|Claimant(s):||CRANE-HOGAN STRUCTURAL SYSTEMS, INC.|
|Claimant short name:||CRANE-HOGAN|
|Footnote (claimant name) :|
|Defendant(s):||THE STATE OF NEW YORK|
|Footnote (defendant name) :|
|Judge:||PHILIP J. PATTI|
|Claimant's attorney:||GATES & ADAMS, P.C.
BY: ANTHONY J. ADAMS, ESQ.
|Defendant's attorney:||HON. ANDREW M. CUOMO
Attorney General of the State of New York
BY: EIDIN BEIRNE, ESQ.
Assistant Attorney General
|Third-party defendant's attorney:|
|Signature date:||June 25, 2010|
|See also (multicaptioned case)|
This claim has not been assigned in whole or in part and arises out of Contract No. D257153 between Claimant, Crane-Hogan Structural Systems, Inc. and the State of New York, titled "Rehabilitation of the Veterans Memorial Highway (Rt. 104) Bridge over the Genesee River in the City of Rochester" (see Exhibit 5). Claimant, by its president, executed the contract on March 12, 1997. The completion date called for in the contract was September 30, 1999. Bidders, when invited to bid on the contract, were informed that the noted defects in the concrete as shown on the plans were based upon a field inspection performed by the State over three years prior to the date of the invitation to bid, and additional inspections would be required during performance of the contract, with the contractor providing access to the State's Engineer-in-Charge (EIC) to perform a visual inspection of the exterior and interior surfaces of the structure.
The breadth of the project envisioned rehabilitation of the exterior to the structure, the slopes and drainage system below the bridge, the concrete and steel inside the bridge and the bridge deck. The deck work was to include partial, as well as complete, removal of the concrete in designated areas, followed by replacement of the concrete and then a new overlay of the entire deck surface. Claimant planned to do this work in three phases, commencing with the work on the exterior and underside of the structure, followed by repairs to the deck and its supporting members in phases two and three in order to maintain traffic on the bridge at all times.
The deck for the Veterans Bridge consisted of a wearing surface which varied in thickness from 5" to 9", on top of a structural concrete deck slab that varied in thickness between 15" and 18". Supporting the aforesaid slab were a series of structural concrete beams which rested on a concrete frame that supported the deck several hundred feet above the Genesee River. Route 104, of which the bridge was an integral part, is a major east-west highway within the Rochester metropolitan area and critically important to the community.
The contract as originally planned provided for the entire length of the structural concrete deck and its supporting beams to remain in place while repair was undertaken to replace discrete deteriorated areas which were to be removed and repaired with fresh concrete. The underlying supports for the deck (i.e. deck and beams) were indicated to be structurally sound so it was believed that all the work could be staged on the top concrete slab itself. The contract specifications and plans, however, contained the caveat that the plans were based on an inspection performed in 1993, and that additional inspections were to be conducted during the performance of the contract. These inspections could involve testing all interior concrete beams as well as a potential survey and chain drag test of the existing concrete deck slap once the Claimant had completed scarification of the structural deck slap (Exhibit 3, p. 61). When Claimant removed the top concrete overlay, it became readily apparent that the deterioration was far more extensive than initially thought by either the State or the Claimant, and Crane-Hogan immediately contacted the State's personnel. The project was put on hold until an in-depth investigation could be completed regarding the deck slab which was constructed in 1931.
By letter dated May 9, 1998, the State notified Crane-Hogan that preliminary findings required an increase in the full-depth removal beyond that originally highlighted on plan sheets 69 to 73 and would materially increase the scope of the project, changing the planned scheduling and sequencing of the construction activities. In addition, Claimant was informed that the unit prices it had developed on the project plans might not be transferrable to the anticipated new work. Claimant was also requested to provide a cost estimate for shoring and other work required for full slab replacement (Exhibit 11). According to Claimant, this was the first indication it had that full-depth removal was being contemplated by the State.
Five days later on May 14, 1998, the State advised Claimant by letter that it had determined that the entire 1931 deck slab was to be removed and replaced with a new monolithic deck with new bar reinforcement, and that the Traverse Level 1 beams at joint locations were to be replaced. It further advised that design work was underway and would be expedited (Exhibit 12).
