ISS Facility Services, Inc. v. Fedcap Rehabilitation Services, Inc.

CourtDistrict Court, S.D. New York
DecidedJuly 2, 2021
Docket1:20-cv-06591
StatusUnknown

This text of ISS Facility Services, Inc. v. Fedcap Rehabilitation Services, Inc. (ISS Facility Services, Inc. v. Fedcap Rehabilitation Services, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
ISS Facility Services, Inc. v. Fedcap Rehabilitation Services, Inc., (S.D.N.Y. 2021).

Opinion

UNITED STATES DISTRICT COURT DOCUMENT SOUTHERN DISTRICT OF NEW YORK ELECTRONICALLY FILED DOC#: ISS FACILITY SERVICES, INC., DATE FILED:

Plaintiff, 20-CV-6591 (RA) v. MEMORANDUM FEDCAP REHABILITATION SERVICES, OPINION & ORDER INC.,

Defendant.

RONNIE ABRAMS, United States District Judge: ISS Facility Services, Inc. (“ISS”) brings this action against Fedcap Rehabilitation Services, Inc. (“Fedcap”) for monetary relief following Fedcap’s alleged breach of two contracts between the parties. Fedcap does not contest the breach, but instead asserts that ISS cannot maintain this lawsuit because it failed to satisfy a contractual condition precedent to filing suit. For the reasons articulated below, the Court agrees. The motion to dismiss is thus GRANTED. BACKGROUND The following facts are drawn from the Complaint, Dkt.1, and the documents attached thereto, namely, the Hughes Subcontract, Dkt. 1 Ex. A; the Cadman Subcontract, Dkt. 1 Ex. B; and the parties’ emails from October 18 through February 7, 2020; Dkt. 1 Ex. C, E, and F. These facts are assumed to be true for purposes of resolving the motion. See Erickson v. Pardus, 551 U.S. 89, 94 (2007). ISS is a Texas-based subcontractor that provides facilities services. Compl. ¶ 1. Fedcap is a New York-based general contractor. Id. ¶ 2. Together, the parties entered the two contracts that form the basis of this dispute: the Cadman Subcontract and the Hughes Subcontract. I. The Cadman Subcontract After the U.S. General Services Administration (“GSA”) awarded Fedcap a contract in connection with the Duberstein Bankruptcy Courthouse and U.S. Post Office in Brooklyn, New York, id. ¶ 13, Fedcap engaged ISS to provide operation and maintenance on the project. Id. ¶¶ 14–15. On June 30, 2014, the parties entered into a subcontract, hereinafter known as the “Cadman Subcontract,” which required Fedcap to pay ISS for services rendered within 45 days of ISS providing Fedcap an invoice. See Cadman Subcontract § 2.1. The initial term of the Cadman Subcontract was designated as

July 1, 2014 until June 30, 2024. Compl. ¶ 16. The Cadman Subcontract contains a provision governing disputes between the parties, which provides that: “If a dispute or misunderstanding arises between the parties . . . then every reasonable effort will be made to settle the dispute without resorting to litigation. The first level of attempted resolution will be between the managers at the level at which the dispute arises. If it cannot be resolved at that level within twenty business days, the issue shall be committed to writing by each party and submitted to the executive of each party with direct responsibility for administering this Subcontract . . . . If the executives cannot resolve the dispute within an additional twenty (20) business days, then the issue shall be further refined by them or their staffs and submitted to the President or Chief Executive Officer (CEO) of each party for resolution. Prior to a final decision at this level that does not finally resolve the issue; the presidents or CEOs shall discuss the issue and attempt final resolution.”

