New York State Court of Claims

New York State Court of Claims

NATIONAL GRANGE v. THE STATE OF NEW YORK, #2009-040-006, Claim No. 109481, Motion Nos. M-73917, M-73928


Synopsis


Cross-motions for summary judgment on public improvement contract denied in part and granted in part.

Case Information

UID:
2009-040-006
Claimant(s):
NATIONAL GRANGE MUTUAL INSURANCE COMPANY
Claimant short name:
NATIONAL GRANGE
Footnote (claimant name) :

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

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
109481
Motion number(s):
M-73917, M-73928
Cross-motion number(s):

Judge:
CHRISTOPHER J. MCCARTHY
Claimant’s attorney:
LAW OFFICES OF NEIL B. CONNELLY
By: Neil B. Connelly, Esq. Sharon Edwards, Esq.
Defendant’s attorney:
ANDREW M. CUOMO
Attorney General of the State of New YorkBy: C. Michael Reger, Esq., AAG
Third-party defendant’s attorney:

Signature date:
January 16, 2009
City:
Albany
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)
2009-040-506

Decision

For the reasons set forth below, Defendant’s motion and Claimants’ motion are decided as follows:

1. Defendant’s motion for summary judgment and to dismiss the Claim of HCS Excavating, Inc. (hereinafter, HCS and the HCS Claim, respectively) on the basis that the Notice of Intention to File a Claim does not comply with Court of Claims Act § 11(b) and, thus, the HCS Claim is untimely, is denied;

2. HCS’ motion to strike the State’s First and Second Affirmative Defenses to the HCS Claim is granted;

3. Claimants’ request to strike the Affidavits of Mr. Penge and Mr. Eryou and portions of Mr. Lasko’s Affidavit is denied;

4. Defendant’s motion for summary judgment and to dismiss the HCS Claim, or the Fourth and Fifth Causes of Action of HCS’ Claim seeking damages for extra work and for delay, is denied;

5. Claimants’ motion: to strike Defendant’s Third, Fourth and Fifth Affirmative Defenses to the HCS Claim and Defendant’s Sixth, Seventh and Eighth Affirmative Defenses to the Claim of National Grange Mutual Insurance Company (hereinafter, National Grange and the National Grange Claim, respectively) and for summary judgment with regard to liability as to the delay and extra work causes of action and breach of contract is denied;

6. Defendant’s motion for summary judgment and to dismiss on the merits the HCS Claim, for the item of extra work claimed in ¶ 26(i) thereto, is denied;
7. Claimants’ motion seeking dismissal of the State’s counterclaims is denied.

8. Claimants’ motion seeking dismissal of the First through Fifth Affirmative Defenses to the National Grange Claim is denied;

9. Defendant’s motion for summary judgment and to dismiss that portion of the National Grange Claim seeking recovery of counsel fees is granted;

10. Claimants’ motion seeking an award of counsel fees, costs and disbursements is denied; and

11. Claimants’ motion seeking summary judgment on the basis that the State breached the contract is denied.
Claims, Affirmative Defenses and Counter Claims
HCS asserts that it served upon Defendant a Notice of Intention to File a Claim on November 18, 2003 (HCS Claim, ¶ 7), although Defendant counters that it was not served until December 22, 2003 (see Ex. F attached to August 27, 2007 Affidavit of C. Michael Reger in Support of State’s Motion [hereinafter, the 2007 Reger Affidavit]). HCS, thereafter, filed the HCS Claim with the Clerk of the Court on July 15, 2004. HCS served it upon Defendant on the same date (see Ex. A attached to 2007 Reger Affidavit). Claimant, National Grange, as surety to HCS, filed the National Grange Claim with the Clerk of the Court on June 15, 2004. The National Grange Claim was served upon Defendant on June 16, 2004 (see Ex. C attached to 2007 Reger Affidavit).

The HCS Claim asserts that HCS was the low bidder for a public contract and entered into a written agreement No. D257608 (hereinafter, the Agreement; see Claimants’ Ex. 9; Ex. A attached to August 27, 2007 Affidavit of Jason A. Penge in Support of State’s Motion [hereinafter, 2007 Penge Affidavit] [copy of executed Agreement]) with the State by and through its Department of Transportation (hereinafter, DOT) on or about June 25, 1998. HCS agreed to provide all labor, equipment and material necessary to construct a fuel farm at Stewart International Airport in New Windsor, New York (hereinafter, the Fuel Farm), in accordance with the plans, specifications, and general and special conditions referred to in the Agreement. The HCS Claim also states that Defendant agreed to pay HCS the estimated sum of $3,417,527.29 for construction of the Fuel Farm and that Defendant made alterations and modifications to the contract in the sum of $1,548,890.68 pursuant to change orders. It is alleged that HCS performed all terms and conditions of the contract except as to time of completion, which condition was waived by Defendant by written extensions of time. It also is alleged that Defendant’s actions delayed and prevented HCS from completing its work within the time specified in the contract.

HCS’ first cause of action seeks $71,951.68, which HCS asserts is the amount of pay estimate No. 34, the balance of the amount due to HCS for construction of the Fuel Farm (not including HCS’ claims for additional or extra work outside the scope of the project), which HCS asserts Defendant improperly withheld.

The second HCS cause of action asserts that Defendant ordered HCS to perform extra and additional work, which HCS performed and for which Defendant failed to pay. It is alleged that the value of the extra and additional work is $1,845,593.40.

HCS’ third cause of action asserts that, pursuant to the Agreement, Defendant retained a certain percentage of the contract funds and that such amount was to be released to HCS upon Defendant’s use and occupancy of any portion of the work. HCS asserts that Defendant occupied and used successive portions of the Fuel Farm, beginning on August 25, 2003, that HCS was entitled to the retainage of $237,080.29 and that the State failed to return the retainage.

In its fourth cause of action, HCS sets forth each item of extra and additional work alleged to have been performed and the cost of same. The total sum sought in the fourth cause of action is $1,845,593.40. The same amount is sought in the second cause of action. The fourth cause of action is an itemization of the second cause of action.

The fifth HCS cause of action alleges that Defendant breached the contract by delaying and impeding HCS’ performance and completion of the contract work by failing to provide accurate and adequate plans and specifications, misrepresenting site conditions, and failing to provide HCS with timely information. As a result of the delay, HCS asserts it was damaged in the amount of $962,251.05.

HCS’ sixth cause of action seeks recovery of $3,578,765.70, the balance claimed by HCS for extra and additional work, as well as for delays caused by Defendant’s actions.

With respect to the first through sixth causes of action, HCS also asserts that it is owed interest on the amounts claimed.

The seventh HCS cause of action seeks punitive damages in the sum of $500,000.00 based upon Defendant having allegedly abandoned the contract in bad faith.

The State’s Verified Amended Answer with Counterclaims (see Ex. B attached to 2007 Reger Affidavit [hereinafter, the State’s HCS Answer]) asserts six affirmative defenses. It also asserts two counterclaims – the first seeking recovery of $1,005,202.80, the cost the State alleges it incurred for hiring a contractor to complete the work on the Fuel Farm, and the second seeking liquidated damages in the amount of $600.00 per day as provided by § 108-03 of the Standard Specifications (defined below) that form part of the contract, as well as engineering and inspection charges Defendant asserts are attributable to the late completion of the Fuel Farm.

The National Grange Claim asserts that, on April 3, 1998, Claimant, National Grange, issued a Faithful Performance Bond and a Labor and Materials Bond with respect to the Agreement for the benefit of the people of the State of New York at the request of HCS. It is alleged that, at a November 28, 2001 meeting with HCS and DOT, National Grange agreed to provide financial assistance to HCS in its efforts to complete its work on the Fuel Farm, that all parties agreed to work together toward completion of the project and that, in exchange for such financial assistance, HCS and DOT agreed that all further contract payments would be made to National Grange as HCS’ surety. National Grange asserts it has spent $590,624.59 in an effort to complete the Fuel Farm but has not received any contract payments from DOT[1].

National Grange’s first cause of action asserts: that DOT provided it with an assignment of contract proceeds form, which National Grange completed and filed in anticipation of receiving the proceeds due and payable to it; that the assignment was rejected “as being an out-of-date form,” so that National Grange was required to execute and deliver an updated assignment form (Claim, ¶ S); and that DOT has not paid any money to National Grange.

The second National Grange cause of action asserts: that, in November 2001, National Grange agreed with DOT to provide HCS with the financing necessary to complete the Fuel Farm project; that National Grange provided the financing; that the amount of the financing as of November 14, 2003 was $590,624.59; and that DOT has failed to pay National Grange.

