after the mailing of the final payment. No payment to the contractor shall limit or qualify any defense, claim or counterclaim otherwise available to the public body relating to the contract involved.
The defendant submitted the affidavit of Stephen T. Smith, a professional engineer licensed by the State of New York and employed by DOT as an Associate Claims Engineer whose duties were described as including the evaluation of DOT construction contract claims and the inspection of related DOT records. With regard to the claim of A. Servidone, Inc/B. Anthony Construction Corp. under contract number D 256840, Smith alleged that final payment was requested by DOT from the State Comptroller on June 14, 2000 in the amount of $24,614.90. He further alleged that the payment record card for the contract shows payment in the requested amount was made to the claimant on June 20, 2000 under warrant number D50469 (see Exhibit F). He further alleged that by letter dated June 5, 2000 (Exhibit G) the Transportation Expenditure Section of DOT requested the Thruway Authority to pay its share of the final payment in the amount of $4,234.36 to claimant and that such payment was made by check dated October 12, 2000 which was mailed on or proximate to the date of the check. Smith asserts that according to the record card the $4,234.36 final payment satisfied 100% of the payments owed to claimant on the contract in the total sum of $17,052,941.93.

Smith alleges further that his review of all sources of information in the claims unit, the DOT Office of Legal Affairs, and all other sources within DOT failed to uncover any evidence of the service or receipt of a verified statement of claim as required by section 109-14 of the contract's standard specifications.

Also submitted on the motion was the affidavit of David Hancox, identified therein as the Director of State Accounting Operations in the Office of the State Comptroller. The affiant alleged familiarity with the process by which DOT's requests for payment of State public improvement contracts are converted into checks payable to the contractor. Hancox explained that, with reference to the invoice number (D256840/F41) contained on DOT's request for payment dated June 14, 2000 on contract number D 256840, the designation "F41" showed such request to be a final payment on estimate number 41 paid on the contract. He asserted that any check drawn for this proposed payment would contain a stub containing the entire legend "D 256840/F41." The affiant detailed the payment process including the manner in which approved checks are issued to contractors and asserted that the Comptroller retrieved images of both the front and back of the relevant checks dated June 20, 2000 and October 12, 2000. The affiant determined from examining those images that the checks were deposited or negotiated on July 17, 2000 and November 7, 2000 respectively (see Exhibits H and I).

The defendant also submitted the affidavit of Assistant Attorney General C. Michael Reger in which he alleges that by operation of section 145 of the State Finance Law and pursuant to section 109-14 of the contract specifications the claimant's breach of contract claim has been waived due to claimant's failure to serve a detailed and verified statement of claim upon the public body concerned not later than forty days after the mailing of final payment under the contract. Counsel for the State alleges that the filing of the instant claim in the Court of Claims without service of the verified detailed statement of claim upon DOT within the time limit set forth in § 145 of the State Finance Law as measured from the mailing of final payment on the contract prohibits claimant's recovery. The Assistant Attorney General further alleges that claimant's apparent inclusion of a separate statutory claim for interest under State Finance Law § 179-d et seq on each of claimant's causes of action alleged in the instant claim is unavailing since interest claims pursuant to Article XI-A of the State Finance Law are subject to compliance with the written notice requirement of State Finance Law § 145. Defendant contends that having failed to comply with the provisions of the State Finance Law claimant is barred from seeking recovery in the Court of Claims on both its breach of contract and interest claims. The defendant seeks summary judgment dismissing the claim based on the Fourth, Fifth and Sixth Affirmative Defenses contained in the amended answer.

The claimant opposed the motion solely by the affidavit of its attorney who is without direct knowledge of the facts and by the subsequent submission of a further attorney's affidavit sworn to June 20, 2001. Attached to the affidavit is an exhibit, allegedly not included in the claimant's original opposition papers through inadvertence, which the claimant asserts is a copy of the final agreement between DOT and A. Servidone/B. Anthony Construction Corp. containing a reservation of rights clause which, it is argued, serves to preserve its right of action on the contract. The exhibit is a letter of transmittal on A. Servidone Inc. letterhead dated March 21, 2000 captioned "Proposed Final Agreement" which is signed by a representative of the claimant and contains the following clause:
This final Agreement is subject to and A. Servidone, Inc./B Anthony Corp. JV reserve their right to file a claim for damages."
Although space is provided for the date and signature of the Regional Construction Engineer, Comptroller and Deputy Chief Engineer of the DOT Construction Division, the spaces provided therefor are blank.
In order to grant summary judgment, a Court must find that there are no material triable issues of fact. 'To obtain summary judgment it is necessary that the movant establish his cause of action or defense 'sufficiently to warrant the court as a matter of law in directing judgment' in his favor (CPLR 3212, subd [b]), and he must do so by tender of evidentiary proof in admissible form' (Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1067). Once the movant establishes his or her prima facie entitlement to summary judgment, the burden shifts to the opposing party to come forward with admissible proof establishing the existence of a material issue of fact requiring a trial (Leek v McGlone, 162 AD2d 504).
The evidence offered by the State on this motion is sufficient to demonstrate that the claimant failed to serve a detailed and verified statement of claim upon DOT within forty days after the mailing of final payment on the subject contract as required by § 145 of the State Finance Law. This is true even if the check dated and mailed on or about October 12, 2000 is deemed to be the final payment for purposes of this motion. Such proof established the State's prima facie entitlement to summary judgment dismissing the claim on the grounds that the claim has been released by operation of law (Ferran Concrete Co. v Facilities Dev. Corp. of State of N.Y., 61 AD2d 1061) and shifted the burden to claimant to demonstrate the existence of a material issue of fact requiring a trial (see, Zuckerman v City of New York, 49 NY2d 557).

