L.K. Comstock & Co., Inc. v. Koch
| Citation | 147 Misc.2d 857,555 N.Y.S.2d 1019 |
| Decision Date | 06 April 1990 |
| Docket Number | ABCO-PEERLESS |
| Court | New York Supreme Court |
| Parties | L.K. COMSTOCK & COMPANY, INC., Plaintiff, v. Edward I. KOCH, as Mayor of the City of New York; Oliver J. Gray, as Director of the Bureau of Labor Services of the City of New York; City of New York; Public Development Corporation; Seaport Marketplace, Inc.; the Rouse Company; and Tishman Construction Corporation of New York, Defendants. SEAPORT MARKETPLACE, INC., Defendant and Third-Party Plaintiff v.SPRINKLER CORP., Alumex, Inc., Del Turco Bros. Inc., Domenick's Iron Works, Inc., Donaldson Acoustics Co., Inc., Oxhandler Structural Enterprises, Inc., Mosher Steel, P & M Sorbara Construction Ltd., Aragus Construction Corp., Third-Party Defendants. MOSHER STEEL, Third-Party Defendant and Fourth-Party Plaintiff, v. AMERICAN STEEL ERECTORS, INC., Fourth-Party Defendant. |
Mazur, Carp & Barnett, P.C., New York City, for plaintiff.
Lewis S. Finkelman, Asst. Corp. Counsel, New York City, for defendants.
Bruce Rothschild, Corwin & Solomon, New York City, for defendant/third party plaintiff Seaport Marketplace, Inc.
Fisher & Fisher, Brooklyn, for third party defendant/fourth party plaintiff Mosher Steel.
The City defendants (the "City") move for leave to renew and reargue this court's decision dated September 22, 1989 (N.Y.L.J. 9/28/89, p. 23 col. 2).
The underlying facts, taken from the court's prior decision, are as follows: The Mayor issued Executive Order No. 50 ("E.O. 50") effective April 25, 1980. Subsequently, regulations to implement E.O. 50 were promulgated by the Bureau of Labor Services of the City of New York ("BLS") effective January 21, 1982 and the BLS was given the responsibility to monitor compliance with E.O. 50. Section 7 of E.O. 50 entitled "Training Programs" provides "[c]ontracting agencies shall require contractors to make a good faith effort to achieve the ratio of one trainee to four journey-level employees of each craft on each construction project." Section 3(j) defines a trainee as "an economically disadvantaged person who qualifies for and receives training in one of the construction trades pursuant to a program other than apprenticeship programs ..." Under Section 3(g), an economically disadvantaged person means "a person who, or a member of a family which, is considered economically disadvantaged under applicable law."
In or about December, 1981, the City entered into certain agreements with Seaport Marketplace, Inc. ("Seaport") as general contractor, covering construction and renovation work at the South Street Seaport (the "project"). The agreements between the City and Seaport provided that Seaport would comply with and cause each subcontractor to comply with all provisions of E.O. 50.
In September 1983, Seaport entered into a subcontract with plaintiff in which plaintiff agreed to perform certain electrical work on the project. Their agreement, as well as the agreements between Seaport and the other subcontractors herein, provided that the subcontractor would comply with E.O. 50. Following completion of the project, the Public Development Association deducted the sum of $396,822.27 from its payment to Seaport on the ground that various subcontractors had failed to comply with the trainee provisions of E.O. 50. Included in this deduction is $179,732.00 attributable to plaintiff.
On December 23, 1987, plaintiff commenced the underlying action for a judgment declaring, inter alia, that E.O. 50 is void and unenforceable and that the City defendants are not entitled to withhold $179,732.00 from it. Plaintiff also seeks a permanent injunction against the City defendants preventing them from enforcing E.O. 50 and the regulations thereunder to the extent that requirements are imposed for the hiring of trainees by construction contractors on projects involving City contracting agencies.
Plaintiff previously moved for an order granting summary judgment against the City declaring the trainee provisions of E.O. 50 void and unenforceable and enjoining the City from enforcing those provisions. Seaport cross-moved for summary judgment based on plaintiff's motion requesting alternative relief depending on the court's disposition of plaintiff's motion. The City cross-moved to dismiss the complaint and for summary judgment on the grounds that the complaint failed to state a cause of action and was time-barred. This court, by decision of September 22, 1989: 1) granted plaintiff's motion; 2) granted the first branch of Seaport's cross-motion for summary judgment; and 3) denied the City's cross-motion to dismiss the complaint or for summary judgment.