National Grange’s third cause of action also seeks payment of the $520,624.59. It asserts: that, during a November 2002 meeting, National Grange demanded payment from DOT for engineering services, shop drawings and related matters provided by HCS with National Grange’s financial assistance; that DOT agreed to process the payment requisition and agreed it would promptly provide HCS with the necessary assignment of contract form that would allow DOT to pay the money directly to National Grange; and that DOT would issue a written commitment to National Grange confirming that all future payments on the Fuel Farm would be made only to National Grange. It alleges: that DOT never provided the written commitment to National Grange and has not paid HCS; that DOT has materially breached the contract, thereby discharging the bond issued by National Grange as a matter of law; and that National Grange is entitled to a declaratory judgment discharging liability on its bonds due to DOT’s breach of the contract.

The State’s Verified Amended Answer with Counterclaims (see Ex. D attached to 2007 Reger Affidavit [hereinafter, the State’s National Grange Answer] asserts eight affirmative defenses and two counterclaims. The counterclaims are the same as those alleged against HCS, as described above.

The Court also notes that, in Claimants’ Memorandum of Law, dated August 27, 2007 [hereinafter, Claimants’ Memorandum of Law], counsel for Claimants state, in footnote 2 on page 1, that “Claimant [HCS] has and hereby discontinues the sixth cause of action, which is duplicative of other causes of action.” Thus, the Court considers the sixth cause of action in the HCS Claim discontinued.
Summary Judgment
Summary judgment is a drastic remedy to be granted sparingly and only where no material issue of fact is demonstrated in the papers related to the motion (see Crowley’s Milk Co. v Klein, 24 AD2d 920 [2d Dept 1965]; Wanger v Zeh, 45 Misc 2d 93, 94 [Sup Ct, Albany County 1965], affd 26 AD2d 729 [3d Dept 1966]). The Court’s task is issue finding, not issue determination, and, before judgment can be granted, it must be clearly ascertained that there are no triable issues of fact outstanding (Matter of Hannah UU, 300 AD2d 942, 943 [3d Dept 2002], lv denied 99 NY2d 509 [2003], citing to Matter of Suffolk County Dept. of Soc. Servs. v James M., 83 NY2d 178, 182 [1994] and Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 404 [1957]). In order to fulfill the Court’s function in deciding a motion for summary judgment, the proof must be examined in a light most favorable to the party opposing the motion (Iwaszkiewicz v Callanan Indus. Inc., 258 AD2d 776, 777 [3d Dept 1999]) “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 eliminate any material issues of fact from the case” (Winegrad v New York Univ. Med. Center, 64 NY2d 851, 853 [1985]; see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, supra at 404). “Failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers” (Alvarez v Prospect Hosp., 68 NY2d 320, supra at 324; see Winegrad v New York Univ. Med. Center, 64 NY2d 851, supra at 853).
HCS’ Notice of Intention of File a Claim
The Court first will address Defendant’s motion to dismiss on the grounds that the Notice of Intention to File a Claim served by HCS does not meet the particularity requirements of Court of Claims Act § 11(b) and, thus, the HCS Claim is untimely served and filed.

Court of Claims Act § 11(b) requires that the Notice of Intention “shall state the time when and the place where the claim arose [and] the nature of same” (Czynski v State of New York, 53 AD3d 881, 882 [3d Dept 2008]; quoting Cobin v State of New York, 234 AD2d 498, 499 [2d Dept 1996], lv dismissed 90 NY2d 925 [1997], rearg denied 91 NY2d 849 [1997]) in sufficient detail to “enable [defendant] to investigate the claim and promptly ascertain the existence and extent of its liability” (Czynski v State of New York, 53 AD3d 881, supra at 882, quoting Riefler v State of New York, 228 AD2d 1000, 1001 [3d Dept 1996]). However, the Notice of Intention need not include the items of damage or injuries and the sum claimed (see Court of Claims Act § 11[b]).

As the Appellate Division, Third Department, recently stated in Czynski v State of New York (53 AD3d 881, supra at 882-883) “ ‘[t]he Court of Claims Act does not require [defendant] to ferret out or assemble information that section 11 (b) obligates the claimant to allege’ (Lepkowski v State of New York, 1 NY3d 201, 208 [2003]; see Kolnacki v State of New York, 8 NY3d 277, 280 [2007]). Failure to comply with Court of Claims Act § 11 (b) deprives the Court of Claims of subject matter jurisdiction (see Lepkowski v State of New York, 1 NY3d at 206-209), and subject matter jurisdiction is unwaivable (see Finnerty v New York State Thruway Auth., 75 NY2d 721, 722-723 [1989]; compare Court of Claims Act § 11 [b], with Court of Claims Act § 11[c]).”

The Notice of Intention served upon Defendant by HCS asserts:
The time when and where such claim arose and the nature of the same are as follows:

Claimant claims that the defendant breached a contract number D257608. Breach consisted of the failure of defendant to pay monies due and owing to the claimant in performance of the above-mentioned contract and for extras occasioned incidental to said contract as a result of the actions of the defendant herein.

Claim arose on or about August 25, 2003

Amount of said claim is $2,654,756.40

This notice is filed within the time constraints set forth in Section 10 of the Court of Claims Act.
(see Ex. F attached to 2007 Reger Affidavit).

Defense counsel asserts that the Notice of Intention fails to adequately state the nature of the HCS Claim and that none of the essential facts showing the nature of the HCS Claim are stated that would allow the State to adequately investigate the HCS Claim (2007 Reger Affidavit, ¶ 7; Defendant’s Memorandum of Law in Opposition to Claimant’s Motion for Summary Judgment, dated February 22, 2008 [hereinafter, Defendant’s Memorandum of Law in Opposition], pp. 44-45).

Pursuant to Court of Claims Act § 10(4), the provisions applicable to breach of contract actions, Claimant HCS was required to file and serve its Claim within six months from the date of accrual unless a written Notice of Intention to File a Claim was served upon the Attorney General within such time period. In that case, the HCS Claim itself was required to be filed with the Clerk of the Court and a copy served upon the Attorney General within two years after the accrual of the Claim. In either case, Claimant HCS was required to initiate action within six months of the HCS Claim’s accrual.

Court of Claims Act § 10 is more than a statute of limitations; it is a jurisdictional prerequisite to bringing and maintaining an action in this Court (DeMarco v State of New York, 43 AD2d 786 [4th Dept 1973], affd 37 NY2d 735 [1975]; Antoine v State of New York, 103 Misc 2d 664 [Ct Cl 1980]). Failure to timely comply with the statutory filing requirements of the Court of Claims Act constitutes a fatal jurisdictional defect requiring dismissal (Buckles v State of New York, 221 NY 418 [1917]; Ivy v State of New York, 27 AD3d 1190 [4th Dept 2006]; Byrne v State of New York, 104 AD2d 782 [2d Dept 1984], lv denied 64 NY2d 607 [1985]).

Section 11(a)(i) of the Court of Claims Act provides that the claim shall be filed with the Clerk of the Court and that any notice of intention to file a claim, as well as a copy of the claim itself, shall be served upon the Attorney General within the applicable time period provided in Section 10 of the Court of Claims Act (six months and two years, respectively, in this instance), either personally or by certified mail, return receipt requested. It is well established that failure to timely serve the Attorney General in strict compliance with Court of Claims Act § 11 gives rise to a jurisdictional defect (see Finnerty v New York State Thruway Auth., 75 NY2d 721, 723 [1989]; Matter of Dreger v New York State Thruway Auth., 177 AD2d 762, 763 [3d Dept 1991], affd 81 NY2d 721 [1992]; Suarez v State of New York, 193 AD2d 1037, 1038 [3d Dept 1993]).

Pursuant to Court of Claims Act § 11(c), however, any such defect is waived unless it is raised with particularity as an affirmative defense, either by motion to dismiss prior to service of the responsive pleading, or in the responsive pleading itself (see Knight v State of New York, 177 Misc 2d 181, 183 [Ct Cl 1998]).

Defendant asserts it received Claimant HCS’ Notice of Intention to File a Claim on December 22, 2003 (see Ex. F attached to 2007 Reger Affidavit). HCS thereafter filed the HCS Claim with the Clerk of the Court, and served it upon the Defendant on July 15, 2004 (see Ex. A attached to 2007 Reger Affidavit) .

Defendant, in the State’s HCS Answer, stated its first two affirmative defenses as follows:
AS A FIRST AFFIRMATIVE DEFENSE TO THE CLAIM, THE STATE OF NEW YORK ALLEGES:

NINTH: The Notice of Intention alleged in the above-captioned Claim and found as an exhibit to the Claim does not meet the requirements of § 11 of the Court of Claims Act with reference to the Claim as presented to the Court of Claims.