When the design changes were completed and reviewed, Claimant concluded that they were beyond anything it had contemplated when the original bid was submitted for the project. In addition to replacing the entire deck, the new plans called for the replacement of some support beams. It was also informed that new pricing would be required in light of the changes.
According to Claimant, these changes significantly altered the scope of the work it had agreed to perform under the original contract which called for the repairs to the deck and supporting beams and installation of a new driving surface. Now Claimant would be required to remove and provide replacement of the entire structural slab and transverse beams, with a new monolithic deck being installed. According to Claimant, this required a complete revamping of the job schedule causing a totally different approach to the job. Now that there was to be more full-depth removal, it had the effect of limiting the accessibility of Claimant's crews onto the bridge for other work which had to be performed to complete the project on schedule. As a consequence of the new plans, the State extended the completion date from 2½ years (Exhibit 3) to 4½ years. To meet this new timetable Claimant was compelled to increase the size of its crews. In addition it had to increase the equipment on the job; design and installing shoring(1) and forming systems, and revamp its original planned schedule so as to minimize delay in the progress of the work.
Apparently the changes also required Claimant to adjust work on the structural support members inside (under) the bridge to insure that no work under the bridge was being performed while the deck was removed. This inside work also had to stay ahead of the pouring of the new beams and deck above, which was another factor that claimant had to consider in revising its sequencing and scheduling of work. Claimant contends that the project went from a repair project to a complete removal and replacement of the bridge deck system. The State conversely contends the purpose of the project never changed and that it always was to repair the bridge.
While the new plans evolved over several months, Claimant was importuned by the State to continue removal of the structural slab. Claimant requested a "partnering" meeting with people from the State's Department of Transportation (DOT) in an effort to fashion a plan which would allow it to proceed with the new expanded work and reach an agreement as to how it would be fairly compensated for this work. DOT, through its representatives, stated that the Claimant could not be compensated based on the unit prices it had submitted with its original bid, and Claimant contended that the contractual "force account" process for change orders would not fairly compensate it for the costs it would incur for the new work that would be necessitated by the new designs. Claimant set out its concerns and objections to proceeding with the new work on a force account basis in a letter to the DOT after the partnering meeting (Exhibit 63). Nonetheless, it proceeded with the work and maintained the increased paperwork generated by the force account process as required by the State. Despite continuing meetings, the State did not change its position that payment for the work being performed was to continue on the force account basis. Claimant, in October of 1999, forwarded a letter to the State which stated that it was reserving its right to continue to seek additional compensation for the additional work it was performing (Exhibit 28). Claimant was adamant that it never agreed to accept force account payments as full compensation for the work it was required to perform because of the change of the scope of the project.
The State accepted Claimant's request to acknowledge that there was the potential for a dispute because of its position, as long as the issues were enumerated in a follow-up letter, which Claimant then provided (Exhibit 31).
Claimant ended its work in late 2001 or early 2002, and the State accepted it on March 11, 2002 (Exhibit 34). Pursuant to the State's request, Claimant submitted all its claims and accounts for the extra work it had performed because of the changes in the contract scope and duration (Exhibit 36). This was followed by discussions between the parties in an attempt to settle disputed items of work, resulting in the issuance of an Order on Contract by DOT in which the Defendant agreed to compensation the Claimant for a portion of its claimed uncompensated costs (Exhibit 9 - Tab 49). Needless to say, Claimant notified the State of its dissatisfaction with the uncompensated cost not accepted by the Defendant. The Defendant directed Claimant to submit further documentation for these items, and after a review of this additional material, agreed to pay a small portion of these claims (Exhibit 9 - Tab 51).
With no further payment forthcoming, Claimant commenced this action seeking to be compensated for its alleged uncompensated costs and lost profits caused by the Defendant's cardinal changes to the contract's scope and duration in the amount of $1,432,624.65 (Exhibit 8). Before addressing the damages sought by Claimant, I must first determine whether the contract changes so altered the scope of the contract that a cardinal change had in fact occurred and that these changes were qualitative, not quantitative, thus causing a breach of contract by the Defendant.
