Andron Constr. Corp. v. Dormitory Auth. of State
| Decision Date | 22 April 2016 |
| Docket Number | No. A114–13.,A114–13. |
| Citation | 38 N.Y.S.3d 830 (Table) |
| Parties | ANDRON CONSTRUCTION CORP., Plaintiff, v. DORMITORY AUTHORITY OF the STATE OF NEW YORK, Defendant. |
| Court | New York Supreme Court |
Harold J. Gabriel, General Counsel, Golden's Bridge, Attorney for Andron Construction Corp.
Gibbons P.C., (Robert J. MacPherson and Philip W. Lamparello, of counsel), Newark, NJ, Co-counsel for Andron Construction Corp.
Eric T. Schneiderman, Attorney General, (Cornelia Mogor, of counsel), Albany, Attorney for Dormitory Authority of the State of New York.
, J.
In this commercial construction dispute, defendant Dormitory Authority of the State of New York (“DASNY”) moves for partial summary judgment, seeking the dismissal of plaintiff's claims for delay and acceleration damages. Plaintiff Andron Construction Corp. (“Andron”) opposes the motion and cross-moves for partial summary judgment on its first cause of action, seeking to recover an unpaid contract balance.
This action arises out of a construction project at the New York State Office of Mental Health (“OMH”), Rockland Children's Psychiatric Center, New Inpatient Building—Package B (“Project”). On or about November 1, 2007, the parties entered into a written agreement (“Contract”)1 for Andron to serve as a prime contractor for general construction work on the Project.
The original contract price was $15,642,000. According to DASNY, the net effect of approved change orders was to increase this sum to $19,059,881.62, of which Andron was paid $18,814,165.01. DASNY's computation reflects a backcharge of $758,341 for certain punch-list work that was deleted from the Contract (“Deleted Work”) and allegedly performed by Jemco Electric, Inc. (“Jemco”), a job order contractor to DASNY. Andron asserts that the Deleted Work had a value of no more than $42,677.36, and, in any event, the illegality of the job order contract between DASNY and Jemco precludes the imposition of the backcharge.
Andron's first cause of action seeks to recover the unpaid contract balance prior to the Jemco backcharge ($19,818,222.62), reduced by the alleged fair value of the Deleted Work ($42,677.36), leaving a remaining balance of $961,380.26. The second through fifth causes of action seek delay and acceleration damages of approximately $3.4 million.
DASNY raises three principal arguments in moving for dismissal of the causes of action seeking damages for delay and acceleration: (1) the claims are barred by the Contract's “no damages for delay” clause; (2) the claims also are barred by Andron's failure to comply with the notice provisions of the Contract; and (3) Andron's use of the “total cost method” for computing damages is improper. Andron opposes the motion and cross-moves for partial summary judgment on its first cause of action, seeking to recover the unpaid contract balance.
Discovery is complete, a trial-term Note of Issue has been filed, and the action has been assigned a day certain for trial of May 11, 2016. The pending motions were made returnable on February 29, 2016, and oral argument was held on April 1, 2016. This Decision & Order follows.
DASNY argues that any claim by Andron for delay damages (including acceleration,2 disruption, inefficiency, lost productivity, cost overruns and the like) is barred by Section 11.02 of the General Conditions of the Contract. The operative contractual language, commonly known as a “no damages for delay” clause, reads as follows:
No claims for increased costs, charges, expenses or damages of any kind shall be made by the Contractor against the Owner for any delays or hindrances from any cause whatsoever, provided that the Owner, in the Owner's discretion, may compensate the Contractor for any said delays by extending the time for completion of the Work as specified in the Contract.
A “no damages for delay” clause that “exculpates a contractee from liability to a contractor for damages resulting from delays in the performance of the latter's work” generally is enforceable (see Corinno Civetta Constr. Corp. v. City of New York, 67 N.Y.2d 297, 309 [1986]
; Tougher Indus., Inc. v. Dormitory Auth. of the State of NY, 130 A.D.3d 1393, 1393–1394, 15 N.Y.S.3d 262 [3d Dept 2015] ). Such a clause bars “claims for damages resulting from a delay of the project beyond the scheduled completion date” as well as “[claims] for increased costs in labor, materials, and equipment occurring prior to the expiration of the contract period” (Corinno, 67 N.Y.2d at 313–314, 502 N.Y.S.2d 681, 493 N.E.2d 905 ). As the Court of Appeals has explained:
All delay damage claims seek compensation for increased costs, however, whether the costs result because it takes longer to complete the project or because overtime or additional costs are expended in an effort to complete the work on time. It is of no consequence that the obstruction, whatever its cause, occurs during the term of the contract or afterwards or whether it disrupts the contractor's anticipated manner of performance or extends his time for completion. The claims are claims for delay and the exculpatory clause was drafted and included in the contract to bar them. (Id. ).
