Richard C. Maider, Esq., Assistant Attorney General">
In this breach of contract action where claimant abandoned the job site based upon its belief that DOT's decrease in the quantity of highway crack sealer would result in a loss, claimant's motion for summary judgment was denied and defendant's cross motion on its counterclaim for damages was granted.
|Claimant(s):||ACME POWERWASHING, INC.|
|Claimant short name:||ACME POWERWASHING|
|Footnote (claimant name) :|
|Defendant(s):||THE STATE OF NEW YORK|
|Footnote (defendant name) :|
|Judge:||Francis T. Collins|
|Claimant's attorney:||Adams Bell Adams, P.C.
By: Daniel P. Adams, Esq.
|Defendant's attorney:||Hon. Barbara D. Underwood, Attorney General
By: Richard C. Maider, Esq., Assistant Attorney General
|Third-party defendant's attorney:|
|Signature date:||December 7, 2018|
|See also (multicaptioned case)|
Claimant moves for summary judgment in its favor. The defendant cross-moves for summary judgment dismissing the claim, and for summary judgment in its favor on its counterclaim.
Claimant, Acme Powerwashing, Inc., seeks damages sounding in breach of a contract in relation to the performance of crack sealing(1) work on certain highways in Erie County under Project Numbers 5V1531 and 5V1534, both of which were coordinated by the Department of Transportation (DOT), Region 5. With respect to Project No. 5V1531, claimant's bid of $266,955.00 was based upon the DOT's estimate that 14,430 gallons of crack sealant would be necessary to complete the work (Lorenz affidavit, ¶ 6; Lorenz Exhibit B; Dockery affidavit, ¶ 40; Dockery Exhibit I). With respect to Project No. 5V1534, claimant based its bid of $119,598.00 on the DOT's estimate that 3,858 gallons of crack sealant would be necessary to complete the work (Lorenz affidavit, ¶ 6; Lorenz Exhibit B; Dockery affidavit, ¶ 47; Dockery Exhibit K). According to William Dockery, the Assistant Resident Engineer for both crack sealing projects, claimant was informed that the highway shoulders were not included within the scope of work at a preconstruction meeting held approximately two weeks before the start of work (Dockery affidavit, ¶¶ 19-20; Lorenz affidavit, ¶ 12). While Nathaniel Lorenz, sole shareholder and President of Acme Powerwashing, Inc., has no recollection of being so informed at the preconstruction meeting, he admittedly was informed of the fact that the shoulders were not included in the scope of work after work on the project commenced on September 11, 2015 (Lorenz affidavit, ¶ 12). Mr. Lorenz states that he objected to "the shoulders being removed from the project, and informed Chodkowski [a DOT representative] that the removal of the shoulders was resulting in far less quantity of cracksealing, which in turn was leading to [his] company being unable to apply enough gallons of sealant to even cover the costs for the labor, material and equipment that was necessary to support the project" (Lorenz affidavit, ¶ 17). Claimant notified Mr. Dockery of the dispute in writing on September 11, 2015, and maintained MURK forms for the work performed on September 10, 11 and 15, 2015 (id. at ¶ 18-19). At the conclusion of these three days, claimant stopped work and left the job site "due to the DOT change in cracksealing quantities on the project, and the DOT's refusal to provide an equitable adjustment" (id. at ¶ 21). According to Mr. Lorenz, he determined that his company "could not absorb the daily losses with the DOT's enforcement of its alleged Region 5 shoulder 'rule' " (id. at ¶ 21). On October 13, 2015, the DOT responded to claimant's dispute by indicating that the 5.6 lane miles completed by claimant's crew represented only approximately 2% of the contract total and "is far too small to be considered representative of the contract total" (Lorenz Exhibit O). As a result, claimant was directed to continue the contract work immediately and was advised that quantities would be reviewed once 33% of the contract total was completed (Lorenz Exhibit O). Claimant did not return to the job site, however, and seeks damages for its losses, alleging the State breached the contract by failing to make an equitable adjustment in the contract price necessitated by a significant reduction in the scope of the work (see Lorenz Exhibit A, Verified Claim). Claimant alleges the reduction in the scope of work "resulted in a significant and substantial lessening in the amount of seal cracking required, such that the unit price for cracksealing contained in the contract was a significant change in the character of the work" (id. at ¶ 15).
After claimant abandoned the projects, the remaining work was put out to bid in the summer of 2016 (Dockery affidavit, ¶ 35). Annseal, Inc. (Annseal), was awarded the work on Project 5V1531 and Midland Asphalt Materials, Inc. (Midland) was awarded the work on Project 5V1534. Annseal completed Project 5V1531 at a cost of $306,635.00 based upon 15,470 gallons of sealant (id. at ¶ 39) and Midland completed Project 5V1534 at a cost of $149,954.12 based upon 4,744 gallons (id. at ¶ 46). Claimant asserts that although the amount of sealant used to complete these projects exceeded the quantities on which its bids were predicated, this circumstance was explained by the fact that photographs of a portion of Route 20, included in the motion papers as Exhibit T, "clearly show that cracksealing was performed outside the white lines of the roadway, and in what I was instructed constituted the shoulder" (see Lorenz affidavit, ¶ 23).