The State does not dispute that the nature and extent of the work changed significantly by what was uncovered once the contract was begun. Furthermore, it does not dispute this caused the Claimant to expend additional sums on the project or that the time spent by it on this contract was far greater than had been anticipated by either the State or Claimant (Transcript - Vol. 1, p. 21). The issue before me is whether the changes in the contract are of such dimension and magnitude that they constitute a cardinal change so as to be deemed a breach of contract and thus entitle the Claimant to recover damages for overhead, costs and lost profit based on a quantum meruit basis.
The State argues that as the owner of the project it could make changes to the contract which do not alter or change the identity of the work without breaching the contract (Del Balso Constr. Corp. v City of New York, 278 NY 154). These changes cannot be such that they alter the essential identify or purpose of the project and are changes that could reasonably be anticipated by the parties (Standard Improvement Corp. of Westchester v Village of Ardsley, 285 NY 843). If the changes are quantitative and not qualitative, there is no breach and the contract provisions apply (Del Balso Constr. Corp. v City of New York, 278 NY 154, supra). If the ordered changes are outside the contemplation of the contract, a breach occurs (Tufano Contr. Corp. v State of New York, 25 AD2d 329, 331).
It is undisputed that this contract called for the Claimant to remove and replace all unsound concrete as indicated on the plans or as ordered by the engineer under the applicable removal or repair item in the contract (Exhibits 1, 2A, 2B and 3). The plans also advised that the areas shown as defective were based on a 1993 field inspection, some three years before the State put this job out for bid. It went on to alert the prospective bidders that there would be a need for further inspection during the performance of the contract and that the successful bidder would have to provide the State's engineers access to both interior and exterior areas so that a full visual inspection could be performed. It also notes that various tests and surveys would be performed on the deck slab to determine the limits of reinforcing bar exposure and the depths of full deck repair (Exhibit 3 - p. 61). In fact, as noted by the State, several pages of the specifications alerted the Claimant that half-cell potential and chain drag testing would be performed after the removal of the existing concrete overlay to ascertain the extent of full deck replacement.
In addition, the contract provided that the State had the right to alter the plans during the course of the work and to provide compensation to the contractor in accord with the Standard Specifications (Exhibit 2B, Article 5, §109-16). That same article, §109-05(D)(3) provides that any changes by the State would not constitute grounds for a claim by the claimant for damages for lost profit, etc. In addition, §109-16(A)(3)(ii) (Exhibit 2B - p. I-28) provides that should "... alterations or changes in quantities significantly change the character of the work under the contract..." the parties would make the necessary adjustments to the contract excluding anticipated profit. "Significant change" was defined in §109-16(A)(3)(iv) and included a change in the character of the work resulting in an increase in excess of 125% of the major item of work. The State further points to §109-16(A)(3)(v) as limiting Claimant to time-related costs and that increased costs were to be considered in accord with §109-05(B).
Moreover, the State maintains under Article 13 of the contract (Exhibit 2B - Addendum #1, pp. I 3-5) that Claimant gave up its right to commence an action against it for extra or additional costs incurred by delay, etc., or other inefficiencies in the performance of the contract except for costs caused by stop-work orders or lack of a critical right-of-way, which clearly is not the case before me. It also points out that the same article binds the parties to the provisions of §109-16 of the specifications relating to a claim of significant changes in the course of the performance of the contract (Exhibit 2B - Addendum #1, pp. I-26 et seq.). It argues that Claimant was an experienced contractor whose witnesses testified that it had extensive experience in bridge work. In fact, Frank Fisher, one of Claimant's lead estimators and its project manager, acknowledged that the quantities set out in the contract would likely increase during the project (Transcript - Vol. 1, pp. 27, 35 and 36). He testified that while he anticipated increases, he could neither anticipate that there would be a complete slab removal and replacement nor beam removal and replacement. He further stated that it was not unusual for there to be a need for an increase in quantities once work had been commenced and that on a rehabilitation project the full extent of the project is not necessarily known until the project is commenced, since the extent of the deterioration is not always ascertainable by exterior inspection. In addition, he conceded that the chain drag structural slab potential survey had to be performed to determine the extent of the full-depth deck repair (Transcript - Vol. 1, pp. 51, 170 and 172).
The State in essence argues that since the plans were based on a 1993 inspection and that they were replete with notes that the ful extent of the rehabilitation would not be ascertainable until after the work was started, Claimant cannot contend that it did not appreciate the extent of work could change. The State posits that any disruption which occurred on the project was countenanced and covered by the contract, and therefore the Claimant is not entitled to further compensation for the alleged uncompensated costs and unrealized profits due to the changes required by the State.
