US FOR USE OF FALCO CONST. v. SUMMIT GEN. CONTR.

• Decision Date: 21 March 1991
• Docket Number: No. 89-CV-2931.,89-CV-2931.
• Citation: 760 F. Supp. 1004
• Parties: UNITED STATES of America for the Use and Benefit of FALCO CONSTRUCTION CORPORATION, Plaintiff, v. SUMMIT GENERAL CONTRACTING CORPORATION and The Fireman's Fund Insurance Company, Defendants.
• Court: U.S. District Court — Eastern District of New York

760 F. Supp. 1004

UNITED STATES of America for the Use and Benefit of FALCO CONSTRUCTION CORPORATION, Plaintiff, v.SUMMIT GENERAL CONTRACTING CORPORATION and The Fireman's Fund Insurance Company, Defendants.

No. 89-CV-2931.

United States District Court, E.D. New York.

March 21, 1991.

Birnbaum & Birnbaum, Mineola, N.Y. (Harris Birnbaum, of counsel), for plaintiff.

Thomas Welby, White Plains, N.Y., for defendantSummit General Contracting Corp.

Hart & Hume, New York City(Eugene F. Brady, of counsel), for defendantFireman's Fund Ins. Co.

MEMORANDUM and ORDER

BARTELS, District Judge.

BACKGROUND

In this Miller Act¹ caseFalco Construction Corporation("Falco"), the use plaintiff and subcontractor, seeks to recover monetary damages from Summit General Contracting Corporation("Summit"), the general contractor, and Fireman's Fund Insurance Company, Summit's surety on its payment bond (jointly, the "defendants").Falco commenced this action after Summit failed to pay $97,515.00, monies Falco alleged it was owed for services Falco rendered Summit pursuant to a written proposal (the "proposal" or "sub-contract") to drive test and production piles for a Naval Telecommunications Center ("NTCC") on Staten Island that Summit was constructing for the Department of the Navy(the "Navy").Falco's demand for $97,515.00 included a claim for (a) $83,845.00 for eighty-nine (89) piles driven from March 8, 1989 through May 19, 1989; (b) $3,240.00 for costs associated with eleven (11) obstructed or broken piles; (c) $1,170.00 for costs associated with spudding² thirty-nine (39) piles; and (d) $9,080.00³ for costs associated with driving additional piles on July 13, 1989.The defendants counterclaimed alleging they suffered $14,000.00 in damages on account of Falco's negligent, improper and delayed performance.

In December 1989, after finding that there were triable issues of fact regarding Falco's claim for obstructed piles, spudding and additional work performed on July 13, 1989, and defendants' counterclaim, the Court awarded Falco partial summary judgment in the amount of $69,045.00 plus interest, leaving in dispute a total of $28,470.00.See Memorandum and Order of this Court dated December 6, 1989.Thereafter, the defendants moved pursuant to Fed.R.Civ.P. 15(a) to amend their counterclaim alleging that as a result of Falco's delayed and improper performance they actually suffered $229,590.00⁴ in damages.The Court granted defendants' motion.

This action was bifurcated and tried without a jury over an eight day period.

CONTENTIONS OF THE PARTIES

A. Falco's Claim

Falco maintains that (1) it is entitled to be reimbursed for spudding, admittedly extra work done without written authorization, notwithstanding the fact that the subcontract contains a contrary provision; (2) under the terms of the sub-contract Summit is responsible for extra costs associated with obstructed piles; and (3) the work performed on July 13, 1989 was pursuant to a separate oral agreement associated with the project that the parties entered into in June 1989.

B.Defendants' Counterclaim

In their counterclaim the defendants contend that Falco (1) provided non-conforming materials; to wit: production piles less than sixty (60) feet long; and (2) did not substantially perform its obligations under the sub-contract by April 17, 1989, thereby breaching the terms of the sub-contract.In essence, the defendants argue that Falco's failure to drive production piles that were a minimum of sixty (60) feet long set off a chain reaction that ultimately delayed construction of the NTCC by fifteen (15) weeks, from April 17, 1989 to August 2, 1989.At the heart of the defendants' counterclaim is an allegation, which Falco denies, that the piles which Falco maintains broke during the course of driving were in fact not broken and were only belatedly denoted as such simply to obscure the fact that the pile driving inspector rejected those piles because they were too short to satisfy the Navy's pile driving criteria.

After due deliberation and full consideration of all of the pleadings, testimony and other evidence the Court makes the following findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure.

