General Ins. Co. of America v. K. Capolino Const.
| Decision Date | 07 October 1997 |
| Docket Number | No. 94 CIV. 8089(WCC).,94 CIV. 8089(WCC). |
| Citation | 983 F.Supp. 403 |
| Parties | GENERAL INSURANCE COMPANY OF AMERICA, Plaintiff, v. K. CAPOLINO CONSTRUCTION CORP., K. Capolino Design and Renovation, Ltd., Kenneth L. Capolino, Patricia M. Capolino and White Plains Housing Authority, Defendants, Myron C. Simon, Mary Burwell, Lawrence Salley, Robert Feder, Isador Feldshon, J. Michael Divney and Anthony Tascione, Additional Defendants. |
| Court | U.S. District Court — Southern District of New York |
Hart & Hume, New York City (Cecil Holland, Jr., of Counsel), for Plaintiff.
Meyer & Wild, New York City (Edward Meyer, Patricia B. Wild, of Counsel), for Defendants K. Capolino Construction Corp., K. Capolino Design and Renovation, Ltd., Kenneth L. Capolino and Patricia M. Capolino.
Calotta Levine Samuel, L.L.P., New York City (Gerald M. Levine, of Counsel), for Defendants White Plains Housing Authority and Anthony Tascione.
Plaintiff General Insurance Company of America ("General") brought this action against defendants K. Capolino Construction Corp. ("the Capolino firm"), K. Capolino Design and Renovation, Ltd., Kenneth L. Capolino ("Capolino") and Patricia M. Capolino seeking indemnification for costs it incurred in completing construction contracts on two housing developments owned by the White Plains Housing Authority ("the Authority") for which General had issued performance bonds on the Capolino firm's behalf. General stepped in and completed the jobs at the request of the Authority, after several disputes arose between the Authority and Capolino over the nature and scope of the work required to be performed under the contracts, and over payment to Capolino for work he asserts his firm had completed. We have jurisdiction under 28 U.S.C. § 1332.
After our November 9, 1995 Opinion and Order denying cross-motions for summary judgment, on March 6, 1996 General amended its complaint to add claims in the alternative against the Authority in the event that it be determined at trial that the Authority breached the contracts. These claims were: for unjust enrichment (Claim 4); for indemnity against any recovery by Capolino on its counter claims (Claim 5), and for unpaid monies for alleged extra work performed to complete the projects (Claim 6). In its March 29, 1996 Answer to General's Amended Complaint, defendant Authority brought five cross-claims against Capolino. These claims were: for declaratory judgment of the rights of the parties to terminate the Winbrook contract and to call upon General to complete the contract (Auth. Cross-Claim 1); for declaratory judgment of the rights of the parties to terminate the Schuyler contract and to call upon General to complete the contract (Auth. Cross-Claim 2); for restitution against Capolino for monies it was overpaid on the Winbrook contract (Auth. Cross-Claim 3); for damages it incurred as a result of Capolino's breach of the Winbrook contract (Auth. Cross-Claim 4); for damages it incurred as a result of Capolino's breach of the Schuyler contract (Auth. Cross-Claim 5). Capolino then cross-claimed against the Authority for breach of contract (Cap. Cross-Claim 1) and against Anthony Tascione for negligent misrepresentation (Cap. Cross-Claim 2).1 Capolino and General have since settled all of their claims and counterclaims. (See 2/27/97 Stip. and Order Dismissing Certain Claims).2
This Court conducted a non-continuous eight-day bench trial beginning March 11, 1997 and concluding April 3, 1997. This opinion constitutes the court's findings of fact and conclusions of law pursuant to FED. R.CIV.P. 52(a).
Plaintiff General is a Washington corporation, duly authorized to engage in the business of suretyship in the state of New York.
Defendant Authority is a corporate entity duly constituted under Article 13, Title 19 § 422 of the New York Public Housing Law. It is the owner and operator of low-income, low-rent residential buildings in the City of White Plains, including Winbrook Houses ("Winbrook") and Schuyler DeKalb Apartments ("Schuyler"). At all times relevant to this dispute, the Executive Director of the Authority was Anthony Tascione. Tascione was also the Contracting Officer. (Tasc., 639.)3
The Capolino firm is a New York corporation. It is a general contractor with its principal place of business in White Plains. The Capolino firm is owned by Patricia Capolino; its President during all times relevant to this suit was her husband Kenneth Capolino.