TENTH: The above-captioned [C]laim has not been filed within the time limits of § 10, subdivision 4 of the Court of Claims Act, and is therefore untimely.

AS A SECOND AFFIRMATIVE DEFENSE TO THE CLAIM, THE STATE OF NEW YORK ALLEGES:

ELEVENTH: Realleges the Ninth and Tenth paragraphs of this Answer as if fully set forth and alleged herein.

TWELFTH: The Court of Claims lacks jurisdiction over the above-captioned [C]laim.
Thus, the question posed is whether Defendant raised its affirmative defense with sufficient particularity to preserve it pursuant to Court of Claims Act § 11(c).

Judge Leonard Silverman of this Court set forth a concise summary of what “particularity” must mean in this situation in Fowles v State of New York (152 Misc 2d 837, 840 [Ct Cl 1991]):
For a statement to be sufficiently particular it must give notice of the transaction or occurrence intended to be proven and the material elements of it (CPLR 3013; Meese v Miller, 79 AD2d 237). The primary purpose of a pleading is to advise the adverse party of a claim or defense (Lane v Mercury Record Corp., 21 AD2d 602, affd 18 NY2d 889). The pleading must provide notice and not be just a label (Huntington Utils. Fuel Corp. v McLoughlin, 45 Misc 2d 79). A pleading must allege facts (Melito v Interboro-Mutual Indem. Ins. Co., 73 AD2d 819). The mere allegation of a legal conclusion in an affirmative defense is insufficient (Griffo v Tauriello, 23 Misc 2d 430).
Judge Silverman continued: “[a] claimant should not be left in a quandary to determine what an affirmative defense is referring to” (id.). In the Court’s view, Defendant has failed to allege sufficient facts to provide notice to Claimant HCS as to how it failed to comply with the filing and service requirements of Court of Claims Act §§ 10(4) and 11.

The language quoted above from the State’s HCS Answer, raised in the appropriate pleading, states only the statute relied upon, Court of Claims Act § 11. However, it does not set forth the nature of the defense, i.e. whether the Notice of Intention was untimely or improperly served pursuant to Court of Claims Act § 11(a)(i), or whether the document failed to meet the particularity requirement of § 11(b). Likewise, it does not set forth the required time period, though it alludes to the applicable paragraph (4) of Court of Claims Act § 10. The Court finds that the State’s HCS Answer fails to state the claimed defect with the requisite particularity to satisfy Court of Claims Act § 11(c). The statement that the Notice of Intention did not meet the requirements of Court of Claims Act § 11 did not, by itself, provide notice to Claimant HCS of the claimed defect.

The Court finds and concludes that the first and second affirmative defenses in the State’s HCS Answer were not raised with the particularity required by Court of Claims Act § 11(c), did not preserve the defense of lack of jurisdiction, and, thus, that the defense of lack of jurisdiction has been waived. Accordingly, the State’s motion to dismiss on this basis is denied and the motion by HCS to dismiss the first and second affirmative defenses is granted.

Assuming, arguendo, that the first and second affirmative defenses were raised with the requisite particularity, the State’s motion still would be denied. The Notice of Intention advised the State that HCS intended to serve and file a claim alleging breach of contract and provided the contract number and the alleged date of accrual. The Court finds and concludes that the Notice of Intention met the requirements of Court of Claims Act § 11(b) and provided sufficient information to “enable [defendant] to investigate the claim and promptly ascertain the existence and extent of its liability” (Czynski v State of New York, 53 AD3d 881, supra at 882, quoting Riefler v State of New York, 228 AD2d 1000, supra at 1001).
Claimants’ Request to Strike Affidavits
Before considering the remaining portions of the parties’ competing motions, it is necessary for the Court to address Claimants’ assertion that the State’s motion papers are procedurally and substantively flawed. Claimants assert that the Affidavits of Jason A. Penge and W. Dennis Eryou should be stricken and that portions of the Affidavit of Richard E. Lasko also should be struck.

Claimants assert that the Court cannot consider Mr. Penge’s affidavit because he was not disclosed as either a fact or an expert witness. Claimants assert that they made a Demand for Expert Witness information pursuant to CPLR 3101(d) on June 17, 2005 (see Ex. 1 attached to February 14, 2008 Affirmation of Robert E. DiNardo in Opposition to State’s Motion [hereinafter, the 2008 DiNardo Affirmation]) and that Mr. Penge was not disclosed as an expert witness.

State’s counsel asserts, in his Affidavit dated May 15, 2008 [hereinafter, the 2008 Reger Affidavit], that Mr. Penge, in his affidavit, gives no opinion that would require specialized training, skill or expertise. Mr. Penge states his familiarity with the DOT records, contractual notice and record-keeping documents to be submitted by the contractor described in the contract provisions for construction of the Fuel Farm and then indicates if the documents were located in the DOT’s records (id., ¶ 6).

Counsel further avers:
7. The evidence offered by Mr. Penge is premised on the evidentiary foundation of CPLR Rule 4518 for the admission, or testimony about the absence of business records. Contractually required notice and record-keeping are information received in the normal course of DOT business in public improvement contracts. Notably, the project Engineer-in-Charge, Walter Greening, concurs with the absence of these records after reading Mr. Penge’s affidavit from his field experience with HCS as contractor for the project. [February 12, 2008] Greening Affidavit, ¶s 40 through 42.
(id., ¶ 7).

The Court accepts Defendant’s arguments with regard to Mr. Penge’s affidavit and the information contained therein. In addition, the Court has reviewed CPLR 3101(d)(i) and the cases upon which Claimants rely in their contention that Mr. Penge’s affidavit should be precluded. The Appellate Division, Second Department stated in Shopsin v Siben & Siben, (289 AD2d 220, 221 [2001]):
CPLR 3101(d)(1)(i) “does not require a party to respond to a demand for expert witness information ‘at any specific time nor does it mandate that a party be precluded from proffering expert testimony merely because of noncompliance with the statute’, unless there is evidence of intentional or willful failure to disclose and a showing of prejudice by the opposing party” (Cutsogeorge v Hertz Corp., 264 AD2d 752, 753-754 [internal quotation marks omitted]; see also, Blade v Town of N. Hempstead, 277 AD2d 268; McCluskey v Shapiro, 273 AD2d 284; Aversa v Taubes, 194 AD2d 580).
Here, the Court finds that Claimants have failed to establish intentional or willful failure to disclose or a showing of prejudice. The Court, therefore, will consider Mr. Penge’s affidavit.

Claimants also seek to strike the November 28, 2007 Affidavit of N. Dennis Eryou (hereinafter, the Eryou Affidavit) and portions of the February 14, 2008 Affidavit of Richard E. Lasko (hereinafter, the Lasko Affidavit).

Mr. Eryou is an engineer licensed to practice engineering in New York and 22 other states and the province of Ontario, Canada. Mr. Eryou states he is the principal of a firm that specializes in the design, construction and planning of airport fueling facilities (Eryou Affidavit, ¶ 1). He avers he has over 20 years experience in the complete design of airport fuel storage facilities and has become familiar with the electrical design and operational requirements for jet fuel storage and dispensing systems (id., ¶ 2).

Mr. Lasko is an electrical engineer with over 30 years’ experience in the design and construction of electrical systems (Lasko Affidavit, ¶ 1). Mr. Lasko states that in 1999 he was employed by Tri-State Planning Engineers (TSPE), an engineering consulting firm, and that TSPE was a sub-consultant to TAMS, Inc. for the Fuel Farm for inspection and other services in connection with construction of the Fuel Farm (id., ¶ 2).

Claimants’ counsel assert in their Reply Memorandum of Law, dated May 15, 2008 (hereinafter, Claimants’ Reply Memorandum of Law), that the Eryou Affidavit should not be considered because the State did not disclose him in response to Claimants’ request for expert witness information pursuant to CPLR 3101(d). In addition, counsel assert that Mr. Eryou lacks the appropriate background to give an opinion. Counsel state that Mr. Eryou gives a legal opinion, not an engineering opinion. In addition, they assert that portions of the Lasko Affidavit should be stricken as incompetent and improper because the eighth paragraph of his Affidavit is identical to paragraph 15 of the Eryou Affidavit. They further assert that paragraph 7 of Mr. Lasko’s Affidavit should be stricken because he provides a legal conclusion without setting forth his legal expertise or the basis for his conclusion. Counsel seek to strike several other paragraphs of the Lasko Affidavit based upon the language he employs.