In its answer to the claim, defendant asserted a counterclaim seeking damages for the difference between the claimant's contract bid price and the amounts paid to Annseal and Midland to complete the work.
It is well established that " 'summary judgment is a drastic remedy and should not be granted where there is any doubt as to the existence of a triable issue' " (Rotuba Extruders v Ceppos, 46 NY2d 223, 231 [citation omitted]). "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. Ctr., 64 NY2d 851, 853 ). Once the movant has made this showing, the burden shifts to the party opposing the motion "to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action" (Alvarez v Prospect Hospital, 68 NY2d 320, 324  citing Zuckerman v City of New York, 49 NY2d 557, 562 ).
As pertinent here, the contract's Standard Specifications reserve to the State's Engineer, "the right to make, in writing, at any time during the work, such changes in quantities and such alterations in the work as are necessary to satisfactorily complete the project" (Dockery Exhibit L, § 104-04). There is no dispute that claimant was advised orally and in writing that the roadway shoulders were not included in the scope of work and was provided an opportunity to complete the work following the written directive (see Lorenz Exhibit O). Even if it were assumed, therefore, that a reasonable interpretation of the contract as a whole included the shoulders, the Engineer's direction to exclude the shoulders from the scope of work did not constitute a breach of contract. The Standard Specifications provide a remedy for a "significant change" in the character of the work, which includes the situation where "a Major Item(2) of work . . . is . . . decreased below 75 percent of the original contract quantity" (Dockery Exhibit L, § 104-04). In such circumstances, "[a]ny allowance for a change in the unit price shall apply . . . in the case of a decrease below 75 percent, to the actual amount of work performed" (id.). Claimant's recourse, therefore, was not to abandon its work, but to pursue its claim for a unit price adjustment.
Moreover, guided by the general rules of contract interpretation, the instant contract unambiguously required the crack sealing work to be performed "where directed by the engineer" (Dockery Exhibit E, p. 17). Analysis begins with the " 'fundamental, neutral precept of contract interpretation . . . that agreements are construed in accord with the parties' intent,' and '[t]he best evidence of what parties to a written agreement intend is what they say in their writing' " (2138747 Ontario, Inc. v Samsung C&T Corp., 31 NY3d 372, 377 , quoting Greenfield v Philles Records, 98 NY2d 562, 569 ; see also Cloke v Findlan, 165 AD3d 1545 [3d Dept 2018]). Thus, "when parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms" (W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 ). "Such agreements should be read as a whole to ensure that undue emphasis is not placed upon particular words and phrases" (Bailey v Fish & Neave, 8 NY3d 523, 528 ; see also Matter of Westmoreland Coal Co. v Entech, Inc., 100 NY2d 352  ). Interpretation of the contract should not render any portion of the contract meaningless and, to the extent possible, should give effect to its general purpose (Beal Sav. Bank v Sommer, 8 NY3d 318, 324-325 ; Calocerinos v C&S Worldwide Holdings, Inc., 162 AD3d 1498 [4th Dept 2018]). Thus, "a court should not adopt an interpretation which would leave any provision without force and effect" (Zullo v Varley, 57 AD3d 536, 537 [2d Dept 2008], Gonzalez v Norrito, 256 AD2d 440, 440 [2d Dept 1998], lv dismissed 93 NY2d 888 ).
While the contract documents here make no express provision for the inclusion or exclusion of the highway shoulders, the contract specifications require that the contractor "[c]lean and seal cracks and joints along their entire length at locations shown in the contract documents or where directed by the Engineer" (Dockery Exhibit E, p. 17 [emphsis added]). Only primary cracks, defined as "a crack 1/8 inch to 1 inch in width with less than 25% of their lengths having secondary cracking"(3) were required to be sealed (id.). Claimant argues that because the specifications governing claimant's work expressly direct claimant to seal all primary cracks and not secondary cracks, the DOT may not "remove from claimant's contract primary cracks located in the shoulders of the relevant roadways" (claimant's memorandum of law, p. 10). Claimant contends, therefore, that the defendant breached the contract in removing the shoulders from the scope of work and failing to equitably adjust the claimant's unit price. In making this argument, however, claimant ignores the plain language of the contract requiring it to clean and seal cracks "where directed by the Engineer" (Dockery Exhibit E, p. 17). Moreover, the language in the specification upon which claimant relies provides only a description of the type of cracks to be filled, not their location in the roadway surface (id.).
