A.H.A. General Const., Inc. v. New York City Housing Authority

• Decision Date: 11 June 1998
• Citation: 92 N.Y.2d 20,677 N.Y.S.2d 9
• Parties: , 699 N.E.2d 368, 1998 N.Y. Slip Op. 5926 A.H.A. GENERAL CONSTRUCTION, INC., Respondent, v. NEW YORK CITY HOUSING AUTHORITY, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 9

677 N.Y.S.2d 9

92 N.Y.2d 20, 699 N.E.2d 368, 1998

N.Y. Slip Op. 5926

A.H.A. GENERAL CONSTRUCTION, INC., Respondent, v. NEW YORK CITY HOUSING AUTHORITY, Appellant.

Court of Appeals of New York.

June 11, 1998.

Jeffrey Schanback, Henry Schoenfeld, Nancy M. Harnett and James R. Adolf, New York City, for appellant.

Scotto, Georgoulis, Dockery & Scotto, New York City (Chris Georgoulis and Michael McDermott, of counsel), for respondent.

Michael D. Hess, Corporation Counsel of New York City (George Gutwirth and Francis F. Caputo, New York City, of counsel), for City of New York, amicus curiae.

OPINION OF THE COURT

KAYE, Chief Judge.

This appeal centers on the notice and reporting requirements contained in two construction agreements between respondent (A.H.A. General Contracting, Inc.) and appellant (New York City Housing Authority). Seeking damages for extra work, respondent contends that the Housing Authority committed misconduct in its performance of the contracts, entitling respondent to recover despite its own noncompliance with the notice and reporting requirements. We conclude that because there is no showing that appellant's alleged misconduct in any way prevented or hindered respondent's compliance with those contract requirements, appellant's summary judgment motion dismissing the complaint should be granted.

I.

In July 1990, the Housing Authority--a public benefit corporation that builds, operates and maintains housing for low-income individuals throughout New York City--publicly bid two Bronx construction contracts, one related to the rehabilitation of three buildings and the creation of park areas on Jennings Street (the Jennings contract) and the second to rehabilitation work on three buildings on Hoe Avenue (the Hoe contract). On October 5, 1990, the Housing Authority awarded respondent the Jennings contract for the price of $2,316,000 and the Hoe contract for the price of $2,410,000.

The Jennings and Hoe agreements include identical provisions regarding "extra work" (i.e., work other than that required by the contract at the time of its execution). Article 25 enables the Authority to order extra work and requires the contractor to perform it. When extra work is ordered, a change order detailing the nature of the job and providing a price increase for the labor is signed to compensate the contractor. As Article 25 states:

"Article 25. Extra Work. This Contract may be modified or changed by the Housing Authority from time to time, in a manner not materially affecting the substance thereof or increasing the price to be paid by more than ten (10%) percent of the contract price in order to carry out and complete more fully and perfectly the Work herein agreed to be done and performed. An order for Extra Work, shall designate the method of payment therefore, and shall be valid only if issued in writing and signed by the Housing Authority. Work so ordered must be performed by the Contractor."

The two agreements also contain notice and reporting requirements--i.e., requirements that respondent timely submit notices of claim and relevant documentation to reserve its right to receive payment for any extra work. These requirements enable the Authority to verify whether allegedly extra work is in fact beyond the scope of the contract, as well as the time, labor, material and cost involved. Article 27 sets forth the procedures to be followed in the event the parties disagree over whether certain work is within or beyond the scope of the original contract:

"Article 27. Disputed Work. * * *. [I]f the Housing Authority determines that the Work in question is Contract Work and not Extra Work, or that the determination or order complained of is proper, he will direct the Contractor to proceed, and the Contractor must promptly comply. However, in order to reserve his right to claim compensation for such Work or damages resulting from such compliance, the Contractor must, within five (5) days after receiving notice of the Housing Authority's determination and direction, notify the Commissioner in writing that the work is being performed, or that the determination and direction is being complied with, under protest. * * *

"If the Contractor shall claim to be sustaining damages by reason of any act or omission of the Housing Authority or the City or its agents, he shall within five (5) days after such act or omissions occur, notify the Housing Authority in writing, and within thirty (30) days thereafter, or within such additional time in excess of thirty (30) days as may be granted by the Housing Authority upon written request therefor, submit to the Housing Authority verified detailed statements of the damages sustained together with documentary evidence of such damages. Upon failure of the Contractor to fully comply with the foregoing provisions, such claims shall be deemed waived and no right to recover on such claims shall exist."

