Corinno Civetta Const. Corp. v. City of New York, NAB-TERN

• Citation: 493 N.E.2d 905,502 N.Y.S.2d 681,67 N.Y.2d 297
• Decision Date: 06 May 1986
• Docket Number: NAB-TERN
• Parties: , 493 N.E.2d 905 CORINNO CIVETTA CONSTRUCTION CORP., Appellant, v. CITY OF NEW YORK, Respondent. ANDREW CATAPANO CO., INC., and Naclerio Contracting Co., Inc., a Joint Venture, Appellant, v. CITY OF NEW YORK, Respondent. HONEYWELL, INC., Appellant-Respondent, v. CITY OF NEW YORK, Respondent-Appellant.CONSTRUCTORS, Appellant, v. CITY OF NEW YORK (YANKEE STADIUM), Respondent. (And Two Third-Party Actions.)
• Court: New York Court of Appeals

Page 681

502 N.Y.S.2d 681

67 N.Y.2d 297, 493 N.E.2d 905

CORINNO CIVETTA CONSTRUCTION CORP., Appellant, v. CITY OF NEW YORK, Respondent.

ANDREW CATAPANO CO., INC., and Naclerio Contracting Co., Inc., a Joint Venture, Appellant, v. CITY OF NEW YORK, Respondent.

HONEYWELL, INC., Appellant-Respondent, v. CITY OF NEW YORK, Respondent-Appellant.

NAB-TERN CONSTRUCTORS, Appellant, v. CITY OF NEW YORK (YANKEE STADIUM), Respondent. (And Two

Third-Party Actions.)

Court of Appeals of New York.

May 6, 1986.

Lester M.A. Gulitz, Michael S. Torre and Jonah C. Grill, New York City, for appellant in the first above-entitled action.

Frederick A.O. Schwarz, Jr., Corp. Counsel (James P. Griffin and John F. Grubin, New York City, of counsel), for respondent in the first above-entitled action.

Tony Berman, New York City, Domenick L. Gabrielli, Rochester, Robert G. Benisch, New York City, and William G. Eggers, Rochester, for appellant in the second above-entitled action.

Frederick A.O. Schwarz, Jr., Corp. Counsel (John F. Grubin, Allen E. Burns and Helene Fromm, New York City, of counsel), for respondent in the second above-entitled action.

Julius L. Schapira, Louis Cantor, Jerome Reiss, Morris Dershowitz and Kalvin Kamien, New York City, for appellant-respondent in the third above-entitled action.

Frederick A.O. Schwarz, Jr., Corp. Counsel (John F. Grubin, Allen E. Burns, New York City, and Emily Pines, of counsel), for respondent-appellant in the third above-entitled action.

George P. Felleman and Mitchell Weitz, New York City, for County of Suffolk, amicus curiae, in the first, second and third above-entitled actions.

Eli Saul Cohn and Franklin E. Tretter, New York City, for appellant in the fourth above-entitled action.

Frederick A.O. Schwarz, Jr., Corp. Counsel (James P. Griffin and John F. Grubin, of counsel), for respondent in the fourth above-entitled action.

OPINION OF THE COURT

SIMONS, Judge.

In Kalisch-Jarcho, Inc. v. City of New York, 58 N.Y.2d 377, 461 N.Y.S.2d 746, 448 N.E.2d 413, we reaffirmed the rule that contract clauses barring a contractor from recovering damages for delay in the performance of a contract are valid, that they will prevent recovery of damages resulting from a broad range of reasonable and unreasonable conduct by the contractee if the conduct was contemplated by the parties when they entered into the agreement, but that they will not excuse or prevent the recovery of damages resulting from the contractee's grossly negligent or willful conduct, i.e., conduct which "smacks of intentional wrongdoing" (supra, at p. 385, 461 N.Y.S.2d 746, 448 N.E.2d 413). The common legal issue in the four appeals now before us is whether that standard is applicable when the delays caused by the contractee were not contemplated at the time the parties entered into the contract. The Appellate Division, First Department, interpreted the Kalisch-Jarcho decision as holding that the city's no-damage-for-delay clause barred contractors from recovering damages for all delays, contemplated or uncontemplated, and it dismissed the complaint in each action. Our decision in Kalisch-Jarcho did not decide the issue, however, nor did it change the existing rule which provides that damages resulting from uncontemplated delays caused by the contractee may be recovered despite the existence of a broad exculpatory clause relieving the contractee from liability. We now reaffirm that rule. Thus, although we agree with the Appellate Division's conclusions that plaintiffs in Corinno Civetta and Honeywell failed to establish a prima facie case of liability against the city and that their causes of action for delay damages should be dismissed, we differ with its reasoning. In Catapano and Nab-Tern, however, the city's moving papers are insufficient to warrant relief and the motions for summary judgment should have been denied.

