New York State Court of Claims

New York State Court of Claims

LaCORTE v. STATE OF NEW YORK, #2004-015-395, Claim No. 105031, Motion No. M-67999


Synopsis


Court granted Summary Judgment dismissing contract claim for delay damages due to contractor's failure to comply with notice and documentation provisions of the contract.

Case Information

UID:
2004-015-395
Claimant(s):
LaCORTE COMPANIES, INC.
Claimant short name:
LaCORTE
Footnote (claimant name) :

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

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
105031
Motion number(s):
M-67999
Cross-motion number(s):

Judge:
FRANCIS T. COLLINS
Claimant’s attorney:
Harris Beach LLPMark J. McCarthy, Esquire
Defendant’s attorney:
Honorable Eliot Spitzer, Attorney General
By: C. Michael Reger, EsquireAssistant Attorney General
Third-party defendant’s attorney:

Signature date:
April 20, 2004
City:
Saratoga Springs
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)



Decision

Defendant's motion for summary judgment pursuant to CPLR 3212 seeking an order dismissing the claim upon the fourth affirmative defense contained in the amended answer is granted. On August 5, 1998, LaCorte entered into a contract (Contract No. D40424-E) with the New York State Office of General Services (OGS) to perform electrical work at the Health Facility Regional Medical Building at Fishkill Correctional Facility in Beacon, New York.

The instant claim seeks to recover approximately $850,000.00 in additional costs of construction, extended overhead, supervisory expenses and other costs plus interest allegedly due as a result of the defendant's breach of the contract. Specifically, claimant alleges that the State impeded the claimant's work involving the installation of overhead electrical conduit, light fixtures and in-wall electrical box assemblies. The claim alleges that the State failed to provide timely access to portions of the construction site; failed to coordinate the work of prime contractors on the project; required claimant to perform its operations in a manner neither called for nor anticipated in the contract plans and specifications; required claimant to incur unanticipated extra and additional work; and imposed restrictions on the claimant's operations which were not authorized in the contract documents. Claimant alleges that the above described circumstances resulted in claimant suffering inefficiencies and delays in completing the contract and required the performance of extra and additional work for which claimant seeks compensation.

By the instant motion the defendant seeks dismissal of the claim based upon the fourth affirmative defense raised in defendant's amended answer. That affirmative defense specifically states:
AS A FOURTH AFFIRMATIVE DEFENSE, THE STATE OF NEW YORK ALLEGES:

TWELFTH: Claimant has failed to provide the Notice of Claim required by Article 17A.3 of the General Conditions of the agreement between the parties for anticipated claims for delays of the work for the contract involved in this claim, and has therefore waived its claim for any compensation for delay, inefficiency, or extra or additional costs pursuant to the terms of Article 17A.4 of the General Conditions of the agreement between the parties.

Sections 17A.3 and 17A.4 cited in the fourth affirmative defense provide as follows:
17A.3 The Contractor shall provide "notice of claim" of an anticipated claim for delay to the Contracting Officer by personal service or certified mail no more than fifteen days after the Contractor knew or ought to have known of the facts which form the basis of the claim. The Contracting Officer shall acknowledge receipt of the Contractor's notice, in writing, within five days. The Contractor agrees that the State shall have no liability for any damages which accrue more than fifteen days prior to the delivery or mailing of the required notice. The notice shall at a minimum provide a description of any operations that were, are being, or will be delayed, the date(s) and reasons for the delay, and, to the extent known, the information required by Section 17A.6 below. In no case, shall oral notice to the Director's Representative or contracting officer constitute notice under this provision or be deemed to constitute a waiver of the written notice requirement.

17A.4 Failure by the Contractor to adequately progress the completion of the work will be considered in determining the causes of delay. For any claim asserted under this Article, the Contractor shall keep detailed written records of the costs and shall make them available to the Contracting Officer at any time for the purposes of audit and review. Failure by the Contractor to provide the required written notice or to maintain and furnish records of the costs of such claims to the Contracting Officer shall constitute a waiver of the claim.
Other sections of the general conditions germane to this motion include the following:
2.5 The term "Contracting Officer" means the Director of Contract Administration of the Design and Construction Group of the Office of General Services or his representative designated in writing.

2.8 The term "Director" means the Director of Construction of the Design and Construction Group of the Office of General Services who will have general direction and supervision of the Work.
* * *
17A.1 For the purposes of this contract, the term delay includes delay, disruption, interference, inefficiencies, impedance, hindrance and acceleration.

