In breach of contract action, Claimant failed to provide Defendant with notice or contemporaneous cost reports relating to alleged delay damages. Claimant also failed to secure written authorization for acceleration of its performance. Finally, Claimant failed to offer any evidence that Defendant waived or should be estopped from asserting any of the contractual bars to commencement of the action. Defendant's motion for summary judgement granted.
|Claimant(s):||DIPIZIO CONSTRUCTION CO., INC.|
|Claimant short name:||DIPIZIO|
|Footnote (claimant name) :|
|Defendant(s):||THE STATE OF NEW YORK|
|Footnote (defendant name) :|
|Judge:||RENÉE FORGENSI MINARIK|
|Claimant's attorney:||FOX, CHARLES & KOWALEWSKI, LLP
BY: LAURENCE I. FOX, ESQ. and
STAMM, REYNOLDS & STAMM
BY: BRADLEY J. STAMM, ESQ., co-counsel
|Defendant's attorney:||HON. ELIOT SPITZER
New York State Attorney General
BY: ARTHUR PATANE, ESQ.
Assistant Attorney General
|Third-party defendant's attorney:|
|Signature date:||February 4, 2004|
|Official citation:||20 Misc 3d 1117(A)|
|Appellate results:||15 AD3d 897|
|See also (multicaptioned case)|
The following papers, numbered 1 to 12, were read on motion by Defendant to amend answer and for summary judgment:
1) Notice of Motion, filed October 16, 2003;
2) Affidavit of John Puzan, sworn to October 15, 2003, with attached exhibit;
3) Affidavit of Arthur Patane, Esq., sworn to October 16, 2003, with attached exhibits;
4) Defendant's Memorandum of Law, dated October 16, 2003;
5) Affidavit of Laurence I. Fox, Esq., sworn to October 29, 2003;
6) Affidavit of Bernard Dipizio, sworn to October 29, 2003, with attached exhibits;
7) Claimant's Memorandum of Law, dated October 29, 2003;
8) Affidavit of Arthur Patane, Esq., sworn to November 7, 2003;
9) "Post Oral Argument Affidavit" of Bradley J. Stamm, Esq., sworn to December 22, 2003, with attached exhibit;
10) January 6, 2004 correspondence of Arthur Patane, Esq., with enclosure;
11) January 19, 2004 correspondence of Bradley J. Stamm, Esq.;
12) January 22, 2004 correspondence of Arthur Patane, Esq.
This is Defendant's motion for permission to amend its answer to more specifically assert two affirmative defenses, and for summary judgment dismissing Claimant's breach of contract claim.
On November 25, 1997, Claimant entered into contract number D257459 ( "the Contract") with the New York State Department of Transportation ("the Department") for an asphalt concrete reconstruction project on Niagara Falls Boulevard, in the Towns of Amherst, Tonowanda, and the City of Buffalo. Importantly, a segment of the work contemplated by the Contract, identified as "B portion" work, was time-sensitive. The Contract contained a timetable within which this B portion work was to be completed. The Contract also contained both an incentive to Claimant for finishing the work ahead of schedule, and a disincentive if the work was not completed on time. Specifically, Claimant was to receive an incentive payment of $4,000.00 per day for each day, up to a maximum of 30 days, that the B portion work was completed ahead of schedule. However, if Claimant finished the B portion of the work late, a $4,000.00 per day disincentive would be deducted from Claimant's payment on the Contract. Unlike the incentive, there was no cap on the number of days that this $4,000.00 disincentive could be charged against Claimant.
In its underlying action, Claimant alleges that, during the course of the project, the State caused delays which impeded Claimant's performance of the Contract and inhibited Claimant's ability to complete the B portion work on time. Claimant asserts that, in order to complete the B portion work on or before the deadline (thereby earning the incentive payment, and more importantly avoiding the disincentive penalties), it was required to accelerate its performance of the B portion work. This acceleration involved an increase in Claimant's work force and equipment costs. Claimant completed the B portion work ahead of schedule, and, after being credited with extra B days by Defendant due to acknowledged delays, was given the full 30 day incentive award. Claimant alleges, however, that the State created the need for the acceleration and the related increased expenditures. Claimant filed claim number 104693 on August 7, 2001, alleging breach of contract and seeking $1,567,709.24 for labor, materials, equipment, overhead and lost profit related to the acceleration.DEFENDANT'S MOTION
With this motion, Defendant seeks: 1) permission to amend its answer to more specifically assert its second and third affirmative defenses; and 2) summary judgment in Defendant's favor based upon the above referenced affirmative defenses.Amendment of Defendant's Answer
With regard to the portion of the motion for permission to amend its answer, both of the affirmative defenses at issue purport to assert bars to Claimant's causes of action. Specifically, the second affirmative defense in Defendant's original answer asserts that Claimant failed "to comply with the notice provisions of Sections 105-14 and 109-16 of the contract." Defendant's third affirmative defense alleges that "The claim is barred by Article 13 of the contract".
