Rad & D'Aprile, Inc. v. Arnell Constr. Corp.
| Decision Date | 03 April 2019 |
| Docket Number | INDEX NO. 502464/2014 |
| Parties | RAD AND D'APRILE, INC. A/K/A RAD & D'APRILE, INC., Plaintiff, v. ARNELL CONSTRUCTION CORP., Defendant. |
| Court | New York Supreme Court |
2019 NY Slip Op 30941(U)
RAD AND D'APRILE, INC. A/K/A RAD & D'APRILE, INC., Plaintiff,
v.
ARNELL CONSTRUCTION CORP., Defendant.
INDEX NO. 502464/2014
New York Supreme Court
RECEIVED: April 8, 2019
April 3, 2019
NYSCEF DOC. NO. 251
At an IAS Term, Part Comm-11 of the Supreme Court of the State of New York, held in and for the County of Kings, at the Courthouse, at Civic Center, Brooklyn, New York, on the 3rd day of April, 2019.
PRESENT: HON. SYLVIA G. ASH, Justice.
The following e-filed papers read herein:
| Papers Numbered | |
| Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affirmations) Annexed | 157-192 199-217 |
| Opposing Affidavits (Affirmations) | 249 |
| Reply Affidavits (Affirmations) | 219-228 230-244 |
| Memoranda of Law | 193, 229 218, 245 |
Upon the foregoing papers, in this action by plaintiff Rad and D'Aprile, Inc. a/k/a Rad & D'Aprile, Inc. (Rad) against defendant Arnell Construction Corp. (Arnell), Arnell moves, under motion sequence number four, for an order, pursuant to CPLR 3212, granting it summary judgment against Rad dismissing all causes of action contained in Rad's amended verified complaint. Rad cross-moves, under motion sequence number five, pursuant to CPLR 3212, for an order, in its favor against Arnell as follows: (1) granting it summary
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CPLR 3212, for an order, in its favor against Arnell as follows: (1) granting it summary judgment on its first cause of action in its amended verified complaint in the amount of $74,964.93, together with interest, costs, and disbursements; (2) granting it partial summary judgment on its second, third, and fourth causes of action in its amended verified complaint on the issue of Arnell's breaches of the liquidating agreement; (3) directing the holding of a hearing/trial to calculate its damages on its second, third, and fourth causes of action; and (4) dismissing all of Arnell's affirmative defenses set forth in Arnell's answer to its amended verified complaint.
On June 25, 2011, Arnell executed a prime construction contract (the prime contract) with the City of New York (the City), acting by and through the New York City Department of Sanitation (the DOS), to provide general construction services for the construction of two new sanitation garages for Districts 1 and 4 at 161 Varick Street, in Brooklyn New York (the project). On August 22, 2001, in furtherance of the prime contract, Arnell, as the general contractor on the project, entered into a subcontract with Rad, a masonry subcontractor, to perform certain unit masonry work (the subcontract).
After Rad and Arnell entered into the subcontract, Rad learned that the start of its work would be delayed because the City did not own and/or did not have the right to access the site where the project was to be constructed. Even after Rad was able to start work, the City only provided access to a portion of the project site, forcing Rad to perform its work in
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a piecemeal fashion. This caused Rad to have increased costs in performing its work, including the costs of labor, materials, and its supervision of its own work at the project.
Since Rad's subcontract was with Arnell and not with the City, it could only make a claim for its damages through Arnell, which had the right to make a claim against the City. By a letter dated June 4, 2002, and a second identical letter dated July 25, 2002, Rad complained to Arnell that increases in its compensation under the subcontract were necessary due to the delays that it encountered. By a letter dated August 9, 2002, Arnell responded as follows:
"In response to your 7/25/02 letter requesting an increase to your contract due to delays, we have agreed to the following terms. Arnell will increase your contract by $100,000 to help offset your increased costs. Your revised contract amount will now be $3,100,000.00. [Rad's] additional costs, due to delays, will be incorporated into [Arnell's] claims against the owner [i.e., the City] at the completion of the contract. Any money received in the settlement of the claim (for Rad) over the $100,000.00 will be forwarded to you."
Thus, by this August 9, 2002 letter, Rad and Arnell entered into a pass-through agreement, also known as a liquidating agreement. This liquidating agreement required Arnell to increase Rad's subcontract amount by $100,000 and incorporate Rad's additional costs, due to delays, into its own claim against the City. Under the liquidating agreement, Arnell assumed the duty to prosecute Rad's claims for damages against the City, and to forward to Rad any money received by it in a settlement of the claim for Rad over the sum of $100,000.
