Barry, Bette & Led Duke Inc. v. State

• Decision Date: 12 March 1998
• Docket Number: No. 74178,74178
• Citation: 669 N.Y.S.2d 741,240 A.D.2d 54
• Court: New York Supreme Court — Appellate Division
• Parties: , 1998 N.Y. Slip Op. 2258 BARRY, BETTE & LED DUKE INC., Respondent, v. STATE of New York, Appellant. (Claim)

Page 741

669 N.Y.S.2d 741

240 A.D.2d 54, 1998 N.Y. Slip Op. 2258

BARRY, BETTE & LED DUKE INC., Respondent, v. STATE of New York, Appellant. (Claim No. 74178.)

Supreme Court, Appellate Division Third Department.

March 12, 1998.

Dennis C. Vacco, Attorney General (Patrick Barnett-Mulligan, Peter G. Crary and Gina M. Ciccone, of counsel), Albany, for appellant.

Murphy, Burns, Barber & Murphy LLP (William J. Murphy, of counsel), Albany, for C.T. Brickman & Associates.

Before CARDONA, P.J., and MERCURE, WHITE, SPAIN and CARPINELLO, JJ.

MERCURE, Justice.

Claimant was the prime general contractor on a project for construction of a headquarters complex for the State Division of Military and Naval Affairs at the Albany County Airport. C.T. Brickman & Associates (hereinafter Brickman) subcontracted with claimant to install partitions and suspended acoustical ceilings in the complex. In December 1986, claimant filed a claim against the State for damages resulting from an alleged five-month delay in completing the project based upon, among other things, a May 2, 1985 stop work order that the State had issued with regard to partition work in the headquarters building. Subsequently, in May 1988, claimant filed an amended claim asserting a second cause of action on behalf of Brickman (the only cause of action at issue on this appeal), seeking to recover the cost of additional work Brickman was required to perform in connection with its installation of acoustical ceilings in the area affected by the stop work order.

At trial, the parties stipulated that it cost Brickman $25,532.41 to perform extra work necessitated by another subcontractor's installation of fireproofing material during the time period covered by the stop work order and prior to Brickman's installation of the ceilings. At the conclusion of the evidence, the State moved to dismiss the second cause of action based upon the lack of privity of contract between Brickman and the State. The Court of Claims denied the motion and, on the merits, found that the State was liable for the extra work performed by Brickman. The State appeals from the judgment awarding damages in the stipulated sum. At issue is the propriety of the Court of Claims' finding of an implied liquidating agreement between claimant and Brickman under the terms of which claimant was to prosecute Brickman's claim against the State and pay over to Brickman any award received in satisfaction of that claim. Because we conclude that the Court of Claims erred in that finding, we are constrained to reverse its judgment and dismiss claimant's second cause of action.

It is established law that the general contractor on a construction project which has itself sustained no injury may not bring suit on behalf of a subcontractor for additional costs caused by the owner's delays (see, Degnon Contr. Co. v. City of New York, 235 N.Y. 481, 486-487, 139 N.E. 580). In addition, lacking privity of contract, the subcontractor is also precluded from bringing suit against the owner (Alvord & Swift v. Muller Constr. Co., 46 N.Y.2d 276, 282, 413 N.Y.S.2d 309, 385 N.E.2d 1238). The frequently employed remedy is a "liquidating agreement" between the general contractor and the subcontractor, which in its general form (1) imposes liability upon the general contractor for the subcontractor's increased costs, thereby providing the general contractor with a basis for legal action against the owner, (2) liquidates that liability in the amount of the general contractor's recovery against the owner, and (3) provides for a pass-through of that recovery to the subcontractor (see, Degnon Contr. Co. v. City of New York, supra, at 487, 139 N.E. 580; Schiavone Constr. Co. v. Triborough Bridge & Tunnel Auth., 209 A.D.2d 598, 599, 619 N.Y.S.2d 117; Lambert Houses Redevelopment Co. v. HRH Equity Corp., 117 A.D.2d 227, 230-231, 502 N.Y.S.2d 433; Ardsley Constr. Co. v. Port of N.Y. Auth., 61 A.D.2d 953, 403 N.Y.S.2d 43).

As correctly observed by the Court of Claims, liquidating agreements, which are generally enforceable, need not take any particular form. They may be memorialized in the...