Phillips Const. Co., Inc. v. City of New York

• Decision Date: 14 February 1984
• Citation: 61 N.Y.2d 949,475 N.Y.S.2d 244,463 N.E.2d 585
• Parties: , 463 N.E.2d 585 PHILLIPS CONSTRUCTION CO., INC., Respondent, v. CITY OF NEW YORK, Appellant. (And a Third-Party Action.)
• Court: New York Court of Appeals Court of Appeals

Page 244

475 N.Y.S.2d 244

61 N.Y.2d 949, 463 N.E.2d 585

PHILLIPS CONSTRUCTION CO., INC., Respondent, v. CITY OF NEW YORK, Appellant. (And a Third-Party Action.)

Court of Appeals of New York.

Feb. 14, 1984.

Frederick A.O. Schwarz, Jr., Corp. Counsel (James P. Griffin and Leonard Koerner, New York City, of counsel), for appellant.

Saul Weprin, Julius L. Schapira and Louis Cantor, New York City, for respondent.

OPINION OF THE COURT MEMORANDUM.

The order of the Appellate Division 95 A.D.2d 753, 464 N.Y.S.2d 697 should be reversed, with costs, plaintiff's motion to strike the tenth defense (Statute of Limitations), denied, and defendant's motion to dismiss the action as time barred under the six-year Statute of Limitations (CPLR 213, subd. 2), granted.

This action arises out of the construction of an ice skating rink at Clove Lake Park, Staten Island, New York. The provisions of article 53 ¹ of the construction contract prescribed a supplemental period of limitation for assertions of claims against the city. Nothing in the record suggests that the provisions of that article were intended by the contracting parties wholly to supplant the Statute of Limitations prescribed in the CPLR, if indeed the parties were free to do so (Kassner & Co v. City of New York, 46 N.Y.2d 544, 415 N.Y.S.2d 785, 389 N.E.2d 99). Accordingly, the six-year period of limitations prescribed in CPLR 213 (subd. 2) is applicable.

In arguing as to the date of accrual of the causes of action alleged in the complaint plaintiff points to certain language lifted out of article 42 of the contract (entitled "Final Payment"): "[T]he certification of the Engineer [on the final payment voucher] and the approval of the Commissioner thereof, shall be a condition precedent to the right of the Contractor to receive any money thereunder." (Emphasis is that of plaintiff contractor.) This provision is explicitly made applicable, however, only to the right to receive payment under the final voucher; it has no relation to the institution of actions for breach of obligations other than the obligation to make payment under that voucher. The present action for damages for the cost of additional work occasioned by but not included in change orders, for extra work performed, and for delay damages is grounded in allegations of liability of the city arising out of the contract but apart from its obligations under the payment provisions of the contract. It is not based on any asserted nonperformance of payment mandated by the final voucher or on any insufficiency in the amount of the final voucher which was not certified until September, 1979, some 20 months after the present action was commenced.

The Statute of Limitations prescribed in CPLR 213 (subd. 2) began to run on completion of the actual physical work even though incidental matters relating to the project remained open (State of New York v. Lundin, 60 N.Y.2d 987, 471 N.Y.S.2d 261, 459 N.E.2d 486). It was alleged in the city's moving papers, with documentation, that the project was substantially completed on September 28, 1971. Supreme Court agreed. In some instances the counter proof tendered by a plaintiff might call for an immediate trial of a factual dispute as to when the cause of action alleged in the complaint accrued as prerequisite to a determination whether it was time barred (CPLR 3211, subd. [c] ). In the present case, however, plaintiff's submission is insufficient to raise any material question of fact on the issue. Examination of the punch list work directed in the letter of the acting engineer dated October 13, 1971 discloses only incidental items and no proof that actual construction had not already been completed, and the affidavit of the contractor's president relating to the subsequent preparation of the final payment voucher, cites only work on a single door frame. Accordingly, the present action, commenced on January 17, 1978, was time barred. ²

COOKE, Chief Judge (dissenting in part).

I cannot agree that plaintiff's complaint should be dismissed in its entirety. Under one of plaintiff's causes of action, given the terms of the contract and the parties' actions insofar as reflected in the record, plaintiff suffered no injury until defendant determined that it would not pay all of the money requested by plaintiff. Therefore, I respectfully dissent.

In April, 1967, plaintiff was awarded a contract to build an ice skating rink at Clove Lake Park in Staten Island. This was not a fixed-sum contract, however. Instead, defendant used a unit-price contract under which the actual cost was to be determined by defendant after construction was completed. For various reasons, plaintiff was not able to present the premises for a final inspection until September 28, 1971. It is undisputed that, to some extent, the delay in completion is attributable to defendant.

Final payment was to proceed by plaintiff's submitting a requisition for approval. Once defendant, through its engineer, determined the amount to be paid, a final voucher was to be certified, approved and filed, whereupon plaintiff would be paid. For reasons not apparent from the record or the briefs, the final requisition was not approved until late 1977.

This action was commenced in January, 1978. The complaint pleads four causes of action. The first cause alleges that, by reason of defendant's change orders, plaintiff was required to provide extra materials subject to the unit-price computations and that it had been underpaid $164,572.38. The second cause of action seeks to recover $132,896.69 for the reasonable value of additional work that was required by defendant's modifications and other conduct. The third claims losses of $935,352.77 in that defendant caused the project's delay and thereby caused plaintiff to expend additional sums for labor and overhead, as well as restricting its bondability and available working capital. Lastly, plaintiff pleaded that defendant's conduct constituted a total breach so as to vitiate the contract and entitle plaintiff to recover in quantum meruit, with the balance due being $1,134,609.91.

Defendant answered and asserted that the action was barred by the Statute of Limitations. Both courts below denied a motion to dismiss the complaint.

A cause of action in contract accrues and the Statute of Limitations begins to run when a breach occurs (Kassner & Co. v. City of New York, 46 N.Y.2d 544, 550, 415 N.Y.S.2d 785, 389 N.E.2d 99). Generally, when a party is suing for payment, the action accrues when the right to final payment becomes unconditional (see id.). As a corollary, the Statute of Limitations begins to run when an injury occurs so that the party knows that a suit may be brought, although the full amount of damages may not be known at the time (see Martin v. Dierck Equip. Co., 43 N.Y.2d 583, 591, 403 N.Y.S.2d 185, 374 N.E.2d 97).

In pleading the Statute of Limitations, a defendant raises an affirmative defense on which it has the burden of proof (see Goncalves v. Regent Int. Hotels, 58 N.Y.2d 206, 217, 460 N.Y.S.2d 750, 447 N.E.2d 693; Manion v. Pan Amer. World Airways, 55 N.Y.2d 398, 405, 449 N.Y.S.2d 693, 434 N.E.2d 1060; Matter of Davis v. Kingsbury, 27 N.Y.2d 567, 571, 313 N.Y.S.2d 390, 261 N.E.2d 393 [Breitel, J., dissenting]; Wechsler v. Bowman, 285 N.Y. 284, 295, 34 N.E.2d 322). Applied in the present context, this requires showing that plaintiff had a right to sue more than six years before it commenced this action. Put another way, defendant must establish that the right plaintiff seeks to enforce became unconditional and defendant refused to perform as promised at some time more than six years before this suit was instituted.

Plaintiff's third and fourth causes of action should be dismissed as time barred. The rights that plaintiff seeks to enforce in the last two causes of action were violated, if at all, by September 28, 1971, when plain...