I

The claim of Corinno Civetta arises out of a contract by which plaintiff was to reconstruct and install approximately 245 feet of combined sewer beneath the west side of Central Park between West 61st Street and Columbus Circle at a price of $207,061. The contract was executed on September 13, 1979 and by its terms was to be completed within 100 consecutive days. Work began on October 1, 1979 but was not completed until December 1980. Plaintiff brought this action seeking to recover various items of damage including damages of $162,343 resulting from actions by the city which it alleges delayed the project. Trial Term denied the city's motion for partial summary judgment dismissing the cause of action for delay damages and granted plaintiff's cross motion for partial summary judgment on the remaining causes of action. The city appealed only the denial of its motion and the Appellate Division reversed, granted the motion, and dismissed the cause of action for delay damages (107 A.D.2d 610, 483 N.Y.S.2d 1017). The remaining causes of action have been settled, thus presenting a final order for review.

In Catapano plaintiff is seeking damages in the amount of $1,850,000 for delays in completing its contract to construct certain sewers in Queens which allegedly were caused by the city. The parties executed the contract in June 1977 for a total contract price in excess of $3,850,000 and work was to commence on August 8, 1977. Sewer construction was scheduled to be completed by September 21, 1978 and street restorati was to be accomplished within an additional 100 consecutive days. The project was not finished, however, until March 2, 1980. The city's motion for summary judgment dismissing the complaint, or alternatively to strike the complaint under CPLR 3126 for failure to answer interrogatories, was denied by Special Term. On appeal, the Appellate Division modified by granting the city's motion for summary judgment to the extent of dismissing the second cause of action for delay damages and otherwise affirmed (107 A.D.2d 640, 484 N.Y.S.2d 566). The parties have stipulated to discontinue the remaining causes of action with prejudice.

The claim in Honeywell arises out of a contract for the installation and maintenance of a system of instrumentation and data logging equipment at the city's sewage treatment plants at Rockaway, Jamaica, Bowery Bay, and Tallman's Island at a price of $1,600,000. The contract was executed in August 1973 and provided that installation of the equipment was to be completed in three and one-half years, by February 1977, and that thereafter plaintiff would maintain the system at each of the four plant locations for an additional two years. Plaintiff terminated work at all plants in February 1979, the date originally scheduled for completion of all its contract obligations, with the installation work unfinished. It instituted this action in 1981 seeking damages on a quantum meruit basis for $1,342,000, which represented the difference between what it claimed was the reasonable value of the work performed and the payments already received. The city counterclaimed for the cost of completing the system and consequential damages, alleging abandonment and breach of contract by plaintiff. Following a trial, the jury returned a verdict in favor of plaintiff and against the city for $1,225,845 and judgment was entered on the verdict. The city's counterclaims were dismissed. The Appellate Division reversed the judgment, dismissed plaintiff's complaint and affirmed the order dismissing the city's counterclaims (108 A.D.2d 125, 488 N.Y.S.2d 386).

The contract in Nab-Tern required plaintiff to perform services as general contractor for the reconstruction of Yankee Stadium at a price of $22,220,000. By its terms, work was to commence on January 11, 1974 and be completed by February 6, 1976. The project was not finished until April 14, 1976. Plaintiff brought this action in 1978 alleging several causes of action including one for delay damages totaling $5,744,267. Special Term denied the city's motion for partial summary judgment dismissing the fourth cause of action for delay damages and granted plaintiff's cross motion to amend its complaint to allege willful misconduct and gross negligence by defendant in the cause of action for delay damages. The Appellate Division reversed, granted the city's motion and denied plaintiff's cross motion (111 A.D.2d 56, 489 N.Y.S.2d 181). The court then granted plaintiff leave to appeal to this court on a certified question.

Plaintiffs present three legal issues.

First, all four plaintiffs contend that the Appellate Division erred in dismissing their claims for delay damages on the basis of the exculpatory clause contained in the contracts. This is so, they claim, (a), because the rule set forth in Kalisch-Jarcho does not apply to uncontemplated delays and the court failed to consider whether the delays in question were contemplated or uncontemplated, and (b), because even if it is contended that the delays were contemplated when the parties entered into the contracts there are factual questions which must be decided to resolve that issue and to resolve whether the city's conduct in causing the delays amounted to willful misconduct, bad faith or gross negligence. For its part, the city asserts that under the broad exculpatory clause contained in the contracts, all claims for delay damages are barred unless deliberate and intentional misconduct is established. ¹ Alternatively, it contends that even if the contemplation of the parties is relevant it is entitled to judgment as a matter of law because there are no questions of fact in any of the actions warranting trials.

A second issue, raised only in Honeywell, is whether the city's conduct was so unreasonable and the resulting delays so protracted that the city may be charged with abandoning or breaching the contract, conduct which entitles Honeywell to recover damages notwithstanding the contract's exculpatory clause.

Finally, plaintiffs Catapano and Nab-Tern allege that a substantial portion of the...