New York State Court of Claims

New York State Court of Claims

HANSON AGGREGATES v. NEW YORK STATE THRUWAY AUTHORITY, #2009-015-172, Claim No. 115013, Motion No. M-76217


Synopsis


On claimant's motion for renewal, summary judgment was granted. Hearing to determine the rate of interest and the date of accrual to be scheduled.

Case Information

UID:
2009-015-172
Claimant(s):
HANSON AGGREGATES NEW YORK, INC.
Claimant short name:
HANSON AGGREGATES
Footnote (claimant name) :

Defendant(s):
NEW YORK STATE THRUWAY AUTHORITY
Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
115013
Motion number(s):
M-76217
Cross-motion number(s):

Judge:
FRANCIS T. COLLINS
Claimant’s attorney:
Gates & Adams, P.C.By: Anthony J. Adams, Jr., Esquire
Defendant’s attorney:
Honorable Andrew M. Cuomo, Attorney General
By: Eidin Beirne, EsquireAssistant Attorney General
Third-party defendant’s attorney:

Signature date:
May 26, 2009
City:
Saratoga Springs
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)



Decision

Claimant moves to renew its prior motion for summary judgment asserting the defendant, New York State Thruway Authority (Thruway Authority), has failed to pay monies due on two highway construction contracts and for interest thereon. As reflected in the prior Decision and Order, contract number TAS 06-38/D213584 (hereinafter Contract 38) relates to the reconstruction and paving of 7.4 miles of the New York State Thruway between milepost 233.5 and milepost 240.9 and contract number TAS 06-42 / D213631 (hereinafter Contract 42) relates to the reconstruction and paving of 13.5 miles of the New York State Thruway between milepost 220.0 and milepost 233.5.

By Decision and Order dated September 26, 2008, the Court granted claimant's motion for summary judgment on the issue of liability relating to Contract 38 and denied its motion relating to Contract 42 (see Hanson Aggregates New York, Inc. v New York State Thruway Auth., Ct Cl, September 26, 2008 [Claim No. 115013, Motion No. M-74968], Collins, J., unreported).[1] In so doing, the Court found that the claimant established its prima facie entitlement to summary judgment on the issue of liability relating to Contract 38 through the submission of the pleadings establishing the existence of a contract, and the defendant's admissions contained in correspondence from Christopher A. Waite, P.E., an employee of the Thruway Authority, that the work performed in connection with this contract was completed and the Contract would be closed out. This correspondence also indicated, however, that the balance due on Contract 38 was being held to offset the overpayment on Contract 42.

In opposition to the claimant's prior motion for summary judgment relating to Contract 38, the defendant did not dispute that money was owed under Contract 38 but took the position that it should be offset against the amount of overpayment made by the State in connection with Contract 42. The defendant argued that the paving work performed in connection with Contract 42 did not conform to the contract specifications thereby precluding summary judgment on both contracts. A force account had been established for a portion of the pavement work relating to Contract 42, which the defendant required the claimant to remove and replace. With respect to the remaining portion of the pavement work performed under Contract 42, Mr. Waite informed the claimant in a letter dated April 9, 2008 that "at this time we do not intend to direct Hanson to remove additional pavement we are willing to wait for the warmer days of summer to determine whether or not the remaining pavement remains stable."

While the Court found that summary judgment on Contract 42 was not appropriate, it granted claimant's motion for summary judgment on Contract 38, holding that the defendant's failure to plead its entitlement to an offset as either an affirmative defense or counterclaim constituted a waiver (citing, inter alia, Ellenville Natl. Bank v Freund, 200 AD2d 827 [1994]; Kivort Steel v Liberty Leather Corp., 110 AD2d 950 [1985]). In addition, the Court found that absent the assertion of the State's right to an offset as an affirmative defense, and without any pending counterclaim for the monies allegedly owed the State under Contract 42, the State's claim to the amount of the purported overpayment was merely contingent, possible and in futuro and, as such, provided no basis for denying claimant's motion for summary judgment in relation to Contract 38 (see e.g. Matter of Northville Indus. Corp. v State of New York, 14 AD3d 817, 818 [2005]; Matter of Fehlhaber Corp. v O'Hara, 53 AD2d 746, 747 [1976]; Slate v State of New York, 284 AD2d 767, 770 [2001]).