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In early 2005, the president of Rad, Andrew Feldman, contacted Robert D. Munster, the president of Bethay Consultants (Bethay) and a construction claims consultant, to review Rad's project records and to prepare a claim for delay damages for Arnell to submit to the City on Rad's behalf. Throughout 2005, Mr. Munster and his associate reviewed Rad's project records and prepared Rad's damage claim. Arnell's key project employee was Barry Aronowitz, who reviewed drafts of Rad's claim and asked for changes to be made to it. Mr. Aronowitz asked Rad to revise some of the claims schedules and instructed Rad not to include some claims. Rad's claim was finalized, and, on October 31, 2005, Rad's claim was delivered to Mr. Aronowitz at Arnell.
Consistent with the typical standard format when claims are submitted to an owner by a general contractor on behalf of itself and its subcontractors, Rad's claim was not submitted by itself to the City, but was submitted to the City with claims from other Arnell subcontractors as part of Arnell's claim. In January 2006, Rad was informed that Arnell submitted its own claims, which incorporated Rad's claims and those of other subcontractors, to the City. According to Mr. Feldman, he spoke to Mr. Aronowitz and Harold Zarember, who is Arnell's owner and president, throughout 2006, 2007, and 2008, to find out the status of Rad's claim, and was told that Rad's claim was being reviewed by the City, that Rad would be hearing about its claim, and that Rad need not take any further action.
In December 2008, Mr. Feldman learned that Arnell had retained an attorney, Henry Goldberg, Esq., to pursue Arnell and Rad's claims against the City. He also learned that Jack
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Menco, a claims consultant, had been hired by Arnell, on Mr. Goldberg's recommendation, to work on the project claim. Rad was asked to send Mr. Menco a copy of Rad's claim that had been prepared by Mr. Munster, and, on December 30, 2008, Rad sent a copy of its claim to Mr. Menco.
According to Mr. Feldman, in March 2009, when he asked Mr. Aronowitz about Rad's claim, he was told by Mr. Aronowitz that he would follow-up and assured him that Rad's claim was being prosecuted. Mr. Feldman eventually learned that Rad's claim was not timely submitted to the City, and that Arnell did not submit any claim to the City until August 11, 2010, when Arnell filed a verified notice of claim against the City, alleging the various delays and interferences by the City and the DOS and extra work, including the delays and interferences caused to Rad and Rad's extra work. In Arnell's notice of claim, Rad's claims in the amount of $2,099,192 were incorporated into and made part of its claims against the City.
On December 13, 2010, Arnell commenced an action against the City and the DOS in the Supreme Court, New York County (Arnell Constr. Corp. v City of New York, Sup Ct, NY County, index No. 651491/2010) (the New York County action), seeking $15,092,471.40 on its own behalf and on behalf of Rad and other subcontractors, alleging the delays, interferences, and extra work on the project. By a decision and order dated May 7, 2012 in the New York County action, Justice Eileen Bransten denied a motion by Arnell for partial summary judgment, granted a cross motion by the City and the DOS to dismiss Arnell's
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complaint as time-barred, and denied a cross motion by Arnell to dismiss the City and the DOS' affirmative defenses which asserted that Arnell's claims were time-barred. Justice Bransten held that article 56 of the prime contract established a statute of limitations period for claims against the City and the DOS requiring such claims to be commenced within six months after the date the Commissioner1 issued a certificate of substantial completion. Justice Bransten found that Arnell had substantially completed its work on December 7, 2007, and that this six-month period was triggered on December 27, 2007, when the City forwarded to it notice of the substantial completion, requiring it to bring its claims prior to June 27, 2008 in order for those claims to be timely.
On March 21, 2014, Rad filed this action against Arnell. Rad's original complaint alleged five causes of action, including: (1) a first cause of action for breach of contract related to its subcontract balance allegedly due to it on the project, and seeking the recovery of $74,964.93, plus interest; (2) a second cause of action for breach of the duty of good faith and fair dealing with respect to its pass-through delay claims, and seeking the recovery of $2,099,192, plus interest, for not prosecuting its claim timely; (3) a third cause of action for breach of fiduciary duty based on Arnell's failure to prosecute its claims, and seeking $2,099,192, plus interest; (4) a fourth cause of action for breach of contract related to Arnell's failure to directly pay for its delay damages, and seeking the recovery of $2,099,192,
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plus interest; and (5) a fifth cause of action based upon a theory of quantum meruit, and seeking the recovery of $2,174,157.03, plus interest, as the reasonable value of its work. On August 29, 2014, Arnell filed a motion to dismiss Rad's complaint.
By a decision and order dated June 5, 2015 (RAD & D'Aprile Inc. v Arnell Constr. Corp., 49 Misc 3d...
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