Westinghouse Elec. Corp. v. New York City Transit Authority

Decision Date08 April 1993
Docket NumberDocket No. 92-7503
Citation990 F.2d 76
PartiesWESTINGHOUSE ELECTRIC CORPORATION, Plaintiff-Appellant, v. NEW YORK CITY TRANSIT AUTHORITY, Metropolitan Transportation Authority, Defendant-Appellee.
CourtU.S. Court of Appeals — Second Circuit
ORDER

Present: LUMBARD, ALTIMARI, Circuit Judges.

LOKEN, Circuit Judge, for the United States Court of Appeals for the Eighth Circuit, sitting by designation.

On consideration of the briefs and records and the oral argument in this appeal, it is hereby ORDERED that the Clerk of the Court transmit to the Clerk of the New York Court of Appeals a Certificate in the form attached, together with a complete set of the briefs, appendix and record filed by the parties with this court.

J. EDWARD LUMBARD

Hon. J. Edward Lumbard, by FXA

FRANK X. ALTIMARI

Hon. Frank X. Altimari

JAMES B. LOKEN

Hon. James B. Loken, by FXA

Circuit Judges.

Certificate

to

the New York Court of Appeals

(pursuant to McKinney's Revised 1992 New York Rules

of Court § 500.17(b)--certification of

unsettled questions of state law)

On October 17, 1983, Westinghouse Electric Corporation ("Westinghouse"), a Pennsylvania corporation, entered into a contract with the New York City Transit Authority ("NYCTA") and the Metropolitan Transportation Authority ("MTA", collectively herein "NYCTA") for the sale, delivery, and installation of power rectifier equipment to five substations for the New York City subway system.

During the course of Westinghouse's performance under the contract, numerous disputes arose between the parties concerning, inter alia, whether Westinghouse was entitled to damages for delay or compensation for additional work, whether NYCTA could properly delete certain portions of the work from the contract, whether Westinghouse was being restrained from performing under the contract, and whether Westinghouse was entitled to unilaterally stop work under the contract.

The contract contains an alternative dispute resolution ("ADR") provision, Article 8.03, which provides as follows:

ARTICLE 8.03. Disputes. (a) In the event the Contractor and Authority are unable to resolve their differences concerning a determination by the Superintendent, the Contractor may initiate a dispute in accordance with the procedure set forth in this Article. Exhaustion of these procedures shall be a precondition to any lawsuit permitted hereunder.

(b) The parties to this contract authorize the Superintendent, acting personally, to decide all questions of any nature whatsoever arising out of, under, or in connection with, or in any way related to or on account of, this Contract (including claims in the nature of breach of contract or fraud or misrepresentation before or subsequent to acceptance of the Bidder's Proposal) and his decision shall be conclusive, final and binding on the parties. His decision may be based on such assistance as he may find desirable, including advice on engineering or other experts. The effect of his decision shall not be impaired or waived by any negotiations or settlement offers in connection with the question decided, whether or not he participated therein himself, or by any prior decision of others, which prior decisions shall be deemed subject to review, or by any termination or cancellation of this Contract. All such disputes shall be submitted in writing by the Contractor to the Superintendent, acting personally, for his decision, together with all evidence and other pertinent information in regard to such questions, in order that a fair and impartial decision may be made. The Superintendent shall render his decision in writing and deliver a copy of the same to the Contractor.

(c) If the Contractor protests the determination of the Superintendent, the Contractor may commence a lawsuit in a Court of competent jurisdiction of the State of New York under Article 78 of the New York Civil Practice Law and Rules or a United States Court in New York, under the procedures and laws applicable in that court, it being understood the review of the Court shall be limited to the question of whether or not the Superintendent's determination is arbitrary, capricious or grossly erroneous to evidence bad faith. The Contractor must allege in his complaint and prove such submission, which shall be a condition precedent to any such action. No evidence or information shall be introduced or relied upon in such an action that has not been so presented to the Superintendent personally.

