Manshul Const. Corp. v. Dormitory Authority of New York

• Decision Date: 10 March 1981
• Parties: MANSHUL CONSTRUCTION CORP., Plaintiff-Respondent-Appellant, v. The DORMITORY AUTHORITY OF the State of NEW YORK, Defendant-Appellant- Respondent. MANSHUL CONSTRUCTION CORP., Plaintiff-Appellant-Respondent, v. The DORMITORY AUTHORITY OF the State of NEW YORK, Defendant-Respondent- Appellant.
• Court: New York Supreme Court — Appellate Division

Page 724

436 N.Y.S.2d 724

79 A.D.2d 383

MANSHUL CONSTRUCTION CORP., Plaintiff-Respondent-Appellant, v. The DORMITORY AUTHORITY OF the State of NEW YORK,

Defendant-Appellant- Respondent.

MANSHUL CONSTRUCTION CORP., Plaintiff-Appellant-Respondent, v. The DORMITORY AUTHORITY OF the State of NEW YORK,

Defendant-Respondent- Appellant.

Supreme Court, Appellate Division, First Department.

March 10, 1981.

Michael R. Treanor, New York City, of counsel (Plunkett & Jaffe, P. C., New York City, attorneys), for Dormitory Authority.

Gary M. Axenfeld, New York City, of counsel (Thomas S. Finegan, New York City, with him on the brief; Baskin & Sears, New York City), for Manshul Const. Co.

Before MURPHY, P. J., and SULLIVAN, LUPIANO, SILVERMAN and YESAWICH, JJ.

SILVERMAN, Justice:

This action arises out of a construction contract whereby plaintiff Manshul Construction Corp. contracted to do certain work for defendant The Dormitory Authority of the State of New York (DASNY) in connection with LaGuardia Community College, a division of the City University of New York.

Plaintiff's complaint had three causes of action, the first for balance due under the contract, the second for reasonable value of extra, changed and/or additional work, and the third for damages essentially for delay due to defendant's failure to provide adequate access to the job site, proper information, proper drawings and plans, failure to coordinate the work of other contractors, etc. Defendant counterclaimed for delay damages and for fair and reasonable value of work not performed by plaintiff, and work deleted from the contract.

After a six week non-jury trial in which the court painstakingly went into the many claims, the court awarded plaintiff $259,754 on the first cause of action, being essentially full recovery on that cause of action; $212,149 on the second cause of action; and $160,639 on the third cause of action; and the court allowed to defendant a credit of $105,750 on its counterclaim for work deleted or not performed, said credit being applied against the award to plaintiff on the second cause of action. In addition, pursuant to a stipulation of partial settlement, the judgment awarded to plaintiff recovery on various items of extra work in stipulated amounts.

Both parties have appealed from the judgment. The issues on this appeal relate essentially to interest, and to the third cause of action for delay damages.

1. Interest on credits to defendant. The trial court awarded to plaintiff sums of money on its first cause of action for contract balance, on its second cause of action for extras, and on its third cause of action for damages for delay, in each case with interest to the date of the decision. The court also awarded to defendant $105,750.91 for credits due for work deleted or not performed, but no pre-decision interest was awarded on this item. In the judgment, this $105,750.91, without interest, was simply subtracted from the total of $768,809.42 (which included pre-decision interest) awarded to plaintiff, and a net award was made to plaintiff of the difference, $663,058.51, together with interest from the date of decision. But the correct net amount actually owed by defendant to plaintiff is of course only the gross amount of plaintiff's claim, as allowed, minus the credits allowed to defendant ; and pre-decision interest should be allowed to plaintiff only on that net amount. The credits for work deleted or unperformed would seem logically most closely related to the amount allowed to plaintiff on the first cause of action as contract balance due. Indeed the contract provides that where changes are made altering, adding to or deducting from the work, the contract sum shall be adjusted accordingly. (Art. 17, Supplemental General Conditions; A 2110) We therefore direct that the $105,750.91 credited to defendant be applied against the $259,754.29 awarded to plaintiff on its first cause of action, and that pre-decision interest on the first cause of action be allowed only on the net balance of $154,003.38.

