Claimant's motion for a default judgment was denied, but his motion for leave to file and serve an amended claim (treated as a late claim application) was granted as to a breach of contract claim only.
|Claimant(s):||RUSTON PAVING CO., INC.|
|Claimant short name:||RUSTON|
|Footnote (claimant name) :|
|Defendant(s):||NEW YORK STATE INSURANCE FUND|
|Footnote (defendant name) :|
|Judge:||NICHOLAS V. MIDEY JR.|
|Claimant's attorney:||WALTER D. KOGUT, P.C.
BY: Walter D. Kogut, Esq.,
|Defendant's attorney:||HON. ANDREW M. CUOMO
BY: Frederick H. McGown, III, Esq.,
Assistant Attorney General
|Third-party defendant's attorney:|
|Signature date:||October 13, 2010|
|See also (multicaptioned case)|
Claimant has brought this motion seeking a default judgment against the State. In the alternative, claimant seeks leave to file and serve an amended claim.
The following papers were considered by the Court in connection with this motion:
Notice of Motion; Affirmation of Walter D. Kogut, Esq., with Exhibits; Affidavit of Thomas Nelson, Division Manager of Claimant, with Exhibits 1-3
Correspondence from Mr. Kogut to Mr. McGown dated June 28, 2010 4
Affirmation in Opposition of Frederick H. McGown, III, Assistant Attorney General, with Exhibit; Affidavit of Michael Matthews, Purchasing Agent for the State Insurance Fund, with Exhibits 5,6
Filed Papers: Claim, Verified Answer.
This claim, filed May 10, 2010 with the Clerk of the Court of Claims, seeks damages in the amount of $21,227.14, pursuant to a contract entered into between claimant and the New York State Insurance Fund on or about June 27, 2008. Specifically, claimant alleges that defendant has refused to pay the balance due on said contract in the amount of $14,927.14, and further has refused to pay for extra work and materials in the amount of $6,300.00. Although not expressly stated, this claim must therefore be considered as one seeking damages for breach of contract.
As set forth in the Affirmation of Frederick H. McGown, III, Esq., Assistant Attorney General, this claim was served upon the defendant on May 17, 2010. In its Verified Answer, served on June 23, 2010, defendant raised affirmative defenses alleging, inter alia, that the claim was jurisdictionally defective due to a lack of verification (First Affirmative Defense) and that it was not timely served (Fourth and Fifth Affirmative Defenses).(1)
In this motion, claimant seeks a default judgment against the State, contending that the State failed to timely serve and file either an Answer or a dispositive motion. Claimant further contends that pursuant to § 11(c) of the Court of Claims Act defendant, by failing to timely serve a responsive pleading or institute a dispositive motion, has waived any objections or defenses based upon timeliness, manner of service, and/or the verification requirements set forth in the Court of Claims Act.
Pursuant to § 206.7 of the Uniform Rules for the Court of Claims, a party has 40 days in which to serve and file a responsive pleading. In this particular matter, the claim was personally served upon the Attorney General on May 17, 2010, and the Verified Answer was served, by mail, on June 23, 2010 (Exhibit 8 to Item 4). By this Court's calculations, the Answer was therefore served 37 days after service of the claim, and was therefore timely pursuant to § 206.7 of the Uniform Rules.
Accordingly, claimant's motion for a default judgment is without merit. Furthermore, since the Verified Answer was timely served, defendant has not waived any objection or defense based upon time limitations set forth in § 10, the manner of service requirements set forth in § 11(a), or the verification requirements set forth in § 11(b) of the Court of Claims Act.
The Court must therefore consider claimant's alternative request seeking permission to file and serve an amended verified claim. Generally speaking, requests to amend pleadings should be freely granted (CPLR Rule 3025[b]). However, the Court of Appeals has held that the provisions of § 11(b) of the Court of Claims Act are "'substantive conditions upon the State's waiver of sovereign immunity'" (Kolnacki v State of New York, 8 NY3d 277, 280, quoting Lepkowski v State of New York, 1 NY3d 201, 207). The failure to satisfy any one of the requirements of § 11(b) is a jurisdictional defect (Kolnacki v State of New York, supra at 281), which therefore may not be cured by amendment (Manshul Constr. Corp. v State Ins. Fund, 118 AD2d 983; Grande v State of New York, 160 Misc 2d 383). As a result, claimant's request herein for leave to amend its claim must be denied.(2)
The Court notes, however, that in its application seeking leave to serve and file an amended claim, claimant addressed the statutory factors which must be considered by a court in determining whether to grant permission to serve and file a late claim under § 10(6) of the Court of Claims Act. These statutory factors were also addressed by defendant in opposing claimant's request for leave to serve and file an amended claim. Accordingly, this Court will treat this motion as one also seeking permission, in the alternative, for leave to serve and file a completely new and distinct claim under § 10(6).