Claimant argues that new evidence supports summary judgment on Contract 42, and seeks both the outstanding principal amount owed on this contract as well as interest thereon. Additionally, although the Court previously granted summary judgment with respect to liability on Contract 38, the claimant represents that the principal amount owed by the State has now been paid and now seeks interest on the belated payments.

In support of its motion to renew its prior motion for summary judgment relating to Contract 42, claimant submits a document entitled Contract Final Acceptance which states, in pertinent part, the following:
You are hereby notified that the work covered by the subject contract TAS 06-42/D213631 . . . the Contractor being Hanson Aggregates, NY was completed as of November 15, 2007. On August 26, 2008, the work was inspected by Thruway Authority and Barton & Loguidice, P.C. personnel and the same was found to be completed in reasonable conformance with the contract plans and Specifications (see claimant's Exhibit A annexed to the Affidavit of Thomas McCambley dated January 23, 2009).

With respect to the remaining balance owed on Contract 42, Thomas McCambley, Construction Manager for Hanson Aggregates New York, Inc., states "[t]he principal amount of $364,494.58 is still due and owing to Hanson on Contract 42 (this does not include payment due on the Force Account)" (see McCambley affidavit, ¶ 13). Notwithstanding Mr. McCambley's reference to monies due on the force account, counsel for the claimant seeks summary judgment on Contract 42 in the total amount of $364,494.58, plus interest.

With respect to the amount of interest purportedly owed on both Contracts 38 and 42, Mr. McCambley sets forth a chart in which interest is calculated based upon "Estimate[d] Closing Date[s]" for both the progress payments and final payments and concludes that interest is payable at the rate of 9% from the date payments were due. Claimant seeks interest in the amount of $83,326.86 on Contract 42 and $120,468.66 on Contract 38.

In opposition to the claimant's motion, defendant contends that the notice of motion was defective as it failed to apprise the defendant of the grounds for the motion, and that the affidavit of Andrew M. Nagy submitted in opposition raises questions of fact precluding summary judgment on Contract 42. Relying exclusively on paragraphs 10 - 11 of the Nagy affidavit, defense counsel contends that "the Thruway Authority's acceptance of the work does not constitute any concession that the work was performed in conformance with the specifications" (defense counsel's Memorandum of Law, p. 2). In paragraphs 10 and 11 of his affidavit, Mr. Nagy states the following:
10. Rather than requiring Claimant to remove and replace, at its own expense, the non-conforming material, the Thruway Authority agreed to leave it in place to see whether it performed acceptably. The material was left in place for testing over a period of approximately nine months. At the conclusion of that period the Thruway Authority's Chief Engineer determined that, although the material had not been supplied in conformance with the contract specifications, its performance was acceptable and it would not have to be replaced. It was a result of that determination that the work under Contract 42 received final acceptance.

11. I say and so believe that the current (March 13, 2009) interest rate as set by the State Tax Commission pursuant to § 1096 (e) (1) of the Tax Law is 3%.

The Nagy affidavit also indicates that the "estimate[d] closing date[s]" in the McCambley affidavit are incorrect because payment processing was delayed due to the determination that the work included in the estimates did not conform to the contract specifications. Mr. Nagy also cites in this regard the belief that the contractual setoff clause in the contract entitled them to withhold payment due on Contract 38 to offset a purported overpayment on Contract 42.

Preliminarily, the Court rejects defendant's contention that the claimant's failure to state the grounds for relief in its notice of motion requires denial. While CPLR 2214 (a) requires a statement of the grounds for relief in the notice of motion, it is well-settled that absent prejudice, the claimant's "failure to state the ground in the notice of motion should be disregarded as a technical deficiency in the interests of justice and expediency" (Matter of LiMandri, 171 AD2d 747 [1991]; Mondello v Mondello, 174 AD2d 712 [1991]; citing, inter alia, CPLR 2001).