FINDINGS OF FACT

1.In September 1988, the Navy awarded Summit a contract to construct the NTCC (the "prime contract").Falco was not a party to the prime contract and is not bound by its terms.Thereafter, Summit solicited Falco's bid to drive test and production piles for the NTCC and forwarded a copy of the specifications, the pile foundation plan and results of pertinent soil borings⁵ to Falco.

2.The specifications, which, parenthetically, are extremely detailed, do not establish a specific length for production piles not does it indicate a time for performance.Pile length is mentioned in only two contexts: First, with respect to bidding on the project, the contractor is advised that the bid length is sixty (60) feet; and second, test pile length is set at sixty-five (65) feet.

3.According to the specifications, the length of production piles would be determined based upon pile driving criteria which the Navy would establish after the test piles had been driven and load tested.⁶

4.The specifications also provide (a) a mechanism for adjusting the price of the prime contract in the event that pile length differed from that specified as the basis for bidding; (b) that spudding, a common pile driving practice, was permitted provided the Navy's representative on the job site approved; (c) the Navy could waive the pile driving criteria under certain circumstances;⁷ and (d) the costs associated with spudded and redriven piles (piles driven to replace piles that were damaged, mislocated or driven out of alignment) are to be borne by the Contractor, in this case Summit, not the Navy.

5.Based on the soil borings, the foundation plan and the specifications Falco's engineer K.K. Ramamurthy("KK") drafted the proposal⁸ which provided in pertinent part that: (a) Falco would "furnish and install 81 creososted sic wood piles driven to 30 ton design load in conformance with NYCB New York City Building code"("NYCBC"); (b) Summit would pay Falco an additional sum if piles longer than sixty (60) feet were driven and Falco would credit Summit if piles shorter than sixty (60) feet were used; (c)"all costs due to redesign together with associated costs for remedial work on account of pile deviation, broken piles, etc." were excluded from the price; and (d) any alteration or deviation from the basic proposal which involved extra costs required a separate written agreement.

6.The sub-contract, which embodied all the terms of the parties' agreement, did not specify the time of performance, nor did it contain a damage penalty clause.Furthermore, the subcontract did not incorporate by reference the terms of the prime contract.⁹

7.On December 1, 1988, George Vrettos("Vrettos"), Summit's project manager, orally accepted the proposal, provided that the price was reduced from $87,500 to $85,000.KK orally agreed to the modification, thereby amending the sub-contract.

8.Summit estimated that the pile driving phase of the operation, including test and production pile driving, should have taken a total of ten and one half weeks.

9.Falco could not begin driving test piles until March 8, 1989, when, relying on its analysis of the soil borings and its pile driving experience, both generally and in the area of the NTCC, it drove six test piles varying in length from fifty (50) to fifty-five (55) feet.(Although the specifications called for five (5) test piles six (6) were actually driven because the first test pile, number 7, had to be pulled and redriven in a new location after it broke at a depth of minus eight (8) feet.)

10.Despite the fact that the test piles were less than sixty-five (65) feet long, as called for in the specifications, the Navy selected two test piles for load testing.

11.Based on the load test data the Navy established the following pile driving criteria for production piles: (1) minimum tip elevation of minus thirty-five (35) feet, approximately forty-five (45) feet embedded length; and (2) driving resistance of at least thirty-five (35) blows per foot for the last foot of driving.The pile driving criteria were more severe than is customary in the industry, therefore, there was a greater likelihood that a pile might be overdriven and break.

12.Given the conflicting expert testimony regarding which layer of soil a pile would "fetch up" in (satisfy the pile driving criteria), it was reasonable to conclude that a pile would "fetch up" in either the medium dense or dense layer of soil which, according to the soil borings, was located at an elevation of minus thirty-five (35) feet and minus (45) feet, respectively.(Due to subsurface conditions, however, these elevations could vary approximately five (5) feet plus or minus.Therefore, the medium dense layer could begin at minus thirty (30) feet and the dense layer at minus forty (40) feet.)

13.Production pile driving began promptly on April 10, 1989 and continued on April 11, 14, 17 and May 19.During that time a total of nine (9) piles — numbers 11, 14, 14A, 12, 22, 46, 48, 53, and 81 — broke, apparently after hitting a subsurface obstruction.¹⁰The evidence regarding pile numbers 40 and 71A, which Falco claims also broke, is inconclusive.¹¹

14.Falco's pile driver exercised no discretion with respect to selecting the location for piles that were driven to replace broken piles.

15.According to the prime contract Navy architects and engineers have the exclusive authority to accept or reject piles.Accordingly, following this phase of production pile driving, Navy engineers reviewed the pile driving logs and the resurvey of "as driven" piles ("resurvey").On May 12, 1989, following that review, the Navy advised Summit that: (a) thirty-five (35)...