Relatedly, Article 28 mandates that respondent furnish the Authority with daily written statements documenting the disputed work, as follows:

"Article 28. Performance of Extra or Disputed Work. While the Contractor or his Subcontractor is performing Extra Work ordered by the Housing Authority under Article 25 hereof (unless payment therefore is to be made by a lump sum or at unit prices previously agreed upon) or is performing disputed Work or complying with a determination or order under protest in accordance with Article 27 hereof, in each such case the Contractor shall furnish the Housing Authority daily with three copies of written statements signed by the Contractor's representatives at the site showing:

"(1) the name and number of each workman employed on such Work or engaged in complying with such determination or order, the number of hours employed thereon, and the character of work each is doing; and

"(2) the nature and quantity of any materials, plant and equipment furnished or used in connection with the performance of such Work or compliance with such determination or order, and from whom purchased or rented. * * *

"Failure to comply strictly with these requirements shall constitute a waiver of any claim for extra compensation or damages on account of the performance of such Work or compliance with such determination or order."

Article 51 underscores the importance of the notice and reporting provisions. It precludes the contractor from asserting any cause of action against the Housing Authority without first "strictly" adhering to those provisions:

"Article 51. Claims and Actions Thereon. No claim against the City or the Housing Authority for damages for breach of contract or compensation for Extra work shall be made or asserted in any action or proceeding at law, or in equity, unless the Contractor shall have strictly complied with all the requirements relating to the giving of notice and of information with respect to such claims all as hereinbefore provided."

Further, the parties agreed in Article 31 that no estoppel would operate against the Housing Authority:

"Article 31. No Estoppel. Neither the Housing Authority, the City nor any department, officer, agent or employees thereof, shall be bound, precluded or estopped by any determination, decision, approval, order, letter, payment or certificate made or given under or in connection with this Contract by the City, the Commissioner, the Housing Authority, or any officer, agent or employee of the City or Housing Authority, either before or after the final completion and acceptance of the Work and payment therefor: (1) from showing the true and correct classification, amount, quality or character of the Work actually done; or that any such termination, decision, order, letter, payment or certificate was untrue, incorrect or improperly made in any particular matter, or that the Work or any part thereof does not in fact conform to the requirements of this Contract; or (2) from demanding and recovering from the Contractor any overpayments made to him, or such damages as it may sustain by reason of his failure to perform each and every part of this Contract in strict accordance with its terms; or (3) both (1) and (2) hereto."

Finally, Article 64 of the Agreements is a merger clause:

"Article 64. Entire Agreement. This written agreement contains all the terms and conditions agreed upon by the parties hereto, and no other agreement, oral or otherwise, regarding the subject matter of this agreement shall be deemed to exist or to bind any of the parties hereto, or to vary any of the terms contained herein."

Two months after the award, construction began. According to respondent, during the course of the projects (as was the case on their previous projects), the Housing Authority would direct respondent to perform extra work, the parties would negotiate a price, and the work would then be done with the expectation that a change order would be issued at the agreed-upon price. Some time later, claims respondent, the Authority would issue a change order in conformity with the parties' agreement authorizing an increase in the contract price. If, however, the parties could not agree upon the terms of the change order, respondent would submit correspondence to support its position that the work was not required by the contract and warranted additional compensation. The correspondence would serve as respondent's notice of claim and the claim would be resolved at a later date.

The Authority has a different recollection. It denies respondent's contention that, with respect to work that the Authority claimed was contract work but respondent contended was extra, the Authority permitted respondent to use correspondence as a substitute for the documentation required by the Agreements. By the express terms of the Agreements, argues the Authority, only when both parties agreed that an item of work was extra and when prior to the performance of the work the Authority ordered respondent in writing to perform the work for an...