Though Defendant believes that its original answer adequately set forth the affirmative defenses in question, this prong of the motion was made as a precaution on the Defendant's part, in reaction to a June 2003 decision in another, unrelated claim, in which it was determined that similar affirmative defenses were waived because they had not been pled with sufficient specificity. This portion of the motion was resolved at oral argument, however, when Claimant stipulated that the original affirmative defenses, as set forth in the answer, were adequate and gave Claimant sufficient notice of the intended defenses. In light of Claimant's stipulation, I find that the affirmative defenses as pled are, indeed, sufficiently specific and therefore, this portion of the motion is denied as unnecessary.Defendant's Motion For Summary Judgment
In the summary judgment portion of its motion, Defendant contends that Claimant failed to comply with certain contractual provisions as set forth in Sections 105-14 and 109-16 of the Contract. Defendant further argues that the provisions of Article 13 of the Contract specifically bar claims for damages relating to delays.
Addressing the latter of these defenses first, that Article 13 bars recovery in this instance, I note that this portion of the Contract does provides as follows:
"The Contractor agrees to make no claim for extra additional costs attributable to any delays, inefficiencies, or interferences in the performance of this contract occasioned by any act or omission to act by the State . . . The Contractor also agrees that any such delay, inefficiency, or interference set forth in Subsection (A) shall be compensated for solely by an extension of time . . ." (Emphasis added).
Contractual provisions such as this which insulate the State from liability for delay damages are enforceable. However, in spite of such provisions:
"[d]amages may be recovered for: (1) delays caused by the contractee's bad faith or its willful, malicious, or grossly negligent conduct, (2) uncontemplated delays, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee, and (4) delays resulting from the contractee's breach of a fundamental obligation of the contract" (Corinno Civetta Constr. Corp. v City of New York, 67 NY2d 297, 309 [citations omitted]; see also Gray, Inc. v City School District of Albany, 277 AD2d 843).
In this matter, Claimant argues that it should not be barred from maintaining this action because the delays were uncontemplated by the parties at the time that they entered the Contract. Based on the record before me, I am unable to say as a matter of law that the "no damages for delay" clause of Article 13 bars recovery by Claimant. I find that a question of fact exists regarding whether or not the delays for which Claimant seeks compensation were contemplated by the parties.
This leaves Defendant's argument that, based upon its second affirmative defense, summary judgment is appropriate, due to Claimant's failure to give proper notice and contemporaneous cost records to Defendant concerning the damages sustained as a result of the acceleration of the B portion work.CLAIMANT'S OPPOSITION
In opposing this portion of Defendant's motion, Claimant sets forth several specific defenses each of which I will address in turn.Notice
Claimant maintains that it did give written notice of the delays as they occurred to Defendant. Claimant has provided the Court with copies of correspondence sent to Defendant between January 27, 1998 and April 30, 1998. The correspondence does demonstrate that Defendant was concerned about delays in the performance of its B portion work. However, notice of a delay is not the same as notice of a claim for damages relating to those delays. Section 105-14(A)(3) of the Contract requires that "within ten work days after the Contractor has knowledge or should have had knowledge of an event, matter or occasion, that will result in time related damages, the Contractor must provide the Engineer with written notice of a dispute for time related damages."
The correspondence sent by Claimant does not give Defendant reason to believe that these notices were anything more than requests for an extension of time to complete the B portion work (an extension that was, in fact, given by the State). Defendant argues that, while these documents demonstrate that Claimant was concerned about delays and, due to these concerns, requested extensions of time to complete the B portion work, Claimant did not give notice of the additional costs it was allegedly incurring and it did not notify Defendant that it intended to assert a claim for money damages. Defendant contends that it was on notice only of Claimant's request for an extension of time to complete the B portion work of the Contract.
