Mars Associates, Inc. v. New York City Educational Construction Fund

126 A.D.2d 178, 513 N.Y.S.2d 125, 1987 N.Y. App. Div. LEXIS 41142
CourtAppellate Division of the Supreme Court of the State of New York
DecidedMarch 17, 1987
StatusPublished
Cited by47 cases

This text of 126 A.D.2d 178 (Mars Associates, Inc. v. New York City Educational Construction Fund) 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
Mars Associates, Inc. v. New York City Educational Construction Fund, 126 A.D.2d 178, 513 N.Y.S.2d 125, 1987 N.Y. App. Div. LEXIS 41142 (N.Y. Ct. App. 1987).

Opinion

OPINION OF THE COURT

Ross, J.

Before us for review are two appeals from two separate judgments, which resulted from a jury verdict, after a joint trial, of breach of contract actions. The issues raised, include whether the jury’s interrogatory responses were inconsistent; was the New York City Educational Construction Fund (Fund), as a matter of law, entitled to judgment on its motion to dismiss the claims for indemnification made by plaintiff Mars Associates, Inc., and Normel Construction Corp., as joint venturers (Mars), in the action entitled Mars v Fund; did the trial court err in denying the motion of defendant Fund for separate trials; did the trial court err in denying the defendant Fund’s request to submit an interrogatory to the jury, which would have requested them to determine whether plaintiff Mars’ action against the Fund was barred by an 18-month contractual period of limitations; and, did the judgment entered in the action, entitled Martin Mechanical Corporation (Martin) v Mars and Federal Insurance Company (Federal), properly reflect the terms of the indemnification agreement between Mars and its subcontractor Martin?

Both the Mars v Fund (Mars action) and Martin v Mars and Federal (Martin action) actions arose out of the construction, on the site of the old 33rd Street Armory, of the school portion of a combined-occupancy structure, located between 33rd and 34th Streets on the east side of Park Avenue in New York County. The school portion of this structure is now known as Norman Thomas High School.

[182]*182Pursuant to the provisions of article 10 of the New York State Education Law, the Fund was created in 1966, as a public benefit corporation, to facilitate the financing of the construction of elementary and secondary school buildings in the City of New York, as part of combined-occupancy structures.

A public benefit corporation is defined as "a corporation organized to construct or operate a public improvement wholly or partly within the state, the profits from which inure to the benefit of this or other states, or to the people thereof’ (General Construction Law § 66 [4]).

By a written contract (Development Agreement), dated January 21, 1972, the Fund, the Board of Education of the City of New York (Board), and Three Park Avenue Co. (Three Park) entered into an agreement, to erect a reinforced concrete combined-occupancy structure on the site of the old 33rd Street Armory. According to the parties’ plans, when completed, the resulting building would consist generally, in the lower part, of a nine-story high school (school portion), with, in the upper part, at least a 29-story office tower. Thereafter, the Fund obtained title to the project site from the City of New York. In accordance with the terms of the Development Agreement, the Fund, after its acquisition of the project site, leased the school portion to the Board, and the nonschool portion to Three Park.

Furthermore, although the Development Agreement provided that Three Park was obligated to develop and construct this combined-occupancy structure, Three Park was only the general contractor of the nonschool portion, since it was obligated and