17A.2 The Contractor agrees to make claim only for additional costs from causes listed below, attributable to delay in the performance of this contract, occasioned by any act or omission to act by the State or any of its representatives. The Contractor also agrees that delay from any other cause shall be compensated for solely by an extension of time to complete the performance of the work.

17A.2.1 The failure of the State to take reasonable measures to coordinate and progress the work.

17A.2.2 Extended delays attributable to the State in the review or issuance of orders-on-contract or field orders, in shop drawing reviews and approvals or as a result of the cumulative impact of multiple orders on contract, which constitute a qualitative change to the project work and which have a verifiable impact on project costs.

17A.2.3 The unavailability of the site for such an extended period of time which the Director determines to significantly affect the scheduled completion of the contract.

17A.2.4 The issuance by the Director of a stop work order relative to a substantial portion of work for a period exceeding thirty days.

* * *

17A.7.3 Failure to timely comply with any of the requirements of Article 17A for the submission of any claim for delay may constitute grounds for denial of such claim.

In support of the motion the defendant submitted, inter alia, the affidavit of Robert E. Kainz, the Director of Contract Administration for the Office of General Services. Mr. Kainz states that he was the Contracting Officer as that term is defined in § 2.5 of the general conditions of the contract and that he did not designate in writing anyone to act on his behalf with regard to the instant contract. He further alleges that although OGS let this electrical contract in August 1998 with required completion in February 2000, the first and only notice of claimant's claim for delay damages to OGS was the submission of something called "preliminary claim documents" received by OGS in January 2001, more than ten months subsequent to the stated contract completion date.

In the preliminary claim documents LaCorte contended that the project's prime masonry contractor (The Losco Group) interfered with or delayed claimant's work by slow masonry production and further alleged that OGS failed to supervise the masonry contractor or coordinate the work of the separate prime contractors.

Mr. Kainz alleges that the written notice of claim required by section 17A.3 "enables OGS contract administration to assess the cause(s) and potential cost of project delay during the course of construction when the cause(s) can be evaluated and project cost, in terms of both time and money, can be mitigated." He further alleges that in cases where, as here, OGS has hired a construction manager the required written notice of claim when served upon the Contracting Officer would bring up for review any allegation that the construction manager was failing to coordinate the work of multiple prime contractors. Without strict compliance with the notice requirement the State would be denied the opportunity to assess and correct the causes of the delay. The affiant avers that letters written by LaCorte to the construction manager's field representative (Norman Brooks), which were not copied to the Contracting Officer or to anyone else at OGS, do not satisfy the contract's written notice requirement.

Furthermore, he alleges that the preliminary claim documents served upon an OGS official other than the Contracting Officer some ten months subsequent to the completion of the project were served well beyond the 15 day period for service set forth in § 17A.3. Those documents he maintains demonstrate that claimant knew early in the project that it was incurring delay damages but failed to bring the matter to the attention of OGS by timely service of a notice of claim. According to Mr. Kainz claimant's failure in this regard constituted a waiver of its claim for delay damages as provided by § 17A.4 of the general conditions of the contract including those involving the in-wall masonry boxes, hanger and conduit installation, lighting fixtures installation, wage escalation, site and home office overhead and professional costs.

Claimant opposed the summary judgment motion solely by an affidavit of counsel who fails to assert direct knowledge of the underlying facts. In his affidavit counsel states at paragraph 3 that "the issue before the Court is strictly one of law as the parties are in agreement with respect to the factual circumstances surrounding this claim". Counsel goes on to state in paragraph 4 that the claimant encountered significant difficulty in performing its work "from the earliest stages of its contract performance" and that the construction manager retained by the defendant was informed of all such difficulties. Claimant's counsel alleges without evidentiary support in paragraph 5 that representatives of OGS were aware of problems at the job site and "were well able to apprise themselves of any information which they deemed necessary with respect to problems on the site". Finally, in paragraph 6 counsel contends that OGS was "fully apprised through the course of the contract performance that the Claimant was experiencing damages" and cites as support for this contention a letter dated January 2, 2001 presenting claimant's preliminary claim documents to the director of the OGS Design and Construction Group.

Counsel argues that by conducting an audit of claimant's project costs and in failing to take any action with regard to the January, 2001 submission of preliminary claim documents by the claimant the defendant has waived the right to "exercise its discretion pursuant to Article 17A.7.3".