Under §10(6) a claimant may seek permission to serve and file a late claim as long as the application is made "at any time before an action asserting a like claim against a citizen of the state would be barred under the provisions of article two of the civil practice law and rules." In this particular matter, since the action is one sounding in breach of contract, the applicable statute of limitations is six years under § 213 of the CPLR, and this application, based upon a breach of contract presumably occurring in late 2008, is therefore timely.
In order to determine an application for permission to serve and file a late claim, the Court must consider, among other relevant factors, the six factors set forth in § 10(6) of the Court of Claims Act. The factors set forth therein are: (1) whether the delay in filing the claim was excusable; (2) whether the State had notice of the essential facts constituting the claim; (3) whether the State had an opportunity to investigate the circumstances underlying the claim; (4) whether the claim appears meritorious; (5) whether substantial prejudice resulted from the failure to timely file and the failure to serve upon the Attorney General a timely claim or notice of intention to file a claim; and (6) whether any other remedy is available. The Court is afforded considerable discretion in determining whether to permit the late filing of a claim (Matter of Gavigan v State of New York, 176 AD2d 1117).
The presence or absence of any one particular factor is not necessarily dispositive of any application (Bay Terrace Coop. Section IV, Inc. v New York State Employees' Retirement System Policemen's & Firemen's Retirement System, 55 NY2d 979), and none of the factors can require denial as a matter of law.
As for excuse, claimant, through the Affidavit of Thomas Nelson, Division Manager, contends that it did not file a claim, or a notice of intention to file a claim, as it was attempting to resolve this dispute through mediation, which ultimately proved unsuccessful. However, the Court notes that reliance on the pendency of settlement negotiations is generally not sufficient to constitute a reasonable excuse (Prusack v State of New York, 117 AD2d 729). This Court therefore finds that reliance upon the mediation process, which can be considered similar to settlement negotiations, is also not a sufficient excuse. Although a copy of the contract has not been provided with any of the motion papers, the Court notes, as set forth in the papers presented on this application, that the contract provided that a claim could be filed simultaneously with any request for mediation.
The intertwined factors of notice, opportunity to investigate, and substantial prejudice will be considered together. There can be no question that the State had notice of the essential facts constituting this claim, since there was an exchange of correspondence, as noted, and the parties had engaged in unsuccessful attempts at mediation. This process certainly provided the State with an adequate opportunity to investigate the facts and circumstances pertinent to the alleged breach of contract. Accordingly, this Court finds that the State will not be substantially prejudiced should it have to defend this claim.
The next factor, often deemed the most critical, is whether the proposed claim has the appearance of merit. If claimant cannot establish a meritorious claim, it would be an exercise in futility to grant a late claim application (Savino v State of New York, 199 AD2d 254; Prusack v State of New York, 117 AD2d 729). In order to establish a meritorious cause of action, claimant has the burden to show that the proposed claim is not patently groundless, frivolous, or legally defective, and that there is reasonable cause to believe that a valid claim exists (Matter of Santana v New York State Thruway Authority, 92 Misc 2d 1).
Initially, in its review of claimant's proposed "amended verified claim" (Exhibit A to Item 3), this Court notes that claimant has incorrectly identified the proper defendant in this matter. The jurisdiction of the Court of Claims is conferred by statute, and is limited to claims against the State of New York, and certain other rare instances when jurisdiction is conferred upon this Court from enabling legislation creating other specific entities (see, for example, Public Authorities Law § 361-b conferring jurisdiction to the Court of Claims over tort and contract claims brought against the New York State Thruway Authority). There is no such statute, however, specifically providing the Court of Claims with jurisdiction over the State Insurance Fund.