I find, for several reasons, that Claimant did not give written notice as required under the Contract. First, in all the correspondence, Claimant requests only one thing: an extension of time to complete the B portion work. In the correspondence, Claimant informed Defendant that, due to certain delays, it requested additional B days. Claimant does not inform Defendant that, due to the delays, it would assert a claim for time related damages.
Further, although as stated above there is a question of fact regarding the "no damages for delay" provision of Article 13, this language does tend to support Defendant's position that the communication between the parties related only to an extension of time to complete the B portion work of the project. An extension of time is all that Article 13 would permit for all but uncontemplated delays. Despite Claimant's contentions, this language would seem to justify Defendant's interpretation of those documents. The documents contain nothing that would give Defendant notice that Claimant might seek damages, or any resolution other than an extension of time to complete the B portion work.
Finally, as I understand Claimant's argument, the damages sustained by Claimant were the result of Claimant's acceleration of its labor to ensure that it completed the B portion work in a timely manner. The work was accelerated because Claimant was dissatisfied with Defendant's response to its request for additional B days. Claimant's acceleration (the damage causing event) is not mentioned in the notices, and in fact did not occur until sometime after the notices were sent. Therefore, Defendant can not be charged with notice of the damage causing acceleration.
Extra Work versus Delay
Claimant does not dispute that it provided no notice or records relating to extra or disputed work to Defendant. Claimant argues, however, that its claim is not for extra or disputed work, but rather for damages relating to delay, specifically, the increased expenses for "forces and equipment, overtime and increased supervision" Claimant incurred in order to get the B portion work of the Contract completed in time (DiPizio affidavit, ¶ 7). Claimant argues that, in fact, the damages it incurred were related to the costs of accelerating the project to ensure that it finished the B portion work on time (Stamm Affidavit, ¶ 6).
According to Claimant, this distinction relieves it of the obligation to provide written notice and contemporaneous cost records concerning the damages. (Although, as set forth above, Claimant alleges that it did comply with the notice requirement of the Contract). Relying on the case of Gemma Construction Co. v City of New York (246 AD2d 451), Claimant argues that the notice and contemporaneous cost records requirements for extra or disputed work do not apply to delay damages. Claimant cites Gemma Construction for the proposition that "a provision of the contract establishing notice and documentation requirements for claims for extra or disputed work, did not apply to a contractor's claim for delay damages" (Fox Affidavit, ¶ 8). Contrary to the contract in Gemma Construction, however, the Contract in this matter contains the same notice and reporting requirements whether the dispute relates to extra work, disputed work or delays. In the Contract at issue, Section 105-14(A) provides:
"Time Related Disputes. Whenever the Contractor believes that it is or will be entitled to additional compensation for time related disputes, whether due to delay, extra work, disputed work, breach of contract, or other causes, the Contractor shall follow the procedures set forth in this Section."
Subdivision 4 of Section 105-14(A) goes on to specifically set forth the reporting requirements for Claimant in the event that it believed it had suffered time related damages.
"[T]he Contractor must keep daily records of all labor, material, and equipment costs and hours incurred for the affected operations . . .. On a 'weekly basis,' . . . the Contractor shall meet with the Engineer and present the daily records for the preceding week." Notwithstanding the dispute relating to written notice, there is no dispute between the parties that Claimant did not follow the procedures set forth in that section relating to contemporaneous cost records. This failure prevented the State from addressing this problem at the time it occurred. Although these records were not required for delay damages in Gemma Construction, they were required in the Contract at issue. It is clear that such requirements are necessary and enforceable to protect the tax-paying public and to ensure the integrity of the bidding process itself (see A.H.A. General Constr. v New York City Housing Authority, 92 NY2d 20). For this reason, I find that Claimant failed to comply with the specific provisions of the Contract, which require that written notice and contemporaneous cost records be provided to Defendant.Acceleration
Claimant contends that Defendant responded to its requests by informing Claimant that the matter of extra B portion days would be resolved when the B portion work was complete. Claimant argues that Defendant's response to these requests was a "non-answer" and "unsatisfactory" (Stamm Affidavit ¶ 5, 6 and 9). Claimant asserts that, because it could not get a commitment from Defendant regarding an extension of time for the B portion work, it was forced to accelerate its labor to ensure timely completion. Claimant argues, therefore, that Defendant should not be permitted, at this time, to invoke the notice and documentation provisions of the Contract in defense of this action.
