Herbert F. Darling, Inc. v. City of Niagara Falls

• Decision Date: 06 April 1979
• Citation: 69 A.D.2d 989,416 N.Y.S.2d 122
• Parties: HERBERT F. DARLING, INC., Respondent, v. CITY OF NIAGARA FALLS, New York, Respondent, Payload Construction Corp., Defendant, International Fidelity Insurance Company, Appellant, and Summit Insurance Company of New York, et al., Defendants, Niagara Stone Division, Frey Concrete, Inc., Respondent, and Hoelschers, Inc., Price Lumber Corp., et al., Defendants.
• Court: New York Supreme Court — Appellate Division

Page 122

416 N.Y.S.2d 122

69 A.D.2d 989

HERBERT F. DARLING, INC., Respondent, v. CITY OF NIAGARA FALLS, New York, Respondent Payload Construction Corp., Defendant International Fidelity Insurance Company, Appellant and Summit Insurance Company of New York, et al., Defendants Niagara Stone Division, Frey Concrete, Inc., Respondent, and Hoelschers, Inc., Price Lumber Corp., et al., Defendants.

Supreme Court, Appellate Division, Fourth Department.

April 6, 1979.

McGrath, Meyer, Lieberman & Lipp, P. C., Buffalo, by Howard Meyer, Buffalo, for appellant.

Hovey & Massaro, Niagara Falls, by Angelo Massaro, Niagara Falls, for respondent Darling.

Carl F. Mooradian, Niagara Falls, by Bernard Sax, Niagara Falls, for respondent City of Niagara Falls.

Raichle, Banning, Weiss & Halpern, Buffalo, for respondent Niagara Stone Div.

Before DILLON, P. J., and SIMONS, HANCOCK, CALLAHAN and MOULE, JJ.

MEMORANDUM:

Defendant International Fidelity Insurance Company appeals from an order denying its motion for summary judgment.

Plaintiff, a subcontractor of defendant C.I.C. Enterprises, Inc., commenced this action against defendants Payload Construction Corp., International Fidelity Insurance Company, Summit Insurance Company of New York, C.I.C. Enterprises, Inc., the City of Niagara Falls, and other defendants to recover $96,997.20 allegedly owing it for work performed upon a waste water facility constructed for the City of Niagara Falls. In its action against International and Summit Insurance, plaintiff seeks to recover on bonds issued by those companies as sureties of the defaulting general contractors, Payload Construction Corp. and C.I.C. Enterprises, respectively. The complaint also pleaded a cause of action to foreclose a mechanic's lien and a cause of action against the City alleging that the City negligently misrepresented that the bond of Summit Insurance Company was adequate to insure payment for the materials and labor of plaintiff-subcontractor when, in fact, Summit Insurance Company was on the verge of insolvency and was placed in liquidation within a month of the issuance of the bond. Defendant International Fidelity Insurance Company submitted a general denial in answer to the complaint and then moved for summary judgment asserting that the City had released International's bonds prior to the time plaintiff performed the work for which it seeks payment.

On July 1, 1973 defendant City contracted with defendant Payload to act as general contractor for the construction and International Fidelity Insurance Company provided performance and payment bonds guaranteeing the performance of Payload and "its successors and assigns" in the amount of $292,500. Payload defaulted on the contract and on May 16, 1974, C.I.C. Enterprises, Inc., with the consent of International, took over the general contract agreeing to supply its own surety, Summit Insurance Company, and to supply proof to International that all existing claims on the project had been satisfied. International then assigned its right as surety of Payload to complete the work to C.I.C. Enterprises, Inc. and in return, on July 10, 1974, the City of Niagara Falls executed a general release in favor of International releasing it from any liability on its Payload surety bond previously issued. On August 29, 1974, after International had been released, C.I.C. Enterprises, Inc. employed plaintiff as a subcontractor. Plaintiff claims that between September 4, 1974 and January 27, 1975 it performed work of the fair and reasonable value of $116,768.11 and that a balance of $96,997.20 remains unpaid. C.I.C. Enterprises, Inc. defaulted on its construction contract and a third general contractor has completed the work. As noted, Summit Insurance Company became insolvent shortly after it bonded C.I.C. Enterprises, Inc.

Plaintiff first alleges that defendant's failure to plead release as a defense bars summary judgment on that ground. Generally, a defendant's failure to plead an affirmative defense precludes it from obtaining summary judgment on the basis of the unpleaded defense (CPLR 3018, subd. b; Furlo v. Cheek, 20 A.D.2d 939, 248 N.Y.S.2d 947; Krohn...