L&L Painting Co. v. Odyssey Contracting Corp.

Decision Date25 September 2014
Docket NumberIndex No.: 105126/2008
Citation2014 NY Slip Op 32511 (U)
CourtNew York Supreme Court
PartiesL & L PAINTING CO., INC., Plaintiff, v. ODYSSEY CONTRACTING CORP., Defendant, and FEDERAL INSURANCE COMPANY, Counterclaim-Defendant.

Motion Seq. No. 008, 009

Motion Date: 4/7/2014

BRANSTEN, J.:

This action arises out of a dispute between plaintiff L & L Painting Co., Inc. ("L&L") and defendant Odyssey Contracting Corp. ("Odyssey") over payment for Odyssey's work on the Queensboro Bridge Repainting Project, L&L alleges three causes of action for breach of contract, and Odyssey asserts six counterclaims for breach of contract, breach of the duty of good faith and fair dealing, and conversion.

In motion sequence number 008, L&L and additional counterclaim-defendant Federal Insurance Company ("Federal") seek summary judgment, dismissing the counterclaims asserted against them. In motion sequence 009, Odyssey separately movesfor partial summary judgment in the amount of $3,083,294.66 for unpaid work; for dismissal of L&L's first and third causes of action; and, for sanctions against L&L for spoliation of evidence. The motions are consolidated for purposes of their disposition.

For the reasons that follow, L&L and Federal's motion for summary judgment is granted in part and denied in part, while Odyssey's motion is denied.

I. Background

In or around January 2004, L&L was awarded a $167 million contract by the New York City Department of Transportation ("City") to perform work on the Queensboro Bridge Repainting Project, also referred to as the Queensboro Bridge Protective Coating project (the "Project"). See L&L's Statement of Undisputed Facts, and Odyssey's Response, ¶¶ 1-2; Odyssey's Statement of Undisputed Facts, ¶ 1. L&L was the prime contractor on the Project, and Federal was its payment bond surety. In March 2004, L&L and Odyssey entered into a subcontract pursuant to which Odyssey was to perform paint removal and re-painting work on the Project for the price of $37,400,000. See Affirmation of Charles Fastenberg ("Fastenberg Affirm") Ex. 7 ("Subcontract"); id. Ex. 8 (March 2, 2004 Letter from L&L to Odyssey).

The parties do not dispute that Odyssey's work on the Project was divided into four phases; however, they dispute whether the four phases were covered by onesubcontract or four separate subcontracts. Odyssey submits copies of four subcontracts, all dated March 3, 2004, which include the same provisions, but were executed at different times. See Affidavit of Theodore Kartofilis in Support of Odyssey's Motion ("Kartofilis Aff") Exs. Y-BB. L&L, while acknowledging that there were separate subcontract documents for each phase, contends that the separate agreements were created "for accounting purposes" only, and that there was just one subcontract between the parties. See Affidavit of Scott Earl in Support of L&L's Motion ("Earl Aff") ¶ 5. For purposes of the instant motions, however, L&L assumes, as will the Court, that there were four separate subcontracts. In July and August 2005, two subcontract amendments, or change orders, also were executed for additional containment work. See Kartofilis Aff. Ex. Y (Subcontract Amendment and Subcontract Amendment #2).

Odyssey's work, which included installing shielding and containment systems, removing old paint, and applying new paint, was performed at different locations on the bridge. These locations were identified by "panel points" along the Queensboro Bridge, and by "bays," the sections of the bridge between the panel points. The main truss spans of the bridge have 123 panel points, which divide the bridge into 122 bays. The parties agree that the four subcontracts corresponded with, and divided Odyssey's work into, the following phases: I and ITA included panel points 77-123 (and tower 4); IIB included panel points 30-47; III included panel points 1-30 (including tower 1); and IV includedpanel points 47-77. See Odyssey's Statement of Undisputed Facts, and L&L's Response, ¶¶ 4, 5,

For each phase, Odyssey's work started with designing and installing a shielding system to protect motorists and pedestrians, and a containment system to protect the environment. Once this was done, Odyssey removed old paint and applied new paint. After the City's engineer approved the new paint system, Odyssey removed the containment system and touched up areas that could not be painted while the containment system was in place. The shielding system could be removed only after the touch-up work was approved by the City's engineer. Id. ¶ 6.