(d) Neither the requirements to this Article nor the time necessary for compliance therewith, however, shall affect the time to have accrued for purposes of any statute controlling actions against the Authority, and the time of such accrual shall be determined without reference to this paragraph.

The "Superintendent" is defined in Article 1.02(a)(10):

The word "Superintendent" to mean the General Superintendent (MOW), or his duly authorized representative and any successor or successors or any deputy or substitute for him who shall be appointed by the Authority to Administer the Contract.

For purposes of dispute resolution, F.D. Westfall, Jr., a NYCTA employee whose title is Chief Engineer, was the Superintendent.

By letter dated November 3, 1988, Westinghouse notified Westfall that the NYCTA's failure to resolve numerous longstanding design problems and other restraints and prohibitions on Westinghouse's work constituted a constructive work stop order. The letter requested that the NYCTA resolve all outstanding performance problems within 90 days. In a subsequent letter dated February 3, 1989, Westinghouse advised Westfall that it was suspending further performance effective February 3, because the NYCTA did not respond to the problems set forth in the earlier letter.

Westfall responded by letter dated February 8, 1989, acknowledging Westinghouse's formal advice that it was suspending performance under the contract. Westfall further stated that this was a breach of contract and directed Westinghouse to discontinue all work pursuant to the contract. In addition, Westfall advised Westinghouse that a recommendation would be made that it be held in default under the contract. On June 13, 1989, the NYCTA advised Westinghouse that Westinghouse had formally been declared in default under the contract.

On June 21, 1989, Westinghouse submitted to Westfall a "Request for Additional Compensation and Time Extension." The request included, inter alia, the costs of additional labor, equipment, and general and administrative expenses Westinghouse claimed it incurred to perform the contract due to the NYCTA's alleged failure to discharge its contract obligations. Westinghouse asked that the NYCTA's declaration that Westinghouse was in default under the contract be rescinded and concluded by requesting a superintendent's decision as required by Article 8.03 of the contract.

By letter dated July 26, 1989, Westfall advised Westinghouse that he rejected Westinghouse's claims. Westfall stated:

in view of the submission of the dispute by both parties, I find that as a result of the willful abandonment of and failure to complete the contract by Westinghouse, the contractor has forfeited any claim for any compensation by the Authority, and that the Authority is entitled to recover from Westinghouse all expenses and damages as stated in Chapter 7 of the contract.

Westinghouse subsequently filed an action for breach of contract and rescission on August 2, 1989. Westinghouse contended that the NYCTA...

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4 cases
  • Hottle v. Seidman, 268 Conn. 694 (CT 5/4/2004), (SC 16941).
    • United States
    • Supreme Court of Connecticut
    • 4 Mayo 2004
    ...Circuit subsequently certified the issue to the New York Court of Appeals for an articulation of the law and public policy of New York. Id., 80. The New York Court of Appeals concluded that the alternative dispute resolution clause was enforceable. Westinghouse Electric Corp. v. New York Ci......
  • Westinghouse Elec. Corp. v. New York City Transit Authority
    • United States
    • New York Court of Appeals
    • 19 Octubre 1993
  • Westinghouse Elec. Corp. v. New York City Transit Authority
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • 1 Febrero 1994
    ...the question of the ADR provision's validity to the New York Court of Appeals, see Westinghouse Elec. Corp. v. New York City Transit Auth., 990 F.2d 76, 80 (2d Cir.1993) (the "Certification"), which subsequently upheld the provision's validity. See Westinghouse Elec. Corp. v. New York City ......
  • Westinghouse Elec. Corp. v. New York City Transit Authority
    • United States
    • New York Court of Appeals
    • 11 Mayo 1993
    ...CITY TRANSIT AUTHORITY, Metropolitan Transportation Authority, Defendant. Court of Appeals of New York. May 11, 1993. Prior report: 2nd Cir., 990 F.2d 76. Certification of question by the United States Court of Appeals for the Second Circuit, pursuant to section 500.17 of this Court's Rules......

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