Defendant contends that Mr. Eryou possesses the requisite skill, training and experience to give opinions on the issues in the claims and that there will be no prejudice to Claimants if the Eryou Affidavit is considered (2008 Reger Affidavit, ¶¶ 8-9, 11). Defendant further asserts that the fact that Mr. Eryou and Mr. Lasko rely on the same contractual provisions in formulating their respective expert and factual conclusions simply underscores the importance of those provisions (id., ¶ 13).

For the reasons set forth above with respect to Claimants’ request to strike Mr. Penge’s Affidavit based upon an alleged failure to comply with CPLR 3101(d), the Court denies the request to strike Mr. Eryou’s Affidavit.

One testifying as an expert “should be possessed of the requisite skill, training, education, knowledge or experience from which it can be assumed that the information imparted or the opinion rendered is reliable” (Matott v Ward, 48 NY2d 455, 459 [1979]; see Prince, Richardson on Evidence, § 7-304 [Farrell 11th ed]). The expert is not bound “by a single verbal straightjacket” in expressing his or her conclusions, but rather, can formulate an opinion in any manner that conveys “an acceptable level of certainty” (Matott v Ward, 48 NY2d 455, supra at 459-460). Thus, the Court of Appeals instructs that, when a court considers an expert’s opinion testimony, it should focus on the totality of the testimony and consider whether the expert conveyed “assurance that it [the opinion] was not based on either supposition or speculation” (Matott v Ward, 48 NY2d 455, 463, supra). The Court finds that the affidavit submitted by Mr. Eryou meets the above test and the Court will not strike his affidavit as requested by Claimants. The Court will determine the weight to be given to each expert’s opinion (Felt v Olsen, 51 NY2d 977 [1980]; Prince, Richardson on Evidence, § 7-305[Farrell 11th ed]). The Court, likewise, rejects Claimants contention that portions of Mr. Lasko’s affidavit should be stricken as being incompetent and improper. The Court will determine the weight to be given his affidavit.
Claimants’ Claims to Be Paid for Extra Work and Delay Costs
The State seeks dismissal of the fourth and fifth causes of action asserted by HCS. The fourth cause of action seeks $1,845,593.40 for extra and additional work. The fifth cause of action seeks $962,251.05 for delay costs. Claimants, by contrast, seek to strike the third, fourth and fifth affirmative defenses raised by the State in its HCS Answer, the sixth, seventh and eighth affirmative defenses raised by the State in its National Grange Answer, and seek summary judgment as to liability regarding the fourth and fifth causes of action in the HCS Claim.

Each of the above-referenced cross-motions is denied because material questions of fact exist. Perhaps the most fundamental questions to be resolved are: whether or not the parties agreed to an alternative method for keeping track of time, materials and equipment that would be used to establish compensation in connection with extra or disputed work; if so, did those practices supersede the notice and record keeping requirements set forth in the contract documents; did HCS, in any event, attempt to invoke the dispute resolution provisions of the contract documents, but was told that such issues would be resolved at the end of the project; and did the State, as a result of the foregoing, waive compliance with those contractual provisions? Other material questions include, but are not limited to: whether the “no damage for delay” provision in Article 13 of the Agreement and/or the terms of Section 109-05(D) of the Standard Specifications (defined below) bar or limit compensation for some items claimed by Claimants; if so, were there extenuating circumstances, such as bad faith behavior on the part of Defendant, or uncontemplated delays, that, nevertheless, might permit recovery by Claimants; did the State improperly withhold permission to flush the Fuel Farm system; if so, did that constitute a breach of contract; were additional state and federal permits required in order to flush the Fuel Farm; if so, which party was responsible for obtaining them; at all pertinent times was there a fixed base operator to whom the Fuel Farm could be turned over after the project was completed; and did airport privatization efforts by the State delay the project?

In the State’s HCS Answer, Defendant raised as the third affirmative defense:
THIRTEENTH: Claimant has failed to dispute the extra or additional work claimed as required by § 105-14 of the Department of Transportation Standard Specifications, January 2, 1990 Edition, Addendum number 1 adopted November 18, 1993 under the terms of its contract with the State of New York.

FOURTEENTH: Claimant has therefore waived its claim against the State of New York.
In the State’s National Grange Answer, Defendant raised the same objection as its sixth affirmative defense and further asserts, therefore, that to the extent National Grange claims monies paid to its principal, HCS, for alleged extra or additional work, or for monies National Grange paid or incurred on its own account under the contract, the claims of National Grange have been waived on account of the failure by HCS to dispute the extra or additional work, as described above (State’s National Grange Answer, ¶¶ Twenty-Seventh, Twenty-Eighth).

In the State’s HCS Answer, Defendant raised as the fourth affirmative defense:
FIFTEENTH: Claimant has failed to keep and maintain sufficient force account and other records as required by § 109-05 of the Department of Transportation Standard Specifications, January 2, 1990 Edition, and its Addendum number 1 adopted November 18, 1993, under the terms of its contract with the State of New York.

SIXTEENTH: Claimant has therefore waived its claim against the State of New York.
In the State’s National Grange Answer, Defendant raised the same objection as its seventh affirmative defense and further asserts, therefore, that, to the extent National Grange claims monies paid to its principal, HCS, for alleged extra or additional work, or for monies National Grange paid or incurred on its own account under the contract, the claims of National Grange have been waived on account of the failure by HCS to keep and maintain sufficient force account and other records, as described above (State’s National Grange Answer, ¶¶ Twenty-Ninth, Thirtieth).

In the State’s HCS Answer, Defendant raised as the fifth affirmative defense:
SEVENTEENTH: This claim is, in whole or in part, barred by the terms and conditions of Article 13 of the Agreement between the parties entitled “Delays, Inefficiencies and Interferences”, and the related provisions of the Department of Transportation Standard Specifications, January 2, 1990 Edition, and its Addendum number 1 adopted November 18, 1993, under the terms of its contract with the State of New York.
In the State’s National Grange Answer, Defendant raised the same objection as its eighth affirmative defense (State’s National Grange Answer, ¶ Thirty-First).

The original Agreement provided for a contract price of $3,437,907.29 and for HCS to complete the work on or before July 31, 1999 (see 2007 Penge Affidavit, ¶ 3, and Ex. A attached thereto [copy of executed Agreement]). According to Jason A. Penge, DOT’s Claims Engineer during the course of performance of the work by HCS, DOT issued 14 orders on contract[2] increasing the contract price by the net sum of $1,548,890.68 and extending the project completion dated without assessment of charges to HCS until December 31, 1999 and, thereafter, to December 31, 2003 with engineering and inspection charges assessed (2007 Penge Affidavit, ¶ 4). Harry C. Serviss, President of HCS, avers that DOT paid HCS $2,135,485.81 on 14 COs (see August 27, 2007 Affidavit of Harry C. Serviss in Support of Claimants’ Motion [hereinafter, the 2007 Serviss Affidavit], ¶ 9).

Mr. Penge avers that Article 1 of the Agreement, inter alia, required HCS to complete the work at the Fuel Farm project as specified and in accordance with: (1) DOT’s Standard Specifications of January 2, 1990 (hereinafter, the DOT Standard Specifications, excerpts of which are attached to the 2007 Penge Affidavit as Ex. B); (2) Addendum No. 1 to the DOT Standard Specifications adopted November 18, 1993 (hereinafter, Addendum No. 1, excerpts of which are attached to the 2007 Penge Affidavit as Ex. C); (3) the contractor’s proposal (hereinafter, the Proposal, which is attached to the 2007 Penge Affidavit as Ex. D) (hereinafter, the Agreement, the DOT Standard Specifications, Addendum No. 1, the Proposal, together with the contract plans, collectively are referred herein to as the Contract Documents) (2007 Penge Affidavit, ¶ 5).

Section 101-24 of the DOT Standard Specifications defines “Extra Work” as “[a]n item, of work not provided for in the contract as awarded but found essential to the satisfactory completion of the contract within its intended scope.” Section 104-03 of the DOT Standard Specifications provides that DOT may add such items of Extra Work to the contract by issuing a CO, and that the contractor is obliged to perform such Extra Work. Whenever the contractor believes that it is, or will be, entitled to additional compensation because: DOT directed it to do Extra Work; DOT directed it to do work pursuant to the Contract Documents (hereinafter, Contract Work) that the contractor asserts is, in actuality, Extra Work (hereinafter, Disputed Work); or that delays, breach of contract or other causes have occurred, then the Contract Documents include dispute resolution provisions, pursuant to which the contractor may be able to receive additional compensation (see §§ 105-14, 109-05 and 109-16 of the DOT Standard Specifications, as applicable and amended by Addendum No. 1 and/or the Proposal). Section 105-14 of Addendum No. 1 provides, however, that “[i]f the contractor fails to comply with the requirements of this section [concerning dispute resolution and prescribed notifications and record keeping, then], any claim of the contractor with respect thereto shall be deemed waived” (see 2007 Penge Affidavit, Ex. B, p. 1-10).