The City now seeks leave to renew that decision on the ground that "... the court was not aware that the project was funded in large part by the United States Department of Housing and Urban Development ("HUD") and the City, as a recipient of the particular HUD grant involved, was not only authorized, but obligated, by the applicable federal regulations to implement the training program on the Project." The City also seeks to reargue that portion of the court's decision which granted summary judgment to Seaport in the amount of $396,822.27 on the first branch of its cross-motion.
To the extent that the City seeks renewal, it is relying on facts, i.e., the federal grant, which were known or should have been known to it at the time of the original motion. For this reason, the court would ordinarily deny the City's application for renewal (see Foley v. Roche, 68 A.D.2d 558, 568, 418 N.Y.S.2d 588 [1st Dept.1979]. However, because of the significance of the underlying social issue, which involves the employment of economically disadvantaged people, the court will, in its discretion, grant the City's application for renewal and reargument (see Oremland v. Miller Minutemen Construction Corp., 133 A.D.2d 816, 818, 520 N.Y.S.2d 397 [2d Dept.1987]; Pinto v. Pinto, 120 A.D.2d 337, 338, 501 N.Y.S.2d 835 [1st Dept.1986]; Levinger v. General Motors Corporation, 122 A.D.2d 419, 420, 504 N.Y.S.2d 819 [3d Dept.1986].
According to the City, HUD approved an Urban Development Action Grant ("UDAG") for the project in the amount of $20,450,000.00. The City asserts that federal regulations relating to such funding require the City to implement a training program assuring trainee employment preferences for economically disadvantaged City residents. The City claims to have met its obligations to the economically disadvantaged by requiring that Seaport and its subcontractors comply with the trainee provisions in E.O. 50. The City also contends, as it did previously, that, regardless of the court's decision, it is entitled to withhold funds from Seaport and the subcontractors which were specifically allocated to the training program to the extent that the program was not implemented.
In opposition, plaintiff contends that E.O. 50 is not authorized by HUD regulations because the regulations fail to make a specific delegation of power to the Mayor and fail to provide guidelines and standards. Plaintiff argues that any authority granted by the HUD regulations is vested in the legislative branch, not the executive, and that the Mayor requires an intervening legislative grant of power. Plaintiff further argues that the provisions of E.O. 50 directly conflict with the pertinent HUD regulations and that a contractor could comply with one set of provisions while being in violation of the other. Plaintiff cites the following differences: definition of persons eligible for favorable treatment; number of trainees to be hired; definition of "good faith effort"; sanctions for non-compliance; residency requirements; and income level. Plaintiff concludes that even if this court were to invalidate E.O. 50, the City would still comply with the HUD regulations. Plaintiff also restates its earlier position that the City's withholding of funds is an unjustified penalty because plaintiff saved no money and, in fact, incurred additional expenses by being forced to hire journeymen instead of trainees. Plaintiff's remaining arguments concerning Seaport's notice of claims and the impropriety of the instant motion are rendered moot by a stipulation between Seaport and the City and the court's decision to allow renewal and reargument.
Seaport requests that if the court adheres to the original decision it be granted the relief set forth therein. In the alternative, if the court reverses the prior decision, Seaport requests that all claims against it be dismissed.
In its agreement with the City, Seaport agreed to comply with the UDAG and HUD regulations as well as E.O. 50. In turn, compliance with these regulations was agreed to by the subcontractors on the project. Congress enacted the Housing and Community Development Act of 1977, 42 U.S.C. § 5318 authorizing HUD to make UDAGs to cities and urban counties experiencing economic distress. The HUD regulations governing UDAGs, in 24 CFR Part 570, Subpart G, specify that the City, as a UDAG recipient had to "comply with ... § 3 of the Housing and Urban Development Act of 1968, as amended, and implementing regulations at 24 CFR Part 135." The HUD regulations require that:
"to the greatest extent feasible opportunities for training and employment arising in connection with the planning and carrying out of any project assisted under any such program be given to lower income persons residing in the area of such project." (24 CFR sect. 135.1[a][2][i]
HUD allows the grant recipient to choose specific programs tailored to local needs (Dixson v. United States, 465 U.S. 482, 487, 104 S.Ct....
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