Addressing the merits of the motion, the law is well-settled that "a motion to renew must be 'based upon new facts not offered on the prior motion that would change the prior determination . . . [and] shall contain reasonable justification for the failure to present such facts on the prior motion" (Kahn v Levy, 52 AD3d 928, 929 [2008], quoting CPLR 2221 [e]; see also Cippitelli v County of Schenectady, 307 AD2d 658 [2003]). Claimant's proffer of the Contract Final Acceptance relative to Contract 42 constitutes new facts not offered on the prior motion and the claimant has set forth a reasonable justification for its failure to present it on the prior motion. The Contract Final Acceptance was not fully executed until September 5, 2008 when it was accepted and signed by the Chief Engineer, Christopher A. Waite. As of the date the claimant's prior motion for summary judgment was submitted for decision, therefore, there had not yet been a final acceptance of the work performed under Contract 42. Likewise, with respect to damages relative to Contract 38, the claimant represents that the principal balance was paid subsequent to the date of the Court's prior Decision and Order. The criteria for renewal having been met, the Court will next address whether or not the new evidence warrants summary judgment.

"The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact" (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1067-1068 [1979]). Once that burden is met, defendant must produce evidentiary proof in admissible form sufficient to require a trial of material questions of fact on which the opposing claim rests (see Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). "[M]ere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient" for this purpose (Zuckerman v City of New York, 49 NY2d at 562). In the Court's view, the newly submitted evidence offered by the claimant in support of its motion established its entitlement to summary judgment with respect to Contract 42. The Contract Final Acceptance establishes the fact that the work performed in connection with Contract 42 was "completed in reasonable conformance with the contract plans and Specifications" (see Contract Final Acceptance, claimant's Exhibit A annexed to the Affidavit of Thomas McCambley dated January 23, 2009). Defense counsel's reliance on paragraphs 10 and 11 of the Nagy affidavit fails to support a contrary conclusion. First, Nagy's statement that "the Thruway Authority's Chief Engineer determined that, although the material had not been supplied in conformance with the contract specifications, its performance was acceptable and it would not have to be replaced" is inadmissible hearsay which, standing alone, is insufficient to defeat summary judgment (Colombo v Sanfilippo, ___AD3d ___, 876 NYS2d 514 [2009]; Raux v City of Utica, 59 AD3d 984 [2009]; Davis v Golub Corp., 286 AD2d 821 [2001]). Second, the plain language of the Contract Final Acceptance, signed by the Chief Engineer, makes clear that the work performed in connection with Contract 42 was completed and reasonably conformed to applicable plans and specifications. Thus, the new facts offered in support of the instant motion to renew sufficiently establish claimant's entitlement to summary judgment on its cause of action for breach of contract in relation to Contract 42.

The amount of interest owed relative to both Contracts 38 and 42 was not established, however. Claimant submits as Exhibit D to the McCambley affidavit standard specifications of the New York State Department of Transportation (DOT) and the Thruway Authority. The DOT specifications reference the payment provisions of both State Finance Law § 179 and Highway Law § 38 . The Thruway Authority specifications reference the payment provisions of Public Authorities Law § 2880. Both are represented by counsel to be the standard specifications applicable to the contracts at issue in this case. These payment provisions differ, however, and there is no allegation or evidentiary support for the proposition that the subject contracts were "undertaken for the Thruway Authority by the Department of Transportation" so as to require compliance with the payment procedures outlined in State Finance Law §§ 179-d through 179-p (see 21 NYCRR 109.1 [h] [3]). If, as claimant's counsel contends, the standard specifications of the DOT are part of the subject contracts, interest on the final payments is due 75 calendar days, excluding legal holidays, after the work "has been accepted as completed by the commissioner of transportation " (emphasis added), a fact which the proof does not address (Highway Law § 38 [7][g]; see also State Finance Law §§ 179-f, 179-f [2] and 179-e [6] [a]).

Public Authorities Law § 2880 (7), on the other hand, provides for the payment of interest as follows:
" Interest eligibility and computation. (a) In order for the corporation not to be liable for the payment of interest, contract payment must be made within thirty calendar days, excluding legal holidays, after the receipt of an invoice for the amount of the contract payment due; except when the contract payment is of the type where the facts and conditions are as defined pursuant to subparagraph (v) of paragraph (a) of subdivision three of this section. Any time taken to satisfy or rectify any of the facts or conditions described in subdivision three (except for subparagraph (iv) of paragraph (b) of subdivision three) of this section shall extend the date by which contract payment must be made in order for the corporation not to become liable for interest payments by an equal period of time" (emphasis added) (see also 21 NYCRR 109.1 [i]).