The Claimant acknowledges that it received payment for the force account work it performed. However, its claim focuses on the fact that the monies paid by the State failed to reasonably compensate it for its increased overhead expenses and profit.
What is clear to me, based on this record, is that this was not a mere quantitative change as maintained by the State. Rather, these changes, in my opinion, altered the scope and original intent of the project to such an extent that they are properly deemed to be qualitative, and I find they were outside the original contemplation of the contract (Triple Cities Constr. Co. v State of New York, 194 AD2d, 1037; Tufano Contr. Corp. v State of New York, 25 AD2d 329, supra). I further find that, since a cardinal change to the contract occurred when the State determined that the entire structural slab would be removed and the transverse beams replaced, the Claimant is entitled to be paid on a quantum meruit basis (Collins v State of New York, 259 NY 200; Triple Cities Constr. Co. v State of New York, 194 AD2d, 1037, supra).
I am aware that the original plans included various cautions to bidders that the degree of deterioration would not be fully known until after a chain drag survey had been completed, and that would not occur until after removal of the traveled surface. However, the uncontroverted testimony of Claimant's witnesses persuades me that while changes had been anticipated, Claimant never contemplated the extensive changes that would be required by the State. The State argues that the nature of the project never changed, as this was always deemed to be a rehabilitation of the Veterans Bridge. I cannot accept that argument, as the proof before me establishes that, no matter how one characterizes the nature of the project, the extensive repairs that were ultimately required were far beyond the contemplation of both parties and the contract.
The changes that were made to the contract amounted, in my opinion, to a breach of contract and were outside the scope of the original contract, entitling Claimant to recover damages for increased overhead and loss of profit. This finding is further supported by the fact that the State was required to draw up a new design plan and that, in turn, required new pricing (Exhibit 11). Such an admission demonstrates in convincing fashion that even the State had not contemplated that such a qualitative change would be necessary when the contract was signed by the parties.
Likewise, I find that the State's contention that this claim is barred in whole or in part by the "no damages for delay" provision in Article 13 of the contract (Exhibit 5) is not persuasive and it is rejected. As the Court of Appeals pointed out in Corinno Civetta Constr. Corp. v City of New York (67 NY2d 297), exculpatory clauses such as the one in this case do not prevent recovery, nor are they enforceable if the delay, or whatever factors cause the delay, are not in the contemplation of the parties at the time of entry into the contract. As I stated above, I am convinced that neither party was aware nor contemplated the extent of the ultimate changes that would be required by the State in completing the rehabilitation of the Veterans Bridge. Therefore I find that this Article is not applicable or enforceable in this instance.
Once the new plans were presented to Claimant and reviewed, discussions commenced as to how the new work would be paid for and scheduled. The State and Claimant agreed to the extension of the contract completion date for an additional two years.(2) At the same time Claimant proposed that it be paid in accordance with those unit prices it had provided and had been accepted by the State in the original contract. The State rejected this proposal and Claimant agreed to proceed provisionally on a force account basis. This understanding was reached after a partnering meeting with Claimant and DOT officials with the understanding that further discussion would follow in an attempt to fashion an agreement acceptable to both parties.
When no acceptable solution could be found, Claimant proceeded on the force account basis, while at the same time memorializing that it wished to preserve its rights in accord with the Standard Specifications. Claimant went on to request that the State acknowledge, on the record, that there was a dispute between the parties over several different issues or headings to be submitted for further discussion (Exhibit 28). The State did so by letter dated November 13, 1999 (Exhibit 29) with the further request that Claimant set forth the issues in question, which were supplied in a letter dated December 13, 1999 (Exhibit 31).
In my opinion these changes so manifestly altered what was originally contracted for that Claimant's request to enter into a new agreement regarding payment was both reasonable and appropriate. I find that the State's insistence that the work be done by force account in accordance with the original contractual provisions was patently unfair. Furthermore, while the new plans were being prepared, Claimant was required to immediately commence with the removal of the structural slab.