Section 105-14 contains several subdivisions. As pertinent here, subdivision (A) deals with time related disputes arising from any event not within the contractor’s control that affects its ability to perform according to schedule (hereinafter, a Time Related Dispute) and subdivision (C) deals with Disputed Work. The provisions of § 105-14(A) require, generally, that the contractor notify the engineer-in-charge of the project (hereinafter, EIC), in writing, within ten days after the contractor has knowledge, or should have had knowledge, of any Time Related Dispute for which it believes that it is or will be entitled to additional compensation. It further provides that the EIC shall make the initial determination in writing on the dispute and that, if the contractor wishes to appeal an unsatisfactory decision by the EIC, it shall provide written notice to the Regional Director of DOT within ten days after receipt of such EIC determination. Thereafter, if the contractor wishes to appeal an unsatisfactory decision by the Regional Director, it shall provide written notification to the DOT Commissioner within ten days after receipt of the Regional Director’s determination. Section 105-14(C) sets forth virtually identical written notice requirements as § 105-14(A) to govern Disputed Work claims.

After the contractor has provided the requisite notice to the EIC as to the existence of a Time Related Dispute or Disputed Work, it must keep daily records of labor, material and equipment utilized on the disputed work. With respect to Time Related Disputes, § 105-14(A) requires that the contractor present those daily records to the EIC on a weekly basis. The items for which Time Related Dispute compensation is available are enumerated in § 109-05(D). As for Disputed Work, § 105-14(C) requires that the contractor furnish such records to the EIC in the form of daily Force Account Reports and § 109-05(C) sets forth the information that is to be provided in each such summary. Section 109-05(E) provides additional information that must be included in each dispute submission to the EIC. With respect to any dispute over $50,000.00, the contractor also must submit certain certifications pursuant to § 109-05(F).

The fourth cause of action of the HCS Claim enumerates twenty-seven items of Disputed Work that HCS alleges to be Extra Work for which it was not paid, in a total amount of $1,845,593.40 (HCS Claim, ¶ 26). Mr. Penge asserts in his affidavit that he reviewed the project records and found that, for most of the claimed items of Extra Work in paragraph 26 of the HCS Claim, HCS failed to provide either the written notices required by § 105-14(C) or submit any of the required daily cost records or labor summaries required by § 109-05(C) during the course of the project (2007 Penge Affidavit, ¶ 16). Mr. Penge further asserts that National Grange, as surety for HCS, failed to provide the requisite notice or cost records for those items (id.).

With respect to the remaining items of Extra Work alleged in paragraph 26 of the HCS Claim, Mr. Penge asserts that the Extra Work claims were denied by the EIC and/or the Regional Director, and/or that HCS failed to answer DOT requests for additional information, and, in any event, that they also were instances in which HCS failed to provide the requisite notice or cost records (2007 Penge Affidavit, ¶¶ 17-29).

Regarding HCS’ fifth cause of action, that it incurred delay costs, Mr. Penge asserts that HCS failed to comply with the appropriate notice and record-keeping provisions of the contract, §§ 105-14(A) and 109-05(D) and (E) (2007 Penge Affidavit, ¶¶ 31-33). He further asserts that “strict compliance” with such provisions is “an essential precedent condition” to any recovery for a Time Related Dispute (id., ¶ 34). Mr. Penge refers to a letter dated July 10, 2002 from Mr. Serviss to Walter Greening, EIC of the project at that time (2007 Penge Affidavit, ¶¶ 35-36, Exs. AA, BB). Mr. Serviss’ letter encloses a copy of a “delay claim dated December 21, 1998 addressed to Mr. Philip J. Clarke, Regional Director.” Mr. Penge avers that the letter establishes that HCS did not follow the appropriate notice requirements of the Contract Documents because the initial notice of a delay claim was required to be given to the EIC, not DOT’s Regional Director. In addition, Mr. Penge asserts that National Grange, as surety for HCS, failed to submit any Time Related Disputes or provide any records pertaining to such a claim (2007 Penge Affidavit, ¶ 36). Finally, Mr. Penge asserts that, pursuant to the provisions of § 109-05(D), HCS waived any right to present claims for certain items, including labor inefficiencies and lost productivity, consequential damages including interest on monies in dispute (including interest paid on such monies), indirect costs, and attorneys’ fees or claims preparation costs. Mr. Penge avers that such waiver would preclude the damages sought with respect to several of the items of delay, attorneys fees and arbitration costs, that Claimants allegedly incurred, and that recovery with respect to other items are limited by the “Remedies Exclusive” clause of § 109-05(D) (2007 Penge Affidavit, ¶ 37; see HCS Claim, ¶ 35).

In opposition to Defendant’s motion and in support of Claimants’ own motion seeking (1) dismissal of the third, fourth and fifth affirmative defenses raised in the State’s HCS Answer, (2) dismissal of the sixth, seventh and eighth affirmative defenses raised in the State’s National Grange Answer, and (3) for summary judgment in its favor, HCS submitted the affidavit of its president, Harry C. Serviss. Mr. Serviss avers that, at a pre-construction meeting held on June 22, 1998, he advised DOT representatives that there were problems with the bid documents prepared by STV on behalf of the State (2007 Serviss Affidavit, ¶ 4). Mr. Serviss states that HCS was directed by DOT representatives “to proceed diligently with the work and [they] assured me that they would ‘work with me’ as may be necessary in order to compensate HCS for the plans and bid document problems which I raised” (id., ¶ 5). Mr. Serviss further avers that the negotiated “Agreed Price” methodology of performing Extra Work set forth in the Standard Specifications “was not practical because of the need to prepare revised plans and recalculate quantities ‘on the fly’ as construction advanced. This is commonly known as a ‘design build’ [project]” (id., ¶ 6).

Mr. Serviss further states that the “Force Account” provisions of the Standard Specifications for Extra or Disputed Work, likewise, were not practical. He states that “[t]he large amount of anticipated additional work and Mr. Greening’s advice to the effect that the Force Account procedure would significantly delay payment, for as long as a year, precluded HCS from proceeding on a Force Account basis” (id., ¶ 7). Mr. Serviss continues:
8. Accordingly, [i]n June 1998, Mr. Greening and I agreed to follow an alternate method of handling the anticipated additional or extra work. We agreed that we would each keep track of the time, materials and equipment devoted to the additional work as the work progressed. Once the work was completed we would use our respective records of extra time, materials and equipment to negotiate an “agreed price.” The State would then prepare an Order on Contract, which is its methodology for approving extra work, as if an “agreed price” arrangement had been reached prior to the work being done.
Mr. Serviss states that, in December 1999, Mr. Greening, the EIC, insisted for the first time that the Force Account provisions of the contract be followed (id., ¶ 17). Mr. Serviss also asserts that he made several attempts to invoke the dispute resolution provision of the Contract Documents, but EIC Greening told him that such issues would be resolved, instead, at the end of the project (see id., ¶ 22).

Claimants’ Memorandum of Law asserts, at page 33:
The fourth affirmative defense related to the alleged failure to keep force account records should be dismissed because (1) DOT was in breach of the contract, failed to comply with its covenant of good faith and fair dealing, and should not be permitted to assert this defense; (2) the defense only applies to physical work performed by the contractor in the field and does not apply to the claimants’ claims for preparation of engineering plans, [Operations and Maintenance Support Information] documentation, and consulting services incidental to the claimants’ claim for this extra work; (3) the documentation provided by the claimants, while not utilizing the State’s forms, are in substantial compliance with the State’s record keeping requirements; and (4) the State is barred from asserting this defense based on principles of waiver and estoppel (footnote omitted).
Based upon the evidence submitted by the parties in support of and in opposition to the respective motions regarding the causes of action for Extra Work, Disputed Work, and Time Related Disputes, and the affirmative defenses raised by the State with regard to those causes of action, the Court concludes that material questions of fact exist which preclude the granting of summary judgment to Claimants or to Defendant.

A fundamental question of fact has been raised as to whether or not the State waived strict compliance with the notice and record-keeping provisions as set forth in Standard Specification §§ 105-14 and 109-05. Mr. Penge and Walter F. Greening, EIC of the project from June 4, 1998 until his retirement from DOT April 1, 2003, assert that the State did not waive them, that it required strict compliance with the notice and record-keeping requirements of the Contract Documents, and that HCS failed to follow the requirements. However, Mr. Serviss states that the State waived the notice and record-keeping requirements and that DOT advised HCS to do whatever was necessary to complete the job and that payment would be worked out later. In addition, Claimants assert that much of the Extra Work related to consulting services that are not governed by the requirements of § 109-05 (Claimants’ Memorandum of Law, p. 8).