A. Subcontract Payment Provisions

Section 3 of the subcontracts, pertaining to payment, set out the total amount to be paid by L&L for the work identified in each subcontract. Specifically, section 3 provided that, in order to receive "progress payments," Odyssey was to submit to L&L, on a monthly basis, an invoice for work done during the prior month, together with a "Billing Breakdown Form AIA G702-G703" and an executed waiver of lien form. See Fastenberg Affirm. Ex. 7. Section 3(b) further provided that partial payments were to be made to Odyssey each month in an amount equal to 95 percent of the value of the quantity of work performed, as estimated by the City or the City's representative, and "[n]o partial payment. . . shall operate as approval or acceptance of" Odyssey's work. Id. With respect to final payment, the subcontracts provided that "[u]pon complete performance of this Subcontract by the Subcontractor and final approval and acceptance of Subcontractor's Work by the Owner, the Contractor will make final payment to the Subcontractor of the balance due to it." Id. § 3(c). The extra containment work done by Odyssey, pursuant to the written change orders, was billed separately from the base subcontract work.

As required by the subcontracts, Odyssey prepared and submitted monthly invoices to L&L. Odyssey's invoices did not include the specific amounts owed; instead, they were spreadsheets, breaking down and identifying work completed and approved for payment. See e.g. Fastenberg Affirm. Ex. 13. The spreadsheets set out, in grid format, each item of work to be performed at each panel point between 1 and 123, and indicated the date when each item of work was completed and approved for payment by the City. See id.; Odyssey's Statement of Undisputed Facts ¶ 13; L&L's Statement of Undisputed Facts ¶¶ 10-12. L&L then prepared invoices for the approved items of work, based on a calculation of City-approved unit costs for each item of work, and submitted the invoices to the City for payment. L&L provided copies of the invoices to Odyssey, with a "translation," or back-up notes, showing the progress payment amount due for each month. See Odyssey's Statement of Undisputed Facts ¶¶ 16-17. Pursuant to thesubcontracts, monthly progress payments were to be paid to Odyssey seven days after L&L received such payments from the City. See Fastenberg Affirm. Ex. 7 § 3(b).

B. Payment Dispute

Odyssey claims, however, that the City paid L&L for work performed by Odyssey but L&L did not pay Odyssey. That is, although Odyssey received progress payments, it claims that it did not receive the full amounts due on its invoices. According to Odyssey, because it was not receiving proper payments, its business relationship with L&L began to deteriorate in early 2008. See Kartofilis Aff. ¶ 55.

In February 2008, Odyssey sought payment from L&L of $1,379,265.93, for work performed through December 2007 on the first three phases of the Project, which Odyssey claimed was underbilled. See Earl Aff. Ex. F. L&L responded by requesting that Odyssey identify the specific items of work for which it had not been paid. See id. Ex. G. After a meeting in late March 2008 did not resolve the payment issue, Odyssey advised L&L. by letter dated April 1, 2008 ("April 1 letter"), that it was terminating the four subcontracts with L&L due to L&L's failure "to make full and timely payments to Odyssey . . . for work performed." (Fastenberg Affirm. Ex. 9.) In its letter, Odyssey also informed L&L that, "[n]otwithstanding the fact that the termination is effective immediately, [it] will remove its equipment and materials from the site after completionof the punch list-work on subcontracts I, IIA, IIB and III." Id. On April 2,2008, Odyssey's attorney wrote to L&L ("April 2 letter"), claiming that L&L owed Odyssey $5,980,657.12, for work done under all four subcontracts, change order work and retainage, extra work, and other miscellaneous items. See Fastenberg Affirm. Ex. 11.

The parties subsequently met again on April 7, 2008. When Odyssey refused to retract its April 1 letter, L&L, by letter dated April 8, 2008 ("April 8 letter"), declared Odyssey in default of the subcontracts and directed Odyssey to discontinue its work and remove all employees from the work site. See Fastenberg Affirm. Ex. 12. L&L commenced this action the next day, on April 9, 2008, seeking damages for breach of contract, including about $16 million for the cost of completing Odyssey's work. Odyssey, in its counterclaims, seeks more than $6 million for unpaid contract work, and additional amounts for extra work and delay damages.

II. Discussion

It is well-settled that to prevail on a motion for summary judgment, the moving party must make a prima facie showing of its entitlement to judgment as a matter of law, by submitting evidentiary proof in admissible form sufficient to establish the absence of any material issues of fact. See Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 (1986); Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980). Once such a showing hasbeen made, to defeat summary judgment, the opposing party must demonstrate, also by producing evidentiary proof in admissible form, that genuine triable issues of fact exist. See Alvarez, 68 N.Y.2d at 324; Zuckerman, 49 N.Y.2d at 562. The evidence must be viewed in a light most favorable to the nonmoving party, and the motion must be...

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