The uncontradicted testimony of Claimant's witnesses establishes that it became necessary to devote more manpower, more machinery and more time to the project to finish it within the time frame set by the State. As previously noted, the Claimant's representatives and the State met several times in an attempt to negotiate an agreement for payment other than by the force account method, with no resolution of Claimant's concerns. As a consequence, the Claimant maintained force account records for the duration of the project relating to the disputed work, maintaining throughout this time that it was entitled to be compensated for its additional costs and lost profit for which it had not been otherwise compensated by the force account method.
There is no dispute that Claimant completed the work within the prescribed time period, and it was accepted by the State on March 11, 2002 (Exhibit 34). The State, cognizant that Claimant could not get its paperwork together, permitted Claimant an extended period of time to provide its claims and the attendant supporting documentation (Exhibits 33 and 35). It is noted that some of the work Claimant completed during this time was set forth in the original contract and was unaffected by the changes. The original contract was completed as required, including routine changes, so that it was closed by normal change order process. The balance of its claim for various items of field and office overhead expenses incurred due to the changes and for which it had not been fully compensated by the force account process was filed with the State in January of 2003 (Exhibit 36). After it had reviewed the documentation, the State compensated Claimant for a portion of these costs (Exhibit 9 - Tab 49). Claimant, dissatisfied with the unpaid costs that were rejected, communicated that to the State through its agents. Over a period of time, Claimant supplied further requested documentation in support of its position, which resulted in a small amount of additional compensation being paid to Claimant (see Exhibits 39, 40 and 9 - Tab 51).
Exhibits 36 and 42 set out the costs which Claimant contends were unpaid and remain due for the additional work it performed relating solely to the changes that were required. In addition, Claimant seeks a reasonable markup for profit which has been permitted in cases such as the one before me (Triple Cities Constr. Co. v State of New York, 194 AD2d 1037, supra). Claimant acknowledges that it was paid through the force account process for all the direct trade labor it employed on the project as well as materials costs, most of its equipment costs and a portion of its field operations and home office expense. That method, however, failed to reasonably compensate Claimant for the costs set out in Exhibits 42(A), 42(A1), 42(B), 42(C), and 42(D), or for a reasonable margin of profit.
The State, on the other hand, through its expert Richard Weller, maintained that in fact the Claimant had been paid in full for the work it had performed and that, in his opinion, it included profit. I disagree.
I have not totally disregarded the testimony of the State's expert, but have accorded it a lesser degree of probative value than that of the Claimant's witnesses. An example of my concern relating to his objectivity was his admission that he concluded that Claimant was withholding information with no concrete basis for arriving at that conclusion. While troubled by what he perceived to be Claimant's deception, Mr. Weller never memorialized his concerns in a letter to Claimant, itemizing those records he believed to have been withheld (Transcript - pp. 446-448). Furthermore, he requested the force account records from his client as they related to the office and project overhead as well as equipment payments, but never arranged to see Claimant's records showing how they were applied to these proceeds. He offered no explanation for not seeking these records, which I found troubling. They would have provided insight into the basis of the allegation that Claimant had not received total compensation.
Moreover, I found that on more than one occasion Mr. Weller's responses to questions on cross-examination were evasive, giving me the impression that he could/would not answer the questions as offered, and leaving me with a negative impression. Finally, it is my opinion that he prepared a report that was limited to verifying that Claimant had been fully paid under the contract for its force account work and he did not address Claimant's contention that it was entitled to be paid on a quantum meruit basis, ignoring the possibility that there was a cardinal change to the contract. As a result, I am compelled to give his testimony little probative weight.
It is well settled that in cases such as this the burden rests with Claimant to prove its damages and that there is a definite nexus between the proven breach and the damages Claimant maintains it suffered (Berley Indus. v City of New York, 45 NY2d 683). As the Court of Appeals observed in Berley, id., at 686-687:
Delay damages, including ones in overhead, are no exception. A contractor wrongfully delayed by its employer must establish the extent to which its costs were increased by the improper acts because its recovery will be limited to damages actually sustained (Uvalde Asphalt Paving Co. v New York, 196 App Div 740, 762; Encyclopedia, New York Law, Damages, § 565, pp 20-21). Speculation or conjecture will not suffice (25 Fifth Ave. Mgt. Co. v Ivor B. Clark, Inc., 280 App Div 205, affd 304 NY 808; Restatement, Contracts, § 331; 13 NY Jur Damages, § 16).