Claimants also seek dismissal of the State’s fifth affirmative defense in its HCS Answer and the State’s eighth affirmative defense in its National Grange Answer, which allege that Article 13 of the contract bars claims based upon delay in whole or in part.

Pursuant to Article 13, which is captioned “Delays, Inefficiencies, and Interference,” the contractor agrees that it will not assert claims against the State for delays, inefficiencies, and interference in the performance of the Contract caused by certain acts or omissions of the State. Such provisions are generally referred to as “no damage for delay” clauses, and similar exculpatory clauses have been the subject of extensive litigation. In Corinno Civetta Constr. Corp. v City of New York, 67 NY2d 297, 309 (1986), the New York Court of Appeals stated that, even if a contract contains broadly worded exculpatory language, “damages 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.”

Claimants allege many instances where the State caused delays that were not contemplated and where the delays were so unreasonable that they constituted an intentional abandonment of the Contract by the State (see Claimants’ Memorandum of Law, p. 44). The State, on the other hand, contends that the delays were attributable to breaches of contract by HCS (Defendant’s Memorandum of Law in Opposition, pp. 22-41). Thus, the Court finds questions of fact exist as to who was responsible for such delays.

As stated above, the Court finds questions of fact exist relating to the extra work and delay causes of action of both Claimants. Therefore, the State’s motion to dismiss those causes of action is denied, and Claimants’ motion to strike the third, fourth and fifth affirmative defenses in the State’s HCS Answer, the sixth, seventh and eighth affirmative defenses in the State’s National Grange Answer, and to grant summary judgment to them on those causes of action, also is denied.

Defendant’s motion to dismiss, on the merits, HCS’ Extra Work claim for trench drains (see HCS Claim, ¶ 26[i]) is denied. A question of fact exists as to whether the Contract Documents contemplated that such work was to be paid per unit, as Defendant asserts, or by the linear foot, as HCS maintains (see Penge Affidavit, ¶¶ 24-26; Claimants’ Memorandum of Law in Opposition to Defendant’s Summary Judgment Motion, dated February 14, 2008, p. 10; Defendants’ Memorandum of Law, dated August 27, 2007, p. 9).

Claimants seek partial summary judgment: (1) for a determination that DOT was in breach of contract by not allowing HCS to flush and test the system in the Summer of 2000 after the over-spray condition was corrected; (2) to dismiss each of Defendant’s counterclaims; and (3) to dismiss Defendant’s affirmative defenses (see Claimants’ Memorandum of Law, p. 1).

An airport fuel farm is essentially a very large gas station with holding tanks for fuel storage to service airplanes (see August 27, 2007 Affidavit of Michael Rowe in Support of Claimant’s [sic] Motion [Claimant’s Expert Engineer] [hereinafter the 2007 Rowe Affidavit], ¶ 6). The fuel is brought to the tanks by trucks and then pumped from the tanks to smaller trucks that deliver the fuel to the aircraft. The fuel lines are required to be flushed and tested after the various component parts of the system are tested, after which the system is “commissioned,” meaning it is certified for service. The system is flushed and tested by putting Jet-A fuel in the tanks and then circulating the fuel through the system. “This process allows the contractor and the owner to determine whether the pumps, gaskets, filters and other devices that comprise the fuel system are working properly and to clean construction debris, rust, paint and water from the line” (2007 Rowe Affidavit, ¶ 9).

Claimants contend that the State breached the contract by refusing to: (1) pay HCS for point-to-point wiring diagrams and for additional Operations and Maintenance Support Information (hereinafter, OMSI) manual preparation; (2) allow HCS to flush the Fuel Farm in the summer of 2000; and (3) make additional progress payments, including pay estimate 34 (Claimants’ Memorandum of Law, p. 10).

Mr. Rowe asserts that, as he has “observed” the contract and that “point to point” wiring diagrams were only required with regard to the motor control center (hereinafter, MCC), although the State demanded them for the entire electrical wiring system for the rest of the terminal. He further asserts that was not a condition precedent that HCS had to fulfill prior to flushing (2007 Rowe Affidavit, ¶¶ 16-17). Moreover, he asserts that the elementary or ladder drawings issued by the owner provided a greater degree of functionality for the purpose of maintenance, repair and troubleshooting than did the “point to point” drawings required by DOT (id., ¶ 20) and that the elementary drawings satisfied the contract documents and industry standards relative to the electrical plans required to be provided by the contractor and could have been modified later in the project to satisfy all contractual needs (id., ¶ 21).

Mr. Rowe further avers that, based upon his experience in preparing and reviewing OMSI manuals during his construction of fuel farms, completion of OMSI manuals generally are not a condition precedent that a contractor must meet prior to flushing the system and that, under the terms of the contract at issue as he “observed” it, completed OMSI manuals were not a condition precedent that HCS had to fulfill prior to flushing (id., ¶¶ 23 and 24).

Mr. Rowe also states that, based upon his review, the OMSI manual that was required pursuant to the Contract Documents had been prepared by HCS’ subcontractor, Safe, and was submitted and approved by DOT prior to May 2000 and, further, that the manual provided by Safe satisfied the OMSI manual requirements of the contract and the customary practices in the industry (id., ¶¶ 26 and 27).

Mr. Rowe states that, on the day preceding the scheduled flushing of the system in May 2000, a paint over-spray condition was discovered in one of the tanks, which resulted in DOT cancelling the flushing. The painting contractor returned to the site and corrected the over-spray problem within two months (id., ¶ 34). According to Mr. Rowe, at that time and upon each subsequent request by HCS, DOT refused to allow HCS to flush the system, giving the reason that HCS had “to meet such conditions as acceptance of point to point drawings and additional OMSI Manuals” (id., ¶ 35). Mr. Rowe also avers that DOT failed to obtain necessary permits for the flushing of the Fuel Farm in May 2000 and thereafter (id., ¶ 39[D]).

In opposition to Claimants’ motion, the State submitted affidavits from several people. John Hannah is an electrical engineer who has been employed by STV, Inc. for the last 16 years and is currently its Assistant Chief Electrical Engineer. He avers that, as a supervisor of the STV Electrical Department, he was a resource to the project management team during the construction phase of the Fuel Farm (February 14, 2008 Affidavit of John Hannah [hereinafter, the Hannah Affidavit], ¶¶ 1 and 2). Mr. Hannah disagrees with Mr. Serviss’ statement that this was a “design build” project. According to Mr. Hannah, the contract documents did not give the contractor any design responsibility (id., ¶ 3). He further avers that the Fuel Farm was not ready for commissioning because the wiring was not complete as the elementary drawings that were submitted were not accurate or complete (id., ¶ 10). Mr. Hannah further states that the OMSI manuals prepared by HCS were incomplete (id., ¶ 11).

Jeanne L. Hewitt has been the Head of the Hazardous Waste/Groundwater Section of DOT’s Environmental Science Bureau since 1992 (February 13, 2008 Affidavit of Jeanne L. Hewitt [hereinafter, the Hewitt Affidavit], ¶ 1). Ms. Hewitt avers that she is aware that Claimants contend it was DOT’s responsibility to obtain permits for the Fuel Farm prior to operation, including a State Pollution Discharge Elimination System (SPDES) permit and completion of a Spill Prevention and Countermeasures Control (SPCC) plan for the facility (id., ¶ 3). She avers: that SPDES permits are under the jurisdiction of the New York State Department of Environmental Conservation (DEC); that DOT had a SPDES permit that covered all facilities and operations at Stewart Airport as a single discharge source prior to construction of the Fuel Farm; and that the new Fuel Farm only needed to be added to the existing permit (id., ¶ 4). Ms. Hewitt states that the new Fuel Farm was added to the existing SPDES permit on May 10, 2001, effective December 1, 2001 (id., ¶ 5).

Ms. Hewitt also avers that a SPCC plan is not a permit. Rather, it is a plan containing operating procedures designed to prevent spills and control measures to ensure that any such spills are contained, cleaned up and rapidly mitigated (id., ¶ 9). She states that, for facilities placed in operation prior to August 16, 2002, the applicable Federal regulations did not require a SPCC plan to be in place during construction or pre-operational testing (id., ¶ 10).