To the extent claimant relies upon language in the bid documents instructing contractors to "seal cracks in the surface of highway pavements" for a contrary interpretation (reply affirmation of Daniel P. Adams, p. 1, citing Dockery Exhibit A, p. 50), such an interpretation would render meaningless the contract language requiring the work to be performed where directed by the Engineer. Moreover, the language on which claimant relies is found in the sentence defining crack sealers and how they are used "to seal cracks in the surface of highway pavements" (Dockery Exhibit A, p. 50). To extrapolate from this a requirement that the entire paved surface of the highways, including the shoulders, was to be crack sealed is not a practical and reasonable interpretation of the contract. The contract documents unambiguously permitted the Engineer to direct the locations where the crack sealer was to be applied. Consequently, claimant's abandonment of the work site constituted a material breach of its contract obligations thereby entitling the defendant to summary judgment on its counterclaim for breach of contract.
Damages for breach of a construction contract are generally measured by "the difference between the amount due on the contract and the amount necessary to properly complete the job or to replace the defective construction, whichever is appropriate" (see Thompson v McCarthy, 289 AD2d 663, 664 [3d Dept 2001] [internal quotation marks and citation omitted]; Ferreira v Saccento, 286 AD2d 366 [2d Dept 2001]; Liddell v Ali, 12 Misc 3d 133 [A], 2006 NY Slip Op 51182 [U] [App Term, 2d & 11th Jud Dists]). Here, however, payment for the work was on a unit price basis, based on the number of gallons of sealant used for the work (Dockery Exhibit A, Request for Bids, p. 50, § 8.3; Lorenz Affidavit, ¶ 5 and Exhibit B-2, p. 19 attached thereto; claimant's memorandum of law, ¶¶ 38-39). The Court therefore agrees with claimant's contention that the appropriate measure of defendant's damages is the difference between the claimant's unit price and the unit price paid to the contractors employed by the DOT to complete the work (see claimant's memorandum of law, ¶¶ 38-39).
Under Project 5V1531 claimant bid $266,955.00 for an estimated 14,430 gallons of sealant or $18.50 per gallon (Dockery Exhibit I; Lorenz Exhibit B). Annseal, the completion contractor for this project, was paid $306,635 for providing 15,470.06 gallons of sealant or $19.82 per gallon (Dockery affidavit, ¶ 39; Dockery Exhibit H). Consequently, the same 15,470 gallons under the claimant's contract would have cost the DOT $286,195.00. With respect to Project 5V1531, the State's damages are therefore $20,440.00 ($306,635.00 less $286,195.00). Under project 5V1534 claimant bid $119,598.00 for an estimated 3,858 gallons of sealant or $31.00 per gallon (Dockery Exhibit K; Lorenz Exhibit B). Midland, the completion contractor for this project, was paid $149,954.12 for providing 4,744 gallons of sealant or $31.61 per gallon (Dockery affidavit, ¶ 46; Dockery Exhibit J). Consequently, the same 4,744 gallons under the claimant's contract would have cost the DOT $147,064.00. With respect to Project 5V1534, the State's damages are therefore $2,890.12 ($149,954.12 less $147,064.00).
Total damages awarded to the State are $23,330.12(4) with interest at the statutory rate from August 4, 2016, the date of the completion contractors' last purchase order (Dockery Exhibit H) when damages were reasonably ascertainable (see CPLR 5001; Local 851 of Intl. Bhd. of Teamsters v State of New York, 36 AD3d 672, 673 [2d Dept 2007], lv denied 8 NY3d 811 ; Halsey v Connor, 287 AD2d 597, 597-598 [2d Dept 2001]).
Based on the foregoing, claimant's motion for summary judgment is denied. Defendant's cross motion for summary judgment on its counterclaim is granted, and defendant is awarded damages in the sum of $23,330.12 with interest at the statutory rate from August 4, 2016.
Let judgment be entered accordingly.
December 7, 2018
Saratoga Springs, New York
Francis T. Collins
Judge of the Court of Claims
1. "Crack sealers are hot poured liquid bituminous materials (rubberized asphalt) used to seal cracks in the surface of highway pavements" (Dockery Exhibit A, § 8.1, p. 50).
2. A "Major Item" of work is defined as "[a]ny contract pay item for which the original unit bid price multiplied by the original item quantity exceeds the following minimum major item value based on total contract bid price . . .", for contract bid prices less than or equal to $1,333,333 the Major Item Value is $20,000. (Exhibit A, p. 25 attached to reply affirmation of Daniel P. Adams, Esq.).
3. The contract defines a "secondary crack" as "a crack having a width less than 1/8 inch (Dockery Exhibit E).
4. While defendant alleged in its counterclaim damages for the costs incurred in re-letting the project, no such request was made or proof submitted in support of its cross motion.