 Particularly in actions ex contractu, however, when it is clear that some injury has been occasioned, recovery will not necessarily be denied a plaintiff when it is apparent that the quantum of damage is unavoidably uncertain, beset by complexity or difficult to ascertain (cf. Reynolds Securities v Underwriters Bank & Trust Co., 44 NY2d 568; Matter of Rothko, 43 NY2d 305; Bigelow v RKO Radio Pictures, 327 US 251). The law is realistic enough to bend to necessity in such cases. A jury then may draw reasonable inferences from the other, though lesser, proofs actually presented in order to arrive at an estimate of the amount of extra costs which are the natural and probable result of the delay (Jones Co. v Burke, 306 NY 172; Dunkel v McDonald, 272 App Div 267, affd 298 NY 586). Even then, there must be a definite and logical connection between what is proved and the damages a jury is asked to find (see Dunkel v McDonald, supra; 13 NY Jur Damages, § 16, p 441).
In this case it is clear that Claimant has suffered damage as a consequence of the cardinal change to this contract and therefore is entitled to be compensated for its losses. What is bothersome to me is that, while Claimant is entitled to recover damages, and while I may draw reasonable inferences from lesser proofs to determine them, I am unable to accept in its entirety Claimant's submission of uncompensated costs and unrealized profit.
At the outset of this portion of the decision, it should be noted that I permitted both parties greater latitude in presenting their respective positions related to issues of damages. I was acutely aware that the testimony offered by Claimant's witnesses could be perceived as speculative in some respects, yet meets the evidentiary threshold of a definite and logical connection defined by the Court of Appeals in Berley, id. I am not unaware that many of the exhibits entered into evidence to support this claim were prepared years after the completion of the project and, while based on Claimant's records, still required a degree of speculation. As an example, Claimant's Comptroller, Geoffrey Simpson, acknowledged that Exhibit 42(A) was compiled in late 2007. At the time of its preparation, he stated that home office expenses or general administrative expenses were not job specific. Since he was not directly involved in the Veterans Bridge project, he needed to analyze Claimant's records over a time frame covering one partial year, three full years and another partial year (Transcript - p. 188). He testified that because of the size of this project as compared to other projects Claimant was involved in, he had to determine the percentage of time that was devoted to this project in order to calculate the home office expenses or general administrative expenses.
Mr. Simpson identified all individuals listed on the above Exhibit 42(A) and their respective responsibilities as they related to all projects in which Claimant was involved during the relevant time frame. He then determined a percentage allocable to the Veterans Bridge project over this period and used that percentage to determine what portion of their total salary was attributable to the Veterans Bridge project. At this point he gathered those individuals working directly under him who had worked on the Veterans Bridge project, explained what he was doing and asked if they agreed to the reasonableness of the percentages he utilized in allocating the amount they devoted to the project. Under cross-examination he acknowledged that the employees he spoke with relied on their recollection of the scope of the project rather than documentation (Transcript - p. 229).
The Claimant's accountant, James Latona, then reviewed Comptroller Simpson's findings and stated that he agreed to his methodology since it was based on the cost-to-cost method. It was his opinion that this was the best way to estimate the home office expenses. However, Claimant has noted in its posttrial memorandum that it had inadvertently included a previous paid amount of $45,026.50 in calculating the uncompensated home office expenses. This reduces the total amount of uncompensated expenses from the original amount of $929,049.00 set forth in the claim to $884,022.50. Furthermore, Claimant acknowledged in its posttrial memorandum that it had also been paid an additional $49,529.15, representing profit for home office expenses as set out in Exhibit 9 - Tab 49, p. 6. This further reduces the uncompensated expenses sought in this portion of the claim to $834,493.35.
With respect to that portion of the claim labeled as Project (Field) Overhead, Claimant contends that it incurred a total cost of $693,314.56 and was paid the sum of $440,255.00 for force account work, leaving a balance due of $253,059.56. It acknowledged at trial it had neglected to include in the amount it received the sum of $10,010.00 and, when credited against the amount claimed, it reduced the amount to $243,049.56. The computations reflecting the amount due as uncompensated project overhead are set forth in Exhibit 42(B) and, according to Mr. Fisher, the hours each person listed on the exhibit worked on this project were taken directly from their respective timecards (Transcript - p. 145).
