Five Star Elec. Corp. v. A.J. Pegno Constr. Co.

• Decision Date: 24 May 2022
• Docket Number: s. 15501,15502,Index No. 400897/11,Case Nos. 2021-02404,2021-02405,2021-02740,Nos. 15501
• Citation: Five Star Elec. Corp. v. A.J. Pegno Constr. Co., 2022 NY Slip Op 3345, 15502, 2021-02405, 2021-02740 (N.Y. App. Div. May 24, 2022)
• Parties: Five Star Electric Corp., Plaintiff-Respondent, v. A.J. Pegno Construction Co., Inc./Tully Construction Co., Inc, etc., et al., Defendants-Appellants.
• Court: New York Supreme Court — Appellate Division

2022 NY Slip Op 03345

Five Star Electric Corp., Plaintiff-Respondent, v. A.J. Pegno Construction Co., Inc./Tully Construction Co., Inc, etc., et al., Defendants-Appellants.

Appeal Nos. 15501, 15502, Index No. 400897/11, Case Nos. 2021-02404, 2021-02405, 2021-02740

Supreme Court of New York, First Department

May 24, 2022

Hogan Lovells U.S. LLP, New York (Matthew J. Higgins of counsel) and Hogan Lovells U.S. LLP, Washington, D.C. (Jessica L Ellsworth of the bar of the District of Columbia, admitted pro hac vice, of counsel), for appellants.

Duane Morris LLP, New York (Mark A. Canizio of counsel), for respondent.

Before: Webber, J.P., Moulton, Kennedy, Mendez, Pitt, JJ.

Judgment Supreme Court, New York County (Andrew Borrok, J.), entered July 23, 2021, in plaintiff's favor, and appeal therefrom bringing up for review an order, same court and Justice entered June 15, 2021, as amended by an order, same court and Justice, entered June 17, 2021, which, after a nonjury trial, awarded plaintiff the amount of $40, 336, 302.93, unanimously modified, on the law, to vacate the award of $9.8 million in additional labor cost damages, to dismiss the claim for those damages, and to vacate the damages pertaining to additional and extended general conditions, labor escalation, equipment and material damages escalation, and extended home office overhead and to remand the claims for a new assessment on those damages. Appeals from amended order unanimously dismissed, without costs, as subsumed in the appeal from the judgment.

The trial court should not have awarded damages for additional labor costs due to defendants' delays in the construction project. In general, it is impermissible to calculate delay damages for additional labor costs based on a comparison of the contractor's precontract estimate of what its labor cost would be and what it claimed its labor cost actually turned out to be (see Manshul Constr. Corp. v Dormitory Auth. of State of N.Y., 79 A.D.2d 383, 388 [1st Dept 1981]; Peter Scalamandre & Sons v Village Dock, 187 A.D.2d 496 [2d Dept 1992], lv denied 81 N.Y.2d 710 [1993]). Nevertheless, in calculating the additional labor costs that plaintiff incurred from defendants' delays, plaintiff's expert improperly used plaintiff's pre-bid estimate of the project's expected labor costs, and Supreme Court erred in basing the award on this improper method of calculation.

Moreover there is no support for plaintif...