F. Garofalo Electric Co., Inc. v. New York University

• Decision Date: 24 December 2002
• Citation: 754 N.Y.S.2d 227,300 A.D.2d 186
• Court: New York Supreme Court — Appellate Division
• Parties: F. GAROFALO ELECTRIC CO., INC., Appellant,<BR>v.<BR>NEW YORK UNIVERSITY, Respondent.

300 A.D.2d 186

754 N.Y.S.2d 227

F. GAROFALO ELECTRIC CO., INC., Appellant,

v.NEW YORK UNIVERSITY, Respondent.

Decided December 24, 2002.

Concur — Mazzarelli, J.P., Rosenberger, Rubin and Gonzalez, JJ.

This case, on its second appearance before this Court, involves a dispute between plaintiff, F. Garofalo Electric Co., Inc. (FGE), an electrical contractor, and New York University (NYU), which hired FGE to perform electrical work on the construction of NYU's Skirball Institute of Biomolecular Medicine and Residential Tower (the Project). An agreement, dated November 20, 1990, between FGE and NYU required FGE to work under the direction and supervision of Morse Diesel International (MDI), the construction manager for the Project, and gave MDI exclusive control over the construction scheduling. Among other things, the contract required FGE to revise its schedules, to add additional workers and/or overtime labor as requested by MDI, and to continue work and maintain the schedule set by MDI, even in the event a dispute should arise regarding the work. The contract also permitted MDI to schedule other work at the same time and in the same area as FGE's work.

Construction began in the latter part of 1990, but progress on the electrical systems soon fell behind schedule. FGE contended that the delays were caused by, among other things, MDI's mismanagement and lack of coordination with other contractors, and vandalism and theft resulting from NYU's failure to provide adequate security, which required FGE to redo work it had already completed. While acknowledging various reasons for the delays, NYU argues that the many of the scheduling setbacks were attributable to "the insufficiency of [FGE's] workforce."

According to NYU, in order to address the problem, MDI negotiated an agreement with FGE in which certain "milestones" were set for the completion of the work. MDI purportedly sent a letter, dated April 7, 1993, to FGE memorializing the allegedly agreed-upon milestones. The letter set a deadline of May 7, 1993, for completion of a "total working," "fully operational" security system and all other electrical work. The letter also provided for "payment to FGE of $40,000 per week upon completion of specified milestones for a period of six weeks commencing March 22, 1993 through April 30, 1993," as well as for payment to FGE of half the retainage held by NYU throughout the Project and certain outstanding requisitions by specified dates. That letter was not signed by FGE, and FGE denies having agreed to the time limits it sets forth.

NYU soon thereafter accused FGE of failing to meet the designated milestones, and ceased tendering to FGE the $40,000 weekly milestone payments. When FGE purportedly threatened to cease work in response, NYU renewed the milestone payments. Between March and May 1993, NYU paid five of the six $40,000 milestone payments as well as FGE's outstanding February, March and April 1993 requisitions, and released over $300,000 in previously withheld retainage as further payment to FGE. However, beginning with FGE's May 1993 invoice, NYU refused to provide further payments to FGE, arguing in a July 15, 1993 letter that FGE had not timely completed the work. Between May and November 1993, MDI sent FGE a number of letters complaining about the quality of FGE's work, its failure to complete the work according to the schedule, and its failure to employ an adequate work force. In at least two of these letters, MDI demanded that FGE increase its work force and declared FGE to be in default of the contract. FGE countered that the work had been substantially performed and that the delays resulted from mismanagement, scheduling conflicts, vandalism and damage caused by others.

In July 1993, FGE commenced this action against NYU and MDI, seeking, in seven causes of action, payment of $749,581 for work performed pursuant to the contract, as well as additional damages incurred as a result of delays, and for payment for extracontractual work performed and materials provided. Defendants answered and asserted counterclaims for approximately $4 million in various costs allegedly incurred to complete or correct electrical work that FGE allegedly did not complete or perform as required by the contract. Four months later, on November 17, 1993, NYU notified FGE that it was terminating the contract.

In December 1997, NYU and MDI moved for partial summary judgment dismissing six of FGE's seven causes of action. The Supreme Court denied the motions. However, on appeal, this Court reversed, granted summary judgment dismissing the third and fifth causes of action against NYU, FGE's claims against MDI and all third-party claims (F. Garofalo Elec. Co. v New York Univ., 270 AD2d 76, lv dismissed 95 NY2d 825), leaving only FGE's first and second causes of action against NYU for breach of contract and to recover for certain extra work and materials, and NYU's counterclaims against FGE.

Thereafter, NYU moved for summary judgment dismissing FGE's remaining claims and for summary judgment on its own counterclaims. Supreme Court granted NYU's motion, dismissed FGE's claims against NYU, awarded summary judgment to NYU on its counterclaims, and referred the matter to a special referee to hear and report on which of the costs claimed by NYU should be allocated to FGE's alleged failure to perform under the contract. The court...