The Court does have jurisdiction over claims arising out of State Insurance Fund activity, but such jurisdiction arises from the fact that the State Insurance Fund is a State agency, and not an entity with independent legal existence (Cardinal v State of New York, 304 NY 400; Matter of James v State of New York, 90 AD2d 342). Accordingly, any claim arising out of the activities conducted by the State Insurance Fund, a State agency, must be brought in this Court against the State of New York, and any such claim, therefore, must be captioned accordingly. (Siciliano v State of New York, Ct Cl, April 5, 2001, Nadel, J., Claim No. 99597, Motion Nos. M-62593, CM-62668, CM-62774, UID #2001-014-527; Kenmore-Tonawanda School District v State of New York and New York State Insurance Fund, Ct Cl, May 12, 2004, Scuccimarra, J., Claim No. 107943, Motion No. M-67672, UID #2004-030-911).(3)
Secondly, the Court notes that in its proposed "amended verified claim" (Exhibit A to Item 3), claimant has expanded its original claim and has set forth three separate causes of action sounding in breach of contract (first cause of action), quantum meruit (second cause of action), and unjust enrichment (third cause of action).
With regard to the first cause of action, sounding in breach of contract, defendant contends that claimant has failed to comply with requirements of § 11 of the Court of Claims Act by failing to state, with particularity, when the claim arose. Defendant further contends that claimant failed to make any reference to the particular section or provision of the contract that allegedly was breached.
The Court, however, having reviewed the allegations set forth in the proposed claim, finds that claimant has sufficiently established an appearance of merit sufficient to satisfy the minimal requirements of Santana, as well as the requirements of § 11(b) of the Court of Claims Act.
With regard to the second cause of action (quantum meruit), and the third cause of action (unjust enrichment), the Court notes that such causes of action are inconsistent with an action based upon breach of an existing contract. In this case, there is no dispute that the parties entered into a contract on June 27, 2008, and that this contract was approved by the New York Insurance Department, pursuant to § 81 of the Workers' Compensation Law, on July 31, 2008. Furthermore, there is no question that claimant performed services under this contract, and has received some compensation pursuant to the contract. As a result, since they are based entirely on the same facts as the breach of contract cause of action, the causes of action sounding in quantum meruit and unjust enrichment cannot be pursued and therefore they lack merit (Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382; see also, Framan Mechnical, Inc. v State of New York, Ct Cl, March 23, 2010, Collins, J., Claim No. 117181, Motion Nos. M-77173, CM-77430, UID #2010-015-126).
Therefore, although this Court finds that the first cause of action (breach of contract) is sufficient to establish the appearance of merit, the second (quantum meruit) and third (unjust enrichment) causes of action fail to establish any appearance of merit.
It does not appear that claimant has any other available remedy.
Based upon the foregoing, and after weighing and considering all of the factors set forth under Court of Claims Act § 10(6), it is the opinion of this Court that claimant should be allowed to serve and file a claim, (and to which a new claim number will be assigned), against the State of New York, alleging breach of contract only, in accordance with the foregoing.
Therefore it is
ORDERED, that Motion No. M-78432 is hereby GRANTED, in part, and claimant is directed to serve and file a claim, properly verified and based upon breach of contract only, within 45 days from the date of filing of this decision and order in the Clerk's office, with such service and filing to be in accordance with the Court of Claims Act, with particular reference to Sections 10, 11 and 11-a, and the Uniform Rules for the Court of Claims; and it is further
ORDERED, that in all other aspects, Motion No. M-78432 is hereby DENIED.
October 13, 2010
Syracuse, New York
NICHOLAS V. MIDEY JR.
Judge of the Court of Claims
1. This Verified Answer was prepared and served through the Albany Office of the Attorney General. The Court notes that the Syracuse Office of the Attorney General had previously rejected the same claim due to a lack of verification (Exhibit C to Item 2, Affirmation of Mr. Kogut). Since a Verified Answer has now been served and filed, the letter of rejection is therefore considered a nullity.
2. In addition to opposing claimant's request to amend its claim due to a lack of verification in the original claim, defendant also raised an objection that the original claim was not timely served or filed in accordance with the provisions of § 10 of the Court of Claims Act. Defendant, however, did not affirmatively seek dismissal of the claim by means of a motion or cross-motion, and therefore this objection, although potentially dispositive, has not been considered herein.
3. Unpublished decisions and selected orders of the Court of Claims are available via the Internet at http://www.nyscourtofclaims.state.ny.us.