2. Rate of pre-judgment and pre-decision interest. Unconsolidated Laws § 2501 provides that the rate of interest to be paid by a "public corporation" upon "any judgment or accrued claim" shall not exceed 4% per annum. The trial court agreed that defendant is a public corporation, and therefore allowed only 4% per annum as post-judgment interest rather than 6% per annum. But pre-judgment interest has been calculated at 6%. We hold that pre-judgment interest must also be calculated at 4% per annum. The statute is applicable not only to judgments but to "accrued" claims. The pre-judgment interest awarded was for the most part from dates after the completion of the work and just about the commencement of the action, thus the claims could fairly be deemed accrued as of those dates. The most likely significance of the use of the phrase "accrued claim" in the statute is to avoid an interpretation that interest is payable on non-accrued claims. In any event, it would not make sense for the statute to be interpreted to mean that a 4% rate of interest should be applicable for the period after the claims are established but a higher rate of interest should be charged for the period before the claims are established and while they are still disputed.

3. The Cord-Wall dry wall subcontractor claim. Paragraph "mm" of the judgment allows $13,681, with interest thereon, to Manshul, purportedly on account of its third cause of action for delay relating to the dry wall subcontractor. In fact, it is clear that this figure represents the amount of work that the dry wall subcontractor alleged that it had done that was extra to the contract. Concededly, there was no claim by the dry wall subcontractor directly for extra work. Insofar as such extra work was claimed to have been done by the dry wall subcontractor and allowed by the court, it was included in other direct claims allowed by the court for extras, e. g., items "p" and "ff" of the judgment, and thus its allowance represents a duplication of those items. The court appears to have found "p" and "ff" to be well documented whereas, the amount in "mm," though a larger sum than items "p" and "ff," was merely the amount that the subcontractor estimated as the value of its extra work. As plaintiff has the burden of proof, we accept the documented claims in items "p" and "ff" and we strike item "mm." As to the subcontractor's claim for delay, the trial court thought it was "greatly exaggerated," speculative and not supported by the preponderance of the credible evidence. We agree. There was no showing that the delays suffered by the subcontractor were the defendant's responsibility.

4. Damages for delay. The third cause of action claims damages for breach of contract, including damages for delay.

On this cause of action, the court awarded:

(i) $143,325, overhead and profits as delay damages (item (kk) of the judgment).

(ii) $3,633 in connection with the claim of the door manufacturer (item (ll) of the judgment).

(iii) $13,681 relating to the dry wall subcontractor (item (mm) of the judgment).

The last of these items has been discussed and stricken above.

The second item is apparently not questioned by the parties and will not be discussed further by us.

We shall discuss primarily the first item, including plaintiff's claim that the award should have been much larger and defendant's claim that it should have been much smaller or nothing.

As in all contract actions, the burden of proving the damages is on plaintiff. Berley Industries, Inc. v. City of New York, 45 N.Y.2d 683, 686, 412 N.Y.S.2d 589, 385 N.E.2d 281. When claims are made for damages for delay, plaintiff must show that defendant was responsible for the delay; that these delays caused delay in completion of the contract (eliminating overlapping or duplication of delays); that the plaintiff suffered damages as a result of these delays, and plaintiff must furnish some rational basis for the court to estimate those damages, although obviously a precise measure is neither possible nor required. Rusciano Construction Corp. v. State of New York, 37 A.D.2d 745, 323 N.Y.S.2d 21; Bero Construction Corp. v. State of New York, 27 A.D.2d 974, 278 N.Y.S.2d 974; Tully & DiNapoli, Inc. v. State of New York, 34 A.D.2d 439, 441, 311 N.Y.S.2d 941; Fehlhaber Corp. v. State of New York, 69 A.D.2d 362, 369, 419 N.Y.S.2d 773; Rao Electrical Equipment Co., Inc. v. State of New York, 36 A.D.2d 1019, 321 N.Y.S.2d 670.

Defendant contends that while it has been shown that defendant was responsible for some delays, plaintiff was also responsible for some delays, and there has been a complete failure of proof as to which delays and breaches resulted in delays of completion of the contract, or as to whether plaintiff was damaged thereby, or as to any basis for estimating such damages. The trial court found "that the delay on this project was solely caused by DASNY and its agents and was not contributed to by MANSHUL." It appears clear that at least some delay is attributable to plaintiff. It is equally clear that the court thought that the delay attributable to plaintiff was such a small proportion of the total delay that the court could disregard it. We think it would be more proper to allocate 95% of the delay to defendant and 5% to plaintiff.

More difficult are the questions of whether there is an adequate showing that Manshul was damaged by the delay, and the measure and amount of damages, if any. On these questions, plaintiff's claims are largely vitiated by the fact that the trial court found the plaintiff's evidence as to delay damage largely not credible. The trial court said that plaintiff's claim was grossly exaggerated, and parts of it were illusory, based on double billing, invited unfounded speculation, and not supported by the preponderance of the credible evidence. Plaintiff has not persuaded us that these criticisms are incorrect....