New York law does, however, recognize four exceptions to enforcement of a no-damages-for-delay clause: “(1) delays caused by the contractee's bad faith or its willful, malicious, or grossly negligent conduct, (2) uncontemplated delays, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee, and (4) delays resulting from the contractee's breach of a fundamental obligation of the contract” (Clifford R. Gray Inc. v. City School Dist. of Albany, 277 A.D.2d 843, 844, 716 N.Y.S.2d 795 [3d Dept 2000]
; see
Corinno, 67 N.Y.2d at 309, 502 N.Y.S.2d 681, 493 N.E.2d 905 ).
On a motion for summary judgment, the moving party bears the initial burden of establishing that no material issues of triable fact exist and that it is entitled to judgment as a matter of law (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] ). If the moving party meets its initial burden, the nonmoving party must produce sufficient proof, in admissible form, to demonstrate that a material issue of fact exists to defeat summary judgment (see
Alvarez, 68 N.Y.2d at 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 ; Zuckerman, 49 N.Y.2d at 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 ).
As the party seeking the summary dismissal of the claims for delay and acceleration damages, DASNY bears the initial burden of demonstrating that the exculpatory clause bars the claims and that no exception to enforcement is applicable (Tougher, 130 A.D.3d at 1394, 15 N.Y.S.3d 262
). Nonetheless, the “party seeking to invoke any of the exceptions to the general rule that no damages for delay clauses are enforceable bears a heavy burden” (Bovis, 108 A.D.3d at 147, 966 N.Y.S.2d 51 ).
Andron makes four principal allegations in support of its claims for delay and acceleration damages: (1) DASNY's refusal to grant, or even consider in good faith, extensions of Andron's completion date for excusable delay is a breach of the Contract that falls within the Corinno exceptions for bad-faith and uncontemplated conduct; (2) DASNY's failure to timely turn over the work site to Andron represents a breach of a fundamental, affirmative obligation of the Contract; (3) DASNY's failure to produce a coordinated set of mechanical, electrical and plumbing (“MEP”) drawings constitutes a breach of a fundamental contractual obligation, as well as bad-faith and uncontemplated conduct; and (4) DASNY's accelerative directives are breaches of the Contract that fall within the Corinno exception for uncontemplated delay.
Andron alleges that DASNY's refusal to extend its completion date for excusable delay is a breach of the Contract that caused it to sustain monetary damages. In seeking to avoid application of the exculpatory clause, Andron argues that DASNY's conduct was undertaken in bad faith and was not reasonably contemplated.
According to Andron, “[t]he contract not only contemplated it required that DASNY would grant [extensions of time for excusable delay] but DASNY refused with a willful disregard for the disruption to Andron's work plan and financial burdens that the refusal would cause” (Memorandum of Law in Opposition to Defendant's Motion for Partial Summary Judgment and in Support of Plaintiff's Cross-motion [“MOL”], at 3). In this connection, Andron maintains that “Section 11.02 shields DASNY from claims for damages due to delay, but only on the condition that DASNY grant extensions of time commensurate with the delay of the project critical path” (id., at 14, 502 N.Y.S.2d 681, 493 N.E.2d 905
). Thus, it is Andron's contention that DASNY's refusal to grant time extensions “constitute[s] bad faith ... as a matter of law” (id., at 3, 502 N.Y.S.2d 681, 493 N.E.2d 905 ). Andron further contends that DASNY's conduct was not within the contemplation of the parties when the Contract was made.
Relatedly, Andron argues that “DASNY concealed the fact that there would be no extensions of time due to OMH's need to have the buildings by the original contract date ...” (MOL, at 9). Andron alleges that DASNY knew (or believed) that OMH's funding for the Project was contingent upon the Project being completed by April 29, 2009, and, for that reason, continually advised Andron that requests for extensions of time could not be granted (Winter Aff. [January 28, 2016], ¶ 9[b] ). Thus, “the bad faith [also] was [the] inclusion in the bid documents of a provision for time extension due to excusable delay, while knowing that no such extensions would be given” (MOL, at 10).
In making these arguments, Andron first cites the delays it encountered in obtaining access to the work site. Andron's work was scheduled to commence on December 3, 2007, after completion of the concrete...
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