Gemma Construction Co. v. City of New York

246 A.D.2d 451, 668 N.Y.S.2d 195, 1998 N.Y. App. Div. LEXIS 617
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJanuary 27, 1998
StatusPublished
Cited by8 cases

This text of 246 A.D.2d 451 (Gemma Construction Co. v. City of New York) 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
Gemma Construction Co. v. City of New York, 246 A.D.2d 451, 668 N.Y.S.2d 195, 1998 N.Y. App. Div. LEXIS 617 (N.Y. Ct. App. 1998).

Opinion

Order, Supreme [452]*452Court, New York County (Jane Solomon, J.), entered May 2, 1997, which denied defendant City of New York’s motion for partial summary judgment dismissing plaintiff’s first cause of action, unanimously affirmed, without costs.

In its first cause of action, plaintiff contractor seeks to recover damages of $1,457,049.38 for delay in completing work under its contract with the City. The second cause of action, which seeks to recover a $35,000 balance alleged to be due under the contract, is not at issue. An internal memorandum from defendant’s project manager specifies three periods of “delays encountered by the Prime Contractors on this project directly attributable to actions on the part of the city” totaling “225 calendar days, or approximately 71/2 months”. Defendant unquestionably had contemporaneous notice of these delays, which were occasioned by the inability to timely obtain building permits (the City’s filed plans were incomplete), an improperly elevated foundation at one of the sites (the City’s specifications were inaccurate), and the City’s failure to timely correct a dangerous condition (an unstable wall on an adjacent property posed a hazard).

The City’s answer alleges that plaintiff waived its right to seek delay damages pursuant to the provisions of article 13 of the contract and that plaintiff failed to comply with notice provisions of article 27, entitled “Disputed Work, Determination or Order”. In its moving papers, however, the City does not raise the waiver provision, advancing only plaintiffs failure to comply with article 27 as the basis for dismissal of the complaint. In opposition, plaintiff contends that the notice provision contained in article 11 governs claims for delay damage and that articles 27 and 28 concern the notice to be given to the City regarding claims for extra or disputed work. In its reply papers, the City takes the position that compliance with the notice and documentation requirements of article 27 is a “condition precedent for all claims for damages under the contract” whether or not they involve “extra” or “disputed” work.

Article 1 of the contract provides that “ ‘Extra work’ shall mean work other than that required by the Contract at the time of its execution.” The contract does not define either “disputed work” or “delay damages”. In Naclerio Contr. Co. v Environmental Protection Admin. (113 AD2d 707, 708, appeal dismissed 66 NY2d 915), this Court noted that, with respect to the various items for which damages are sought, “Chapter VI of the contract, comprising articles 25 through 28, sets forth the governing terms relating to ‘Changes and Extra Work’.” [453]*453We noted that “disputed work” is work that the City contends is required by the contract but the contractor regards as “extra” work (supra, at 708). The decision concludes that work governed by the provisions of Chapter VI invariably falls into one of three categories: (1) work required to be performed pursuant to the contract, resulting in no additional compensation, (2) disputed or extra work, requiring that the contractor comply with articles 27 and 28 in order to pursue its claim, or (3) work attributable to changed conditions, requiring a contract modification subject to the written approval of the Construction Commissioner (supra, at 710). Where damages are sought for “extra or disputed work, there must be strict compliance with the requirements of articles 27 and 28 or any claims relating thereto are explicitly waived” (supra, at 710, citing De Foe Corp. v City of New York, 95 AD2d 793; see also, Buckley & Co. v City of New York, 121 AD2d 933, 935-936). As suggested by Naclerio, the purpose of the detailed notice provision is to document the extra work performed. In the words of the City’s supervising construction engineer, “ ‘Unless such records are submitted to the City on a daily basis and verified by the City representative at the contract site, the City is without recourse to actually know, in a project of this size, whether extra work was done and, if so, was done at a fair and reasonable value and in an efficient manner’ ” (Naclerio Contr. Co. v Environmental Protection Admin., supra, at 709).

By contrast, “delay damage claims seek compensation for increased costs * * * whether the costs result because it takes longer to complete the project or because overtime or additional costs are expended in an effort to complete the work on time” (Corinno Civetta Constr. Co. v City of New York, 67 NY2d 297, 313-314). Therefore, while a contractor may be required to perform additional work on account of a delay, such as protecting concrete from winter temperatures (as done here at a cost of $159,437.71), that expense does not, ipso facto, become “extra” work, as that term is defined in the contract. It is accepted that such action is necessary to mitigate the damages resulting from a delay (Spang Indus. v Aetna Cas. & Sur. Co., 512 F2d 365, 370 [2d Cir 1975]). A significant item in delay damages is the increase in fixed costs and overhead incurred by reason of the deferral of the completion date of the project (see, Fehlhaber Corp. v State of New York, 65 AD2d 119, 130, lv denied 48 NY2d 604), amounting to $968,797.96 in this case.

Chapter III of the disputed contract is entitled “Time Provisions”. Comprising articles 8 through 17, this chapter deals with the progress of the work and contains provisions expressly [454]*454relating to damages for the contractor’s delay (art 16), waiver of claims by the contractor (art 13) and the notice to be furnished to the City of the conditions causing delay (art 11). Although article 13 provides for an absolute waiver of claims attributable to delay, it is settled that the contractual bar does not apply to delays arising from contractee’s bad faith, uncontemplated delays, those constituting intentional abandonment of the contract and those resulting from breach of a fundamental obligation of the contract (Corinno Civetta Constr. Co. v City of New York, supra, at 309; Buckley & Co. v City of New York, supra, at 934).

Defendant suggests no compelling reason to look beyond the provisions of Chapter III in respect of the notice to be given where, as here, damages are sustained solely because of the City’s delay. Indeed, as Supreme Court pointed out, the contemporaneous notification of damages required by article 27 is in conflict with the deferred notification for delay damages provided in article 42.1 of the contract. Therefore, application of article 27 to a delay damages claim would have the effect of rendering the notice provision of article 42 without force and effect, in violation of “a cardinal rule of construction” (Corhill Corp. v S. D. Plants, 9 NY2d 595, 599; Spaulding v Benenati, 57 NY2d 418, 425; Laba v Carey, 29 NY2d 302, 308). However, as the City cites authority that seems to accord universal application to the notice provisions of article 27, a review of this area is in order.

In Huff Enters. v Triborough Bridge & Tunnel Auth. (191 AD2d 314, lv denied

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Bluebook (online)
246 A.D.2d 451, 668 N.Y.S.2d 195, 1998 N.Y. App. Div. LEXIS 617, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gemma-construction-co-v-city-of-new-york-nyappdiv-1998.