However, the Contract specifically addresses such instances. It provides that, if Claimant is dissatisfied with the resolution of a dispute as proposed by the Engineer in Charge ("EIC"), then Claimant is to provide written notice to the Commissioner within 10 days. After being dissatisfied with the EIC's response to its request for additional B portion days, Claimant unilaterally accelerated the project and expended more resources. In doing so, Claimant chose to forgo the contractually provided avenue for settling disputes, which required providing written notice to the Commissioner of Claimant's dissatisfaction with the Engineer's response. Claimant did so at its own peril.
Importantly, even if the Court were to accept Claimant's position that Defendant's failure to properly respond to Claimant's notices compelled Claimant to accelerate the B portion work, and further assuming that Claimant otherwise complied with all contractual provisions, the Contract specifically prohibited Claimant from unilaterally accelerating its work. Subsection B of Section 105-14 provides:
"ACCELERATION DISPUTES. The Contractor may not maintain a dispute for costs associated with acceleration of the work unless the Department has given prior express written direction by the Engineer to the Contractor to accelerate its effort. The Contractor shall always have the basic obligation to complete the work in the time frames set forth in the contract. For purposes of this Subsection, lack of express written direction on the part of the Department shall never be construed as assent." (Emphasis added)
Based upon this clear and unequivocal contractual language, the State is not liable for Claimant's damages relating to its acceleration of the B portion work.Waiver or Estoppel
Claimant also argues that Defendant has either waived or should be estopped from asserting the contractual conditions precedent relating to notice and contemporaneous cost records. Claimant alleges that, in response to the alleged written notice as set forth above, Defendant, through its EIC John Puzan, informed Claimant that the delay issues would be resolved after completion of the B portion work. Claimant alleges that its failure to strictly adhere to the contractual notice and documentation requirements was the result of its detrimental reliance upon these representations.
I find this argument to be without merit. First, I note the glaring inconsistency of this "detrimental reliance" argument when considered with Claimant's assertions that it accelerated the work and incurred the damages at issue only because it could not rely on Defendant's unsatisfactory responses to its correspondence. Also, I find that Defendant's response was, in fact, entirely accurate. After the B portion of the work was completed, Defendant gave Claimant credit for delays up to the maximum allowable incentive award. Nothing Defendant did beguiled or compelled Claimant to fail to comply with the clear requirements of the Contract.
Second, Claimant has come forward with nothing that would indicate that Defendant has waived, or should be estopped from asserting, the contractual provisions which bar Claimant's recovery. "[T]he intent to waive a right must be unmistakably manifested, and is not to be inferred from a doubtful or equivocal act" (Orange Steel Erectors, Inc. v Newburgh Steel Products, Inc., 225 AD2d 1010, 1012, 640 NYS2d 283). Defendant's promise to address Claimant's request for extra B days when the B portion work of the Contract is completed, is not an "unmistakably manifested" waiver of any rights under the Contract. Such waivers "should not be lightly presumed" (see Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966, 968).
Finally, Claimant has failed to demonstrate any justification for estoppel. Claimant has offered no evidence indicating that Defendant made a misrepresentation or concealed a material fact upon which an estoppel could be based (see Rashbaum v Tax Appeals Tribunal of State of New York, 229 AD2d 723; Madison-Oneida-Herkimer Consortium v North American Administrators, Inc., 196 Misc 2d 365). Moreover, even if an estoppel might otherwise be justified, it is well-settled law that an estoppel is not recognized against a public agency in the absence of exceptional circumstances, which I do not find to exist in this matter (Massa v City of Kingston, 284 AD2d 836).
In conclusion, I find that Claimant failed to give notice to Defendant of the alleged delay damages; that Claimant failed to provide contemporaneous cost records concerning the expenses incurred; that Claimant failed to adhere to the provisions of the Contract regarding disputes that it considered unresolved; and that Claimant failed to receive written approval from Defendant prior to accelerating its work. Finally, I find no factual support for Claimant's contention that the State has waived, or should be estopped from asserting, the contractual provisions which operate to bar Claimant's recovery in this action.
Accordingly, upon the foregoing it is:
ORDERED, that Defendant's motion for summary judgment is granted and the claim is dismissed.
February 4, 2004
Rochester, New York
RENÉE FORGENSI MINARIK
Judge of the Court of Claims