Eaton Electric, Inc. v. Dormitory Authority

48 A.D.3d 619, 852 N.Y.S.2d 363

This text of 48 A.D.3d 619 (Eaton Electric, Inc. v. Dormitory Authority) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eaton Electric, Inc. v. Dormitory Authority, 48 A.D.3d 619, 852 N.Y.S.2d 363 (N.Y. Ct. App. 2008).

Opinion

[620]*620In an action to recover damages for breach of contract, the defendant appeals from an order of the Supreme Court, Kings County (Demarest, J.), dated December 6, 2006, which denied its motion for summary judgment dismissing the second, third, and fourth causes of action.

Ordered that the order is affirmed, with costs.

The defendant, Dormitory Authority of State of New York (hereinafter DASNY), is a public authority which arranges for the financing of construction projects at not-for-profit institutions including the City University of New York (hereinafter CUNY). With respect to CUNY projects, DASNY also acts as owner of the projects, taking title to the property, contracting for design and construction, and leasing the projects back to CUNY pending repayment of the amount financed.

On May 10, 1999 the plaintiff entered into a contract with DASNY pursuant to which the plaintiff agreed to perform certain electrical work and furnish all necessary supplies and materials incident to that work for a fixed price of $8,933,000 (hereafter the contract), in connection with a project to renovate the existing library and construct a new addition to that library at Brooklyn College.

Pursuant to the contract, the plaintiff furnished a payment bond and a performance bond in favor of DASNY, as obligee, covering payment for labor, materials, and performance of its obligations under the contract. AXA Global Risks US Insurance Company (hereafter AXA) issued the bonds.

Through no fault of its own, the plaintiffs work pursuant to the contract was delayed, causing it to experience financial difficulties and to seek financial assistance from AXA. AXA agreed to advance funds to the plaintiff in exchange for an assignment, entitled “Assignment of Contrary Moneys” (hereinafter the assignment), pursuant to which the plaintiff agreed to assign its “right, title and interest in and to any and all payments on account of estimates, change orders, extras, claims or bonuses including, but not limited to, the final estimate, final payment and retainage, and any other money now due or hereafter to become due arising out of the Contract between [the plaintiff] and [DASNY], together with all rights of action accrued or which [621]*621may accrue thereunder.” From that point forward, the plaintiff continued its performance obligations under the contract and continued dealing directly with DASNY concerning any matters arising out of the contract, while AXA received payments directly from DASNY for the plaintiffs work performed under the contract.

In a notification of construction completion dated August 28, 2002 DASNY accepted the plaintiffs work as completed, with the exception of outstanding punchlist items, which included more than 800 incomplete work items entailing substantial work. CUNY occupied and began using the library on that date.

On August 29, 2002 the plaintiff requested that DASNY reduce the retainage it was permitted to withhold from its monthly partial payments, pursuant to general conditions § 17.01D of the contract, from 5% to 2.5%, based upon DASNY’s “beneficial occupancy” of the library. Pursuant to section 1 of the general conditions of the contract, “beneficial occupancy” is defined as “[t]he use, occupancy or operation by the Owner of the work or any part thereof as evidenced by a notification of Beneficial Occupancy executed by the Owner.”

In a letter dated January 13, 2003, the plaintiff repeated its request for a reduction of retainage. On February 11, 2003 the plaintiff, using a requisition form provided to it by DASNY’s construction manager, Turner Construction Company (hereafter Turner), requested DASNY to pay it one half of the retain-age that DASNY was withholding as of that date, which it calculated to be in the sum of $260,351.31. In the form, the plaintiff stated that its work pursuant to the contract work was 99.22% complete.

In a memorandum by Turner’s project manager, Frank Yozzo, dated February 19, 2003, Turner informed DASNY’s project manager, Eugene Leung, that the plaintiff had completed 99.55% of the work required by the contract, with the remaining amount of DASNY’s obligation with respect to that work totaling $40,300.23, and 75% of the punchlist items, with the remaining obligation for the punchlist items valued at no more than $75,000. Yozzo further stated that change orders remained to be processed that were valued at $578,000. Yozzo recommended a reduction of retainage from 5% to 2.5% and the release of a payment to the plaintiff in the sum of $260,351.31.

In a memorandum dated February 20, 2003, Leung calculated that the plaintiff had completed work valued at $10,414,049.59 as of that date, and also recommended a payment to the plaintiff in the sum of $260,351.31.

DASNY’s accounts payable office reviewed the requisition and [622]*622increased the amount of retainage to be released from the sum of $260,351.31 to the sum of $262,319.84, based upon its own calculations that took into account a pending progress payment that had not been included in the plaintiffs calculation.

In a letter to AXA dated March 3, 2004, DASNY enclosed forms entitled “RELEASE FORM/REDUCTION OF RETAIN-AGE” (hereinafter the release) and “CONSENT OF SURETY/ REDUCTION OF RETAINAGE” to be executed by AXA (hereinafter the consent of surety). The release referred to and identified AXA as “Contractor” and stated that, in consideration of the sum of $10,230,468.17, “heretofore or now paid” by DASNY, AXA: “has remised, released and forever discharged and by these presents does for itself, its successors and its assigns, remise, release and forever discharge [DASNY], . . . from all claims of liability to the Contractor for anything furnished or performed in connection with, or arising out of the contract. . . between [DASNY] and the Contractor ... or out of the work covered by said contract . . . including, but not limited to, all claims for extra work or by reason of extra work, labor or materials, or additional work or by reason of additional work, labor, or materials furnished or performed in connection with, relating to, or arising out of the subject matter of said contract, and any prior act, neglect or default on the part of [DASNY] . . . and all manner of action and actions, cause and causes of action, suits, . . . sums of money, . . . contracts, . . . agreements, . . . promises, . . . damages, judgments, . . . claims and demands whatsoever in law or in equity, which against [DASNY] . . . the Contractor ever had, now had, or which its successors or assigns hereafter can, shall or may have for, upon or by reason of any matter, cause or thing whatsoever.”

The release contained an exclusion for the portion of the retainage that was not being released, which was in the sum of $262,319.70. This exclusion clause provided spaces in which AXA was to write any additional exclusions for “a claim for damages in the amount of_dollars ($_) presented to [DASNY].” In these spaces, AXA wrote the terms “N/A” and “0.” AXA executed the release on March 7, 2003 and DASNY issued a check to AXA on April 1, 2003 in the sum of $262,319.84.

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Bluebook (online)
48 A.D.3d 619, 852 N.Y.S.2d 363, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eaton-electric-inc-v-dormitory-authority-nyappdiv-2008.