"It is well settled that 'the opposing affidavit should indicate that it is being made by one having personal knowledge of the facts' (Capelin Assocs. v Globe Mfg. Corp., 34 NY2d 338, 342) and, therefore, the affidavit of counsel is of no probative value in opposing a motion for summary judgment (Hasbrouck v City of Gloversville, 102 AD2d 905, affd 63 NY2d 916; Farragut Gardens No. 5 v Milrot, 23 AD2d 889)" (Marinelli v Shifrin, 260 AD2d 227, 228, 229).

Even if the Court were to consider the affidavits of claimant's counsel submitted on the motion neither raises a material fact sufficient to defeat the instant motion. Claimant's argument that its claim filed in this Court on September 12, 2000 in advance of the State's final contract payment on or about October 12, 2000 should somehow excuse claimant from the requirement to serve DOT with the detailed, verified statement required by the standard specifications and State Finance Law § 145 is unavailing. In this regard claimant's attorney cites the case of Lancaster Dev. v State of New York, 148 AD2d 892, in which the Appellate Division, Third Department, determined that service upon DOT of a duplicate copy of the verified claim filed in the Court of Claims and served within 40 days of final payment under the contract satisfied the requirements of State Finance Law § 145 even though such service on DOT occurred subsequent to the commencement of the action in the Court of Claims. The instant case is distinguishable from Lancaster because in this case claimant never served DOT with a copy of its verified claim. Service of the instant claim upon the Attorney General does not constitute service on "the public body concerned" as required by State Finance Law § 145 (see, Fosco Fabricators v State of New York, 94 AD2d 667)

With regard to the alleged reservation of rights contained in what claimant's counsel characterizes as the parties "final agreement," it need only be stated that the document is neither verified nor sufficiently detailed as to substantially comply with the requirement of State Finance Law § 145 (Ritangela Constr. Corp. v State of New York, 183 AD2d 817; Ferran Concrete Co. v Facilities Dev. Corp. of State of N.Y., 61 AD2d 1061, supra).

Finally, as to that portion of the claim which seeks damages attributable to the State's failure to timely pay amounts due the claimant for work performed under the contract, State Finance Law § 179-k[1] precludes an action to recover interest otherwise owed by the State for late payments on construction contracts unless such has been preserved by the service of a statement of claim upon the affected public body as provided in section 145 of the State Finance Law.

By its failure to timely serve DOT pursuant to State Finance Law § 145 claimant has lost its right to recover against the State and its claim is hereby dismissed.


August 17, 2001
Saratoga Springs, New York

HON. FRANCIS T. COLLINS
Judge of the Court of Claims


The Court considered the following papers:
  1. Notice of motion dated May 25, 2001;
  2. Affidavit of Stephen T. Smith sworn to May 24, 2001, with exhibits;
  3. Affidavit of David Hancox sworn to May 24, 2001, with exhibits;
  4. Affidavit of C. Michael Reger sworn to May 24, 2001, with exhibits;
  5. Affidavit of Anthony Rotondi sworn to June 12, 2001;
  6. Affidavit of C. Michael Reger sworn to June 19, 2001;
  7. Affidavit of Anthony Rotondi sworn to June 20, 2001, with exhibit;
  8. Affidavit of C. Michael Reger sworn to June 25, 2001, with exhibit.

[1]"§ 179-k - Acceptance of Payment

The acceptance of payment, in whole or in part, by a contractor shall not be deemed to constitute a waiver of interest otherwise due under the provisions of this article nor to supersede the provisions of section one hundred forty-five of this chapter.


(Added L. 1984, c. 153, § 1.)"