"Receipt of an Invoice" is defined as "(i) the date on which a proper invoice is actually received in the designated payment office, or (ii) the date on which the corporation receives the purchased goods, property, or services covered by the proper invoice, whichever is later" (Public Authorities Law § 2880 [1] [g]). In accordance with Public Authorities Law § 2880 [2] directing every corporation[2] to promulgate rules and regulations detailing its prompt payment policy, the Thruway Authority promulgated the procedures contained in 21 NYCRR Part 109. Section 109.1 [h] defines "Receipt of an Invoice" as set forth in Public Authorities Law § 2880 [1] [g] but adds the following with respect to final payments:
(3) in regard to final payments on all construction contracts (whether highway or architectural) and on any and all engineering / architectural agreements for professional services, construction inspection or design, the date on which the contract work has been accepted as completed by the authority's chief engineer; or in those contracts undertaken for the Thruway Authority by the Department of Transportation, the procedure followed by the department under article XI-A, sections 179-d through 179-p of the State Finance Law will govern payment on those contracts" (emphasis added).

Thus, if the State Finance Law applies, interest with respect to final payments is not payable until 75 calendar days, excluding legal holidays, after the work is accepted by the Commissioner of Transportation. If the Public Authorities Law applies, interest with respect to final payments is not payable until 30 days, excluding legal holidays, after the work has been accepted by the Thruway Authority's Chief Engineer. Here, claimant failed to establish whether the interest eligibility criteria set forth in Public Authorities Law § 2880 or the interest eligibility criteria set forth in State Finance Law § 179-f applies to the contracts at issue herein. Claimant's failure to present evidence from which the Court could determine the required payment date as defined by reference to either Public Authorities Law § 2880 (1) (g) and 21 NYCRR § 109.1 (h) or State Finance Law § 179-f requires that this branch of its motion be denied.

While claimant's counsel cites CPLR 5004 for the conclusion that interest is payable at the rate of 9 %, CPLR 5004 states specifically that this rate is payable "except where otherwise provided by statute." Both Public Authorities Law 2880 (7) (c) and State Finance Law § 179-g state that "[n]otwithstanding any other provision of law to the contrary, interest shall be computed at the rate equal to the overpayment rate set by the commissioner of taxation and finance pursuant to subsection (e) of section one thousand ninety-six of the tax law" (see also Public Authorities Law § 2880 [13] [b] and [16]). Section 1096 (e) of the Tax Law states that "[t]he commissioner shall set the overpayment and underpayment rates of interest . . . but if no such rate or rates of interest are set, such overpayment rate shall be deemed to be set at six percent per annum." Consequently, claimant failed to establish not only the dates from which interest accrues but the applicable rate of interest as well (see generally Denio v State of New York, 7 NY3d 159 [2006]).

Based on the foregoing, claimant's motion to renew is granted and upon reconsideration the Court grants summary judgment on Contract 42 in the principal amount of $364,494.58. Interest on Contracts 38 and 42 will be determined following a hearing on the issue on a date to be scheduled by the Court.


May 26, 2009
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 January 31, 2009;
  2. Affirmation of Anthony J. Adams, Jr., affirmed January 31, 2009 with exhibit;
  3. Affidavit of Thomas McCambley sworn to January 23, 2009 with exhibits;
  4. Memorandum of Law of Anthony J. Adams, Jr. dated January 31, 2009;
  5. Memorandum of Law of Eidin Beirne dated March 13, 2009;
  6. Affidavit of Andrew M. Nagy sworn to March 13, 2009 with exhibits;
  7. Reply affirmation of Anthony J. Adams, Jr., affirmed March 18, 2009.

[1]. Unreported decisions from the Court of Claims are available via the internet at http://www.nyscourtofclaims.state.ny.us./decision.htm

[2]."Corporation" is defined by Public Authorities Law § 2880 [1] [a] to mean "every public authority and public benefit corporation a majority of the governing board members of which are either appointed by the governor or serve as members by virtue of their service as an officer of a state department, division, agency, board or bureau, or combination thereof."