In his reply affidavit defense counsel asserts that the audit to which claimant's attorney refers was performed at the request of the Attorney General in response to the filing of the instant action and does not constitute an audit for contract administration purposes as provided in article 17A of the contract's general conditions. He further asserts that the conduct of an audit of any nature does not excuse claimant's non-compliance with the required contractual notice provision. Moreover, defense counsel refutes his adversary's claim of waiver based on the allegation that the State took no action with regard to claimant's January 2, 2001 submission of "preliminary contract documents". In doing so, counsel points to the language in paragraph 5 of the verified claim which states:
5. The claim herein accrued on or about August 20, 2001, when Mr. Donald J. Bishop, Esq., OGS Assistant Counsel, had a telephone conversation with Joel L. Lindy, Esq. of Harris Beach, LLP in which Mr. Bishop informed Mr. Lindy that OGS was denying any payment on the administrative claim submitted by LaCorte to OGS on or about January 19, 2001.
Article 17A of the general conditions of the subject contract makes clear that claims for delay include "delay, disruption, interference, inefficiencies, impedance, hindrance and acceleration" and that such claims are permitted only for the causes specifically listed in sections 17A.2.1 through 17A.2.4. The claimant seeks to predicate recovery upon section 17A.2.1 which covers the State's alleged failure to take reasonable measures to coordinate and progress the work. Claimant's opposition to the motion, however, falls far short of demonstrating by proof in admissible form that OGS was aware of alleged delays attributable to the construction manager's failure to coordinate the work of the various contractors on the project, particularly the prime masonry contractor, let alone that the defendant was aware the claimant intended to institute a claim for damages arising from the delays. Clearly, the affirmation of claimant's attorney who is without direct knowledge of the facts is insufficient to raise a material issue of fact in this regard and is therefore insufficient to defeat the defendant's motion for summary judgment (GTF Mktg. v Colonial Aluminum Sales, 66 NY2d 965; Zuckerman v City of New York, 49 NY2d 557, 563).

Through its submissions, including the affidavit of Robert E. Kainz, the movant has established both that specific notice to the Contracting Officer was required and that no such notice was received. Claimant does not argue that notice conforming in form and manner to the requirements of the contract was provided. Rather, claimant argues that notice was provided the defendant's construction manager or, alternatively, that the defendant could have apprised itself of problems at the site and thereby have become aware of the delays for which claimant now seeks redress. The sole notice to the State evident on this record is the January, 2001 submission of claimant's preliminary claim documents which, the Court notes, appear to have been served not personally or by certified mail but by "UPS Overnight Mail" (see, Defendant's Exhibit D).

The plain language of the contract at issue here provided with regard to delay damages (i) the contractor shall provide a notice of claim for anticipated delays (ii) to the Contracting Officer, a defined term (iii) by personal service or certified mail (iv) not more than fifteen days after the facts underlying the claim became or should have become known and (v) that the notice shall provide certain prescribed information concerning the underlying claim. Failure to provide the required written notice is deemed to constitute a waiver of the claim and, in any event, the contract provides that the State shall have no liability for damages accruing more than 15 days prior to delivery or mailing of the notice.

Applying the required construction to the notice and documentation provisions of the contract the Court concludes that the defendant has established its prima facie entitlement to judgment as a matter of law (A.H.A. Gen. Constr. v New York City Hous. Auth., 92 NY2d 20, 33-34; Bat-Jac Contr. v New York City Hous. Auth., 1 AD3d 128; see also Morelli Masons, Inc. v Peter Scalamandre & Sons, 294 AD2d 113). Nothing in the claimant's submissions raises a triable issue of fact regarding claimant's compliance with the applicable notice requirements or any unsupported allegation of waiver by the State. As a result, the defendant's motion for summary judgment is granted and the claim is dismissed.

The trial previously scheduled to begin April 26, 2004 is hereby cancelled.


April 20, 2004
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 February 6, 2004;
  2. Affidavit of C. Michael Reger sworn to February 6, 2004 with exhibits;
  3. Affidavit of Robert E. Kainz, sworn to February 5, 2004 with exhibits;
  4. Affidavit of Mark J, McCarthy sworn to February 20, 2004;
  5. Affidavit of C. Michael Reger sworn to February 25, 2004 with exhibit;
  6. Affidavit of Shrihari N. Mangalmurti sworn to February 25, 2004.