In the summer and early fall of 1991, the Authority sought bids from qualified contractors to undertake improvements on Winbrook in accordance with a set of contract documents and specifications. The Capolino firm was the low bidder and on or about February 19, 1992 a $263,773 contract for improvements to Winbrook was signed by Kenneth Capolino on behalf of the Capolino firm and by Anthony Tascione, on behalf of the Authority. Additional improvements for the cold water make-up lines were authorized by Board Resolution in the amount of $45,000 and by Change Order # 1 in the amount of $1,219, for a total contract sum of $309,992. In accordance with the contract, the Capolino firm delivered to the Authority performance and payment bonds issued by General. (Stip.# # 10, 12.)
In the late fall of 1991, the Authority sought bids from qualified contractors to undertake improvements to Schuyler in accordance with a set of contract documents and specifications. The Capolino firm was again the low bidder, this time by approximately $73,227. (Exh. A86.)4 Concerned whether the Capolino firm could perform the contract for that amount, the Authority sent a letter to Capolino and received assurances that it could do so. (Tasc., 635.) On or about May 11, 1992, a $235,743 contract for improvements to Schuyler was signed by Kenneth Capolino on behalf of the Capolino firm, and by Anthony Tascione on behalf of the Authority. In accordance with the contract, the Capolino firm delivered to the Authority performance and payment bonds issued by General. (Stip.# # 21-22.)
The Winbrook and Schuyler projects were both funded under HUD CIAP programs. Winbrook was CIAP 1989; Schuyler was CIAP 1990. Mr. Tascione testified at trial that the Authority had two years from the award of the monies under each CIAP to spend the monies awarded, and that it received the money for Winbrook in 1990 and for Schuyler in 1991. (Tasc., 769.) Thus, at the time it accepted bids for the contracts with completion dates in 1993, it knew that the Winbrook funding would expire prior to the completion date. However, Tascione testified that this was simply a "procedural matter, just updating so we continue to have that line of credit open to us." (Id. at 770.)
The contracts each incorporated by reference, among other things: A.I.A. document A201, entitled "General Conditions for the Contract for Construction" (the "A.I.A. General Conditions"); a Department of Housing and Urban Development ("HUD") document entitled "General Conditions of the Contract for Construction — Public Housing Program" (the "HUD General Conditions"); and Division 1 General Requirements ("the General Requirements"). (Stip.# 11.)
At all times relevant to this lawsuit, the Modernization Coordinator for the Authority was Gilbert A. Galli ("Galli") and the architects for the Winbrook and Schuyler contracts were Gismondi and Arnold, P.C., whose principal was Bernard S. Arnold ("Arnold"). The consulting engineers engaged by the Architect for the Winbrook project were Michael K. Dalton, Associates, whose principal was Michael K. Dalton ("Dalton").
In August of 1992, a dispute arose between the Authority and Capolino over the payment of progress payments to Capolino on both contracts.
Regarding payment to the Contractor, the A.I.A. General Conditions provide:
9.3.1 At least ten days before the date established for each progress payment, the Contractor shall submit to the Architect an itemized Application for Payment for operations completed in accordance with the schedule of values....
* * *
9.3.1.2 Such applications may not include requests for payment of amounts the Contractor does not intend to pay to a Subcontractor or material supplier because of a dispute or another reason.
9.3.2 Unless otherwise provided in the Contract Documents, payments shall be made on account of materials and equipment delivered and suitably stored at the site for subsequent incorporation in the Work....
9.3.3 The Contractor warrants that title to all Work covered by an Application for Payment will pass to the Owner no later than the time of payment. The Contractor further warrants that upon submittal of an Application for Payment all Work for which Certificates for Payment have been previously issued and payments received from the Owner shall, to the best of the Contractor's knowledge, information and belief, be free and clear of liens, claims, security interests or encumbrances in favor of the Contractor, Subcontractors, material suppliers, or other persons or entities making a claim by reason of having provided labor, materials and equipment relating to the Work.
9.4.1 The Architect will, within seven days after receipt of the Contractor's Application for Payment, either issue to the Owner a Certificate for Payment, with a copy to the Contractor for such amount as the Architect determines is properly due, or notify the Contractor and Owner, in writing of the Architect's reasons for withholding certification in whole or in part as provided in Subparagraph 9.5.1.
9.4.2 The issuance of a Certificate for Payment will constitute a representation by the Architect to the Owner, based on the Architect's observations at the site and the data compromising the Application for Payment, ...
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