Richard E. Lasko avers that he began work on the Fuel Farm project in February 1999, was involved with the project until the project was completed in 2005, and that his duties included review of HCS’ submittals for equipment, shop drawings, “as-built” drawings for all systems and OMSI manuals before submission of these documents for review and approval by STV, the designer of the project (Lasko Affidavit, ¶ 3). Mr. Lasko avers that the contract required HCS to submit “as-built” drawings for the MCC (id., ¶ 5), and that the elementary drawings provided by STV showed the basic configuration of the electrical system required to be constructed, but provided no wiring information and, thus, could not be used as the required “as-built” diagrams to show the system as it was constructed (id., ¶ 6). Mr. Lasko asserts that the need to submit “as-built” wiring diagrams in “point-to-point” format to show that information comes from several contract requirements (id., ¶ 7).

In ¶ 8 of his affidavit, Mr. Lasko states:
8. While the [OMSI] requirements found in Item 27676.0600 of the proposal specifies information to be submitted for an enumerated list of mechanical equipment, these requirements are not limited to the mechanical systems expressly listed, but may be read to include the related or connecting electrical aspects of each system. For example, the All Level Alarm Systems specification requires the contractor to provide:

Control wiring diagrams showing all terminations of conductors (and all control devices) labeled to permit identification in the field; part numbers of all control devices; normally open or closed; voltage of all components.

Item 3g, page 6 of 13. The above description is not a ladder or logic diagram but rather a point-to-point diagram. Similar wiring diagram requirements are found in the OMSI specifications for Ball Valves, (item 4g, page 7 of 13), and for All Pumps (item 9f, page 9 of 13) (emphasis added).
(see also Eryou Affidavit, ¶ 15).

Mr. Eryou offers his opinion that the point-to-point drawings DOT requested were contractually required for construction of the Fuel Farm based upon the wiring systems specification section of the contract proposal (attached to his Affidavit as Ex. B [Eryou Affidavit, ¶¶ 8 and 9]).

Mr. Eryou states in ¶ 12 of his Affidavit:
12. The electrical drawings for the Stewart Fuel Farm project contain two sheets of drawings with General Notes applicable to the construction of the entire electrical system. A note on plan sheet 54, excerpt showing the full note attached as Exhibit “D”, requires the contractor to provide:

Field installation drawings, with the notation “As Built” stamped and dated thereon for a complete installation, edited on a daily basis. Drawings shall be of a size and scale as directed by NYSDOT and shall be based on drawings generated in computer format, utilizing a[n] industry standard software medium (Autocad, Intergraph, etc.) as directed by NYSDOT. Quantities of hard copy materials shall not be less than four completed sets.

In my opinion, again based on design and construction experience, this drawing note, together with the wiring diagram submittal note quoted above, require the contractor for the Southwest Quadrant Fuel Farm at Stewart Airport to continually provide daily “as built” diagrams for all electrical installations showing connecting wiring between the individual systems or devices in “point-to-point” format, including any changes in wiring as construction progresses.
Defendant has also submitted an Affidavit from EIC Walter F. Greening, a licensed engineer who was employed by DOT for 32 years prior to retiring on April 1, 2003 (February 12, 2008 Affidavit of Walter F. Greening [hereinafter, the 2008 Greening Affidavit], ¶ 1). Mr. Greening avers that fuel for flushing the system was available in May 2000, to be provided by World Wide Flight Services, a Fixed Base Operator (hereinafter, FBO) at Stewart Airport at that time (id., ¶ 31), and that there was no provision in the contract that required DOT or the State to obtain any environmental permits for construction of this Fuel Farm (id., ¶ 32). Mr. Greening asserts that § 107-01 of the Standard Specifications requires the contractor to “observe all applicable governmental laws, rules and regulations, with the contractor agreeing ‘to procure all necessary licenses and permits’” (id.).

The Court finds, based upon all the affidavits and exhibits presented on Claimants’ motion for summary judgment, that material questions of fact exist regarding what was required of each party pursuant to the contract and which party was responsible for any breach of the contract.

In his affidavit, Mr. Lasko avers that the OMSI requirements found in the contract are not limited to the mechanical systems expressly listed “but may be read to include the related or connecting electrical aspects of each system” (Lasko Affidavit, ¶ 8). Claimants’ argue that if the contract requirements may be read to include the electrical aspects, then they also may be read not to include those electrical aspects, and a question of contract interpretation exists (Claimants’ Reply Memorandum of Law, dated May 15, 2008, pp. 6, 10).

In addition, Mr. Eryou and Mr. Lasko aver in their affidavits that point-to-point wiring drawings were required based upon their interpretation of the contract, while Mr. Rowe asserts elementary drawings are sufficient. Both sides assert their characterization of the contract is correct.

With regard to the SPDES permit, Ms. Hewitt asserts in her affidavit that the SPDES permit which was in place for Stewart Airport was sufficient. Mr. Rowe asserts that the SPDES permit had to “explicitly [call] out the location of the outfall for [this] fuel farm” (May 14, 2008 Affidavit of Michael Rowe [hereafter 2008 Rowe Affidavit], ¶ 29). In addition, Mr. Rowe asserts that “HCS asked for proof of the existence of the appropriate SPDES permits and the associated SPCC plans from defendant State of New York and it repeatedly replied that the permits were pending or ‘in the works’” (id., ¶ 30). Thus, the Court finds a question of fact exists as to whether the appropriate permits were in existence at the time HCS was prepared to flush the system since Ms. Hewitt stated in her affidavit that the Fuel Farm was added to the SPDES permit on May 10, 2001, which was well after the original date for flushing was postponed because of the paint issue.

Claimants also contend that the State withheld its permission to flush the Fuel Farm because of: the State’s efforts to privatize the airport; declining utilization of the facility; and the lack of a fixed base operator (FBO) (Claimants’ Memorandum of Law, pp. 20-22). Patricia J. Snyder, DOT’s coordinator for the airport’s privatization counters that there was at least one FBO on site at all relevant times, that funding was not an issue and that Jet-A fuel was available (February 14, 2008 Affidavit of Patricia J. Snyder, ¶¶ 1, 5-6, and 9-10).

The Court concludes that a material question of fact exists as to what caused the flush of the Fuel Farm to be delayed in May 2000. Was it (1) a poor paint job by HCS’ subcontractor; (2) electrical problems; (3) lack of an OMSI manual; (4) lack of SPDES permit; (5) a combination of the above; or (6) something else? Thus, Claimants’ motion seeking summary judgment in its favor is denied.
State’s Counterclaims, Other Affirmative Defenses
The Court, likewise, determines that the same questions of fact concerning which party was responsible for delays in flushing the system, as well as other alleged delays, requires that Claimants’ motion to dismiss the State’s counterclaims be denied. Finally, neither party addressed in any detail the State’s first through fifth affirmative defenses in its National Grange Answer and, thus, Claimants’ motion to dismiss them is denied.
National Grange Claim for Attorneys’ Fees
The Court now turns to that portion of the State’s motion which seeks dismissal of that portion of National Grange’s Claim seeking attorney’s fees.

Defendant asserts that National Grange’s list of damages contains 24 entries for services provided by Neil B. Connelly, Esq., attorney of record for National Grange (see 2007 Reger Affidavit, ¶ 13, Exs. J and D attached thereto). The State asserts that there is no common law or statutory right to an award of attorney’s fees as sought by National Grange (see Vernooy v State of New York, 135 Misc 2d 79, 82 [Ct Cl 1987]; Court of Claims Act § 27).

Defendant argues that the performance and payment bonds issued by National Grange to the State on behalf of HCS contain some basis for fees to be recovered by the State, but makes no provision for the surety to recover fees against the State (Defendant’s Memorandum of Law in Support of Motion, dated August 27, 2007, p. 11).

In opposition, National Grange asserts that the State’s actions with regard to the construction of the Fuel Farm demonstrates a malicious intent to damage HCS and that the State has acted in bad faith. According to National Grange, under these facts, the recovery of attorney’s fees as consequential damages is permitted (Claimants’ Memorandum of Law in Opposition to Defendant’s Summary Judgment Motion, dated February 14, 2008 [hereinafter, Claimants’ Memorandum of Law in Opposition], pp. 30-32).

In Claimants’ Memorandum of Law in Opposition, counsel asserts at page 32:
In United Pickle v. Omanoff, 63 A.D.2d 892 (1st Dept. 1978), the Court stated the right of such recovery this way:

Nevertheless we see no impediment here to the recovery of attorneys fees, as damages, for malice is the gravamen of the conspiracy appellant was found to have been engaged in. (Mastic Fuel Service Inc. v. Van Cook, 55 A.D.2d 599 [2d Dept. 1976]). He intentionally sought to inflict economic injury on respondents by forcing them to engage legal counsel. This was an actionable wrong. The fact that the devices he utilized to harass and oppress them were legal procedures does not relieve him from liability for those legal fees, (cf. Bd. of Educ. v. Farmingdale Classroom Teachers Asso., 38 N.Y.2d 397, 406 [1975]), since they constitute respondents’ harm. To be recoverable those damages must have been proximately related to the malicious acts and the acts themselves must have been entirely motivated by a disinterested malevolence . . . Id at 892-893.
Counsel concludes that that part of the State’s motion which seeks to preclude recovery of National Grange’s attorney’s fees must be denied due to the State’s “disinterested malice” which lead to engagement of counsel by National Grange as surety for HCS.