The one portion of this exhibit which I find not to be based on any record before me is the allocation of time relating to vehicle use. As Mr. Fisher stated, the time allocated for actual use of the vehicles on the job was based upon what he believed was reasonable (Transcript - p. 147). With no probative evidence before me to support these claimed unreimbursed expenses beyond his surmise, I find that there should be a further deduction of $53,140.10 to this portion of the claim, reducing the amount of project overhead to $189,909.46.
With respect to that portion of the claim involving recompense for standby equipment, the record is clear that Claimant has been paid pursuant to the force account for its actual use, but not for the time it remained on site and was not in use.(3) Claimant contends that it is entitled to be paid for this downtime since it was not practical to remove machinery from the site when it was not to be used and to return it when it was required. The methodology used in calculating what it contends it is owed is set out in Exhibit 42(C). The State contends that Claimant, in preparing this part of its claim, ignored the Blue Book equipment rates which bidders are required to follow on all State contracts. In addition, the State argues that instead of using the Blue Book rates excluding any increase for regional adjustments, Claimant used a rate based on an unidentified regional market condition unsupported by any documentation at trial, resulting in rates higher than the Blue Book. I find that on the record before me there is a sufficient and logical explanation to support this part of Claimant's claim in the amount of $63,242.00.
Finally, Claimant seeks to be compensated for underutilized equipment which represents the difference between the force account rates paid by the State and the Claimant's ownership costs for its equipment from the time the State allegedly abandoned Claimant's contractual basis for payment and paid it on a time and material basis. Mr. Fisher testified that he arrived at his conclusions relating to the underutilized equipment by reviewing the records maintained by Claimant and submitted to the State. He totaled the number of force account hours for each piece of equipment that was used and then multiplied it by the Claimant's rate for each piece. He then subtracted the payments received from the State via the force account. The difference, $122,445.00, represents what Claimant argues is still due pursuant to this claim (Exhibit 42[D]). I find that the methodology used was based upon the records compiled by Claimant during the course of the contract as required by the State. As noted earlier, it is entitled to recover on a quantum meruit basis the amount claimed for this portion of its claim. The sum sought is fair, reasonable and is, on this record, well supported. Therefore, Claimant is entitled to recover the sum of $122,445.00 for its underutilized equipment.
I find that Claimant's uncompensated costs are as follows:
|Home Office Overhead||$834,493.35|
|Project (Field) Overhead||$189,909.46|
|Total Unpaid Costs||$1,210,089.81|
Based upon the record before me, I find that the State made total force account payments to Claimant of $14,029,891.65. That payment was comprised of $12,129,945.16 for direct costs and $1,899,946.49, representing a 15.66% "markup" for overhead and profit.
Claimant maintains that it is entitled to a markup for overhead and profit on the uncompensated costs I have found above and I agree. However, I cannot accept the percentage of profit as testified to by the Claimant's witnesses, as the record will reflect that it varied from witness to witness and was not adequately supported by the record. Instead, I find that the overhead and profit to which it is entitled is 15.66%, utilizing a markup similarly calculated on the payments heretofore made to Claimant. Accordingly, applying a 15.66% markup to the total uncompensated costs noted above of $1,210,089.81, Claimant is entitled to $189,500.06 for overhead and profit. This sets the total due and owing to Claimant for its work on this project at $1,399,589.87.
Therefore Claimant is awarded the sum of $1,399,589.87 with appropriate interest from March 11, 2002.
To the extent Claimant has paid a filing fee, it may be recovered pursuant to Court of Claims Act §11-a(2).
All motions previously made at trial and upon which I reserved decision are hereby denied.
LET JUDGMENT BE ENTERED ACCORDINGLY.
June 25, 2010
Rochester, New York
PHILIP J. PATTI
Judge of the Court of Claims
1. According to Claimant, shoring was not anticipated in preparation of its original bid.
2. The original contract was to have been completed in 2½ years. The State extended that time for two additional years (a total of 4½) due to the extensive changes required by the new rehabilitation plans for the bridge.
3. Because the contract was extended from 2 years to 4 years, the equipment assigned to the project incurred extended periods of downtime not contemplated by Claimant in the preparation of its original bid.