Cadman Subcontract § 6.2.1. The dispute resolution provision further states that “[i]n the event that the dispute, claim or controversy has not been resolved through informal dispute resolution within sixty (60) days after a party requests mediation, the party seeking relief may file suit in a court of competent jurisdiction.” Id. § 6.2.2. II. The Hughes Subcontract Fedcap was also awarded a contract by the U.S. Federal Aviation Administration (“FAA”) to provide services at the William J. Hughes Aviation Center in Atlantic City, New Jersey. Id. ¶ 6 (“The Hughes Contract”). Thereafter, Fedcap again engaged ISS as a subcontractor on the project to provide operation and maintenance, as it had on the Cadman Contract. Id. ¶ 8. On November 1, 2015, the parties entered into a sub-contract, hereinafter known as the “Hughes Subcontract,” which, like the Cadman Subcontract, required Fedcap to pay ISS for services rendered within 45 days of the receipt of an invoice. See Hughes Subcontract § 2.1. The initial term of the Hughes Subcontract was designated as November 1, 2015 until October 31, 2020. Id. ¶ 9 The Hughes Subcontract similarly contains a dispute resolution provision, which provides that: “If a dispute or misunderstanding arises between the parties . . . then every reasonable effort will be made to settle the dispute without resorting to litigation. The first level of attempted resolution will be between the managers at the level at which the dispute arises. If it cannot be resolved at that level within ten (10) days, the issue shall be committed to writing by each party and submitted to the executive of each party with direct responsibility for administering this Subcontract . . . . If the executives cannot resolve the dispute within an additional ten (10) days, then the issue shall be further refined by them or their staffs and submitted to the President or Chief Executive Officer (CEO) of each party for resolution. Prior to a final decision at this level that does not finally resolve the issue; the presidents or CEOs shall discuss the issue and attempt final resolution.”

Hughes Subcontract § 6.2.1. This dispute resolution provision further states that “[i]n the event that the dispute, claim or controversy has not been resolved through informal dispute resolution within forty-five (45) days after a party requests mediation, the party seeking relief may file suit in a court of competent jurisdiction.” Hughes Subcontract § 6.2.2. III. The Breach of the Subcontracts ISS alleges that it performed its obligations under both the Cadman and Hughes Subcontracts and submitted invoices to Fedcap in accordance with the Subcontracts. Compl. ¶¶ 21–22. Fedcap, however, became delinquent in payments, and ultimately failed to pay ISS over three million dollars. Id. ¶¶ 23, 25. To address this delinquency, in or around September 2019, ISS purports to have initiated the dispute resolution process mandated by the Subcontracts. Id. ¶¶ 24–25. On November 15, 2019 Fedcap’s General Counsel, Kenneth Brezenoff, acknowledged in an email to ISS’s General Counsel, John Sumner, that Fedcap owed over $3,000,000 to ISS. Dkt. 1 Ex. C at 1 (“The total of valid receivables exceeds $3MM.”). Brezenoff and Sumner then engaged in a series of emails that, according to ISS, resulted in a global resolution between the parties (the “Resolution”) and—after Fedcap purportedly breached the Resolution—an amended resolution of the conflict (the “Amended Resolution”). IV. The Resolution In a December 9, 2019 email, ISS’s General Counsel, Sumner, expressed frustration that ISS had not yet received from Fedcap “any proposal for paying the amounts admittedly owed by Fedcap to ISS” and asserted that ISS “need[s] a realistic and formal commitment ASAP for Fedcap paying that balance.” Dkt. 1 Ex. E at 3. In response, Brezenoff, Fedcap’s General Counsel, stated via email on December 9

that “Fedcap is prepared to commit to a monthly payment of $500,000 per month beginning in January to retire the amount owed by July, 2020.” Id. at 2. In a December 20, 2019 email, Sumner proposed that Fedcap pay $200,000 on or before December 31, 2019, and the rest in monthly installments of $500,000 beginning in January 2020. Id. at 2. After Fedcap purportedly made a payment of $200,000 to ISS, Sumner emailed Brezenoff again on January 7 and asked, “Should I understand that [payment] as acceptance of the proposal I outlined below . . . ?” Id. (ellipses in original). ISS has not alleged whether Fedcap ever responded to this final email. ISS characterizes this series of emails as “a global resolution (the ‘Resolution’) of the outstanding invoices due under the Subcontracts.” Compl. ¶¶ 28– 29. V. The Amended Resolution

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Bluebook (online)
ISS Facility Services, Inc. v. Fedcap Rehabilitation Services, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/iss-facility-services-inc-v-fedcap-rehabilitation-services-inc-nysd-2021.