Najjar Industries, Inc. v. City of New York

• Decision Date: 17 June 1982
• Citation: Najjar Industries, Inc. v. City of New York, 451 N.Y.S.2d 410, 87 A.D.2d 329 (N.Y. App. Div. 1982)
• Parties: NAJJAR INDUSTRIES, INC. and Coppola Bros., Excavation Corp., a joint venture, Plaintiff-Respondent-Appellant, v. The CITY OF NEW YORK (Greenpoint Incinerator), Defendant-Appellant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 410

451 N.Y.S.2d 410

87 A.D.2d 329

NAJJAR INDUSTRIES, INC. and Coppola Bros., Excavation Corp. a joint venture, Plaintiff-Respondent-Appellant, v. The CITY OF NEW YORK (Greenpoint Incinerator) Defendant-Appellant-Respondent.

Supreme Court, Appellate Division First Department.

June 17, 1982.

Joseph F. Grassi, New York City, of counsel (Leonard Koerner, James P. Griffin, New York City, and Paul S. Kleidman, Brooklyn, with him on the brief; Allen G. Schwartz, New York City), for defendant-appellant-respondent.

J. Robert Ellner, New York City, of counsel (Max E. Greenberg, Cantor & Reiss, New York City), for plaintiff-respondent-appellant.

Before MURPHY, P. J., and SULLIVAN, ROSS, SILVERMAN and ASCH, JJ.

SILVERMAN, Justice.

This action arises out of a construction contract dispute. The jury rendered a verdict in favor of plaintiff for $1,849,626.50, and the judgment rendered represents that sum plus interest at the rate limited by General Municipal Law § 3-a, i.e., 3% per annum, plus costs and disbursements in the trial court.

Plaintiff is a joint venture composed of two corporations, Najjar Industries, Inc. and Coppola Bros. Excavation Corp. The joint venture was awarded a contract by the City of New York in the total original sum of $5,119,000 to erect an air pollution device at the Greenpoint Incinerator in Brooklyn, New York. Plaintiff was the prime contractor. The contract was awarded on November 29, 1972; work was to commence on January 5, 1973 and be completed by July 8, 1975. In fact, there were various delays starting early in the contract performance. Work continued until about November 1976, at which time plaintiff and its subcontractor finally left the job with the job still uncompleted. The gravamen of the suit is that the delays were caused by the City's failure to cooperate and failure to perform its obligations promptly. Plaintiff filed three successive and successively larger notices of claim against the City dated December 11, 1973, November 6, 1974 and October 15, 1976. Each of these claims claims a sum resulting from the City's breach and abandonment of the contract and includes an item of "value of work performed" and the final notice includes an item "subcontractor's and supplier's claims."

A slightly novel legal theory presented by plaintiff in this case is that at the time of the first notice of claim plaintiff "rescinded" the contract (although none of the notices of claim uses the word "rescind" and all seem to present the usual claim by a contractor for amounts due by reason of the City's breach and delay) and that it thereupon became entitled to recover the reasonable value of its work and materials as of that date, i.e., quantum meruit. The jury found that the City had breached the contract, that plaintiff had properly exercised its right to rescind and that its performance after December 1973 was not a waiver of its right to rescind.

We agree that these were questions of fact for the jury, and that accordingly the jury's verdict should not be interfered with on these points. Thus plaintiff is entitled to recover the reasonable value of the work performed and of the materials it furnished.

The major question that is left is that of damages and whether proper evidence and measures of damages were presented to the jury.

Plaintiff presented two methods of calculations of damages, the first, which we shall refer to as plaintiff's primary method of calculation, was based on the claimed expert opinion of Mr. Najjar, the principal, and sole employee, of one of the two joint venturer plaintiff corporations. That witness gave as his opinion that the reasonable value of the total work and materials at Greenpoint Incinerator was $6,414,243, and that as plaintiff had been paid $4,176,553, there was still owed $2,237,690.

A second method of calculating damages developed during the trial. We shall refer to this as plaintiff's alternative method of calculation. In this method, plaintiff started as a basis with a City official's estimate of costs totalling $2,966,829 and added to it various additional items, many of them disputed, which had not been considered by the City official. This alternative method of calculation, according to plaintiff, showed a reasonable value of something over $5,638,000, and subtracting from this figure $4,176,553, left a net amount owed on this alternative method of calculation of $1,461,563.

The court in its charge submitted both these calculations to the jury. The jury, not by coincidence, rendered a verdict for plaintiff for $1,849,626.50, a straight arithmetic average to the penny of these two figures.

We do not think the evidence permits this verdict to stand.

As to plaintiff's primary method of calculation, plaintiff's expert based his opinion on his pre-bid estimates made in late 1973 or early 1974 for a similar, but not identical, pollution control device for an incinerator plant to be built in Southwest Brooklyn, and he then made arithmetic--and perhaps simplistic--modifications for the differences, e.g., the Southwest Brooklyn device had three towers while the Greenpoint device here involved had four towers, so he increased his Southwest Brooklyn tower figure by one-third to arrive at his opinion of the value of the four towers at Greenpoint.

The customary method of calculating damages on a quantum meruit basis in construction contract cases both on completed contracts and contracts terminated before completion is actual job costs plus an allowance for overhead and profit minus amounts paid. Whitmyer Bros., Inc. v. State of New York, 47 N.Y.2d 960, 962, 419 N.Y.S.2d 954, 393 N.E.2d 1027, affirming 63 A.D.2d 103, 406 N.Y.S.2d 617; Fehlhaber Corp. v. State, 65 A.D.2d 119, 127, 410 N.Y.S.2d 920; 69 A.D.2d 362, 368, 419 N.Y.S.2d 773. It is well established that pre-bid estimates made by the contractor to compute a bid price are not a valid basis for computing recovery. Whitmyer Bros., Inc. v. State of New York, supra, 63 A.D.2d at 108, 406 N.Y.S.2d 617; Manshul Corp. v. Dormitory Authority, 79 A.D.2d 383, 388, 436 N.Y.S.2d 724; Mt. Vernon Contracting Corp. v. State of New York, 56 A.D.2d 952, 954, 392 N.Y.S.2d 726; Kec Corp. v. Fulton-Montgomery Community College, 44 A.D.2d 737, 354 N.Y.S.2d 476; D'Angelo v. State, 41 A.D.2d 77, 80, 341 N.Y.S.2d 84, mod. 34 N.Y.2d 641, 355 N.Y.S.2d 377, 311 N.E.2d 509; Fehlhaber Corp. v. State, supra, 69 A.D.2d at 368, 419 N.Y.S.2d 773. The major reason for this rule is that such pre-bid estimates are "computations of a subjective nature by the bidder rendering such estimated costs unauditable" by the public authority, Mt. Vernon Contracting Corp. v. State of New York, supra, 56 A.D.2d at 954, 392 N.Y.S.2d 726.

The objection to pre-bid estimates is even stronger in the present case when these pre-bid estimates are estimates of another job and made as of another date, late 1973 or early 1974, which is neither the date of the contract here involved nor the date of completion of work.

Nothing substantial is added to such evidence by the testimony of one of plaintiff's principals giving these figures and then saying that it is his opinion of reasonable value. Such an "expert opinion" of reasonable value is quite meaningless, being really only a repetition of the...