In reply, Defense counsel asserts that National Grange’s contention that it may obtain its counsel fees as damages in this litigation is premised upon the malicious conduct it ascribes to the State with respect to its principal HCS, and the surety. Counsel states that the National Grange Claim, however, is one only for breach of contract, does not allege any tortious or malicious conduct and that not even bad faith is alleged. Counsel asserts that the only proof of the malicious conduct said to support recovery of the cost of attorney time during the project is made in the affidavit of Neil Connelly, attorney for the surety, without specific proof of willful and intentional conduct toward either Claimant by Defendant. Defendant argues that only the “circumstantial” evidence alleged by Claimants, and which it asserts has been refuted by the State, may be said to pertain to those allegations (see Memorandum of Law in Reply to Claimants’ Opposition to the Motion by the State of New York for Summary Judgment dated May 15, 2008, pp. 10-11).

Defense counsel states:
In a case affirming denial of attorneys fees by the Court of Claims for wrongful withholding of monies, the Third Department observed:

It is true of course that in a limited class of cases counsel fees necessarily incurred may be recovered. Where the gravamen of an action is malice, as, for example, malicious prosecution or false arrest or imprisonment, the counsel fees necessarily incurred by the plaintiff in the former action are recoverable. In an action upon an undertaking for an injunction or attachment where the recovery of such damages is fairly contemplated by the statute and contract, in actions for breach of covenants of warranty and indemnity and in contempt proceedings, counsel fees are also recoverable.

Agostino vs. State
, Claim No. 24345, 255 AD 264, 268 (3rd Dept, 1938), citation omitted. The present claim by National Grange is not within the limited class of cases where the expense of counsel may be recovered. Even the United Pickle case cited by National Grange is not helpful to its argument, as malice is not the gravamen, let along mentioned at any point, in its claim. United Pickle Co. vs. Omanoff, 63 AD2d 892 (1st Dept, 1978), where the Appellate Division rejected an award of fees as damages because these damages must be proximately related to the malicious acts and the acts themselves must have been entirely motivated by a disinterested malevolence on [defendant’s] part. Emphasis supplied. In this case, apart from the lack of malice or conspiracy as the basis or allegations of the National Grange claim, National Grange acted as surety for HCS and attempted to negotiate settlement of the matters between the State and HCS as late as June 2003, having been involved in the project since 2001 when DOT first attempted to terminate HCS for lack of performance. These circumstances alone do not amount to actions by the State entirely motivated by a disinterested malevolence by the State against National Grange.
(id., p. 11, emphasis in original).

The State’s counsel further states that the expense of an attorney may be recovered in certain circumstances when the defendant’s breach of contract involved the plaintiff with a third party (see, e.g., Citibank v Chicago Title Insurance Company, 214 AD2d 212, 222 [1st Dept 1995], lv dismissed 87 NY2d 896 [1995], wherein, counsel asserts, the mortgagee was able to recover its fees necessary to obtain title priority as against counsel for the defendant title company under the contract for the mortgage). In the case of the National Grange Claim, however, Defendant contends that the relationship of National Grange to the State is “not one of any third-party nature, but entirely by contract in the classic ‘three cornered’ relationship between the surety, its principal, and the assured party” (id., p. 12). He asserts that, in a breach of contract action, counsel fees as damages may be awarded only if expressly provided for in the contract or by statute (Millman v Brownlee, 133 AD2d 221, 222 [2d Dept 1987]). He states that the bonds do not contain any provision for the State to make payment of attorney’s fees or expenses (id.). Both counsel for National Grange and the State state that HCS signed an agreement with National Grange that HCS would reimburse the surety for all costs and expenses, including attorney’s fees that the surety incurs by reason of claims filed against the bonds.

Here, there is no statutory or contractual authority for National Grange to recover attorney’s fees. The law is well settled that a civil litigant may not recover attorney’s fees in the absence of contractual or statutory authority (see Matter of Green [Potter], 51 NY2d 627, 629-630 [1980]; Wu v Kao, 194 AD2d 666 [2d Dept 1993]; Millman v Brownlee, 133 AD2d 221 [2d Dept 1987], appeal denied 70 NY2d 613 [1987]). Further, the Court concludes that the cases cited by Claimants are inapt insofar as malice is not an element of the breach of contract and unjust enrichment causes of action asserted in the National Grange Claim. Thus, assuming facts most favorable to Claimants, the Court does not find that they have presented sufficient evidence to raise a triable question of fact. Therefore, the State’s motion to dismiss that portion of National Grange’s Claim which seeks to recover attorney’s fees is granted.

Claimants also seek an award of counsel fees, costs and disbursements. Court of Claims Act § 27 specifically precludes this Court from granting such relief to Claimants (Taylor v State of New York, 160 Misc 2d 120, 126 [Ct Cl 1994]; see Mihileas v State of New York, 266 AD2d 866 [4th Dept 1999]). Therefore, that portion of Claimants’ motion is denied.


January 16, 2009
Albany, New York

HON. CHRISTOPHER J. MCCARTHY
Judge of the Court of Claims


The following papers were read and considered by the Court on Defendant’s and Claimants’ motions for summary judgment:

Papers Numbered


Defendant’s Notice of Motion,

Affidavit of Jason A. Penge and Exhibits Attached,

Affidavit of C. Michael Reger and Exhibits Attached, and
Memorandum of Law in Support 1


Claimants’ Notice of Motion,

Affidavit of Harry C. Serviss,

Affidavit of Michael Rowe,

Affirmation of Neil B. Connelly, Esq.,

Affirmation of Robert E. DiNardo, Esq.,

Exhibits Attached, and
Claimants’ Memorandum of Law 2


Claimants’ Opposition to Defendant’s Motion

Affidavit of Harry Serviss,

Affidavit of Michael Rowe,

Affirmation of Neil B. Connelly, Esq.,

Affirmation of Robert E. DiNardo, Esq.,

Exhibits Attached, and

Claimants’ Memorandum of Law in Opposition
to Defendant’s Motion 3


Defendant’s Opposition to Claimants’ Motion

Affidavit of John Hannah,

Affidavit of Jeanne L. Hewitt,

Affidavit of Richard E. Lasko,

Affidavit of R. Greg Abernathy,

Affidavit of N. Dennis Eryou,

Affidavit of Walter F. Greening,

Affidavit of Neil Geiselhart,

Affidavit of Patricia J. Snyder,

Affidavit and Revised Affidavit of Jason A. Penge,

Reply Affidavit of Paul E. Degen,

Affidavit of C. Michael Reger,

Exhibits Attached, and

Defendant’s Memorandum of Law in Opposition
to Claimants’ Motion 4


Affidavit of Michael Rowe in Opposition to Defendant’s

Motion to Dismiss,

Claimants’ Reply Memorandum of Law, and
Exhibits Attached 5

Affidavit of C. Michael Reger in Reply to Claimants’

Opposition to Defendant’s Motion,
Exhibits Attached, and
Defendant’s Memorandum of Law 6


Defendant’s Memorandum of Law in Sur-Reply to
Claimants’ Opposition to Defendant’s Motion 7



Filed Papers: Claims, Answer with Counterclaims, Amended Answer with Counterclaims


[1].CPLR 3212(b) requires that a motion for summary judgment be supported by a copy of the pleadings (Capelin Assoc. v Globe Mfg. Corp., 34 NY2d 338 [1974]). In support of its motion, National Grange did not submit a copy of its Claim or the State’s Answer. The failure to include pleadings in support of a motion for summary judgment requires that the motion be denied, regardless of the merits of the motion (Senor v State of New York, 23 AD3d 851 [3d Dept 2005]; Bonded Concrete, Inc. v Town of Saugerties, 3 AD3d 729 [3d Dept 2004], lv dismissed 2 NY3d 793 [2004]; Deer Park Assocs. v Robbins Store, 243 AD2d 443 [2d Dept 1997]; CPLR 3212[b]). Therefore, based upon the foregoing, National Grange’s motion for summary judgment is denied. Assuming, arguendo, the pleadings were attached, the motion would be denied for the reasons set forth.
[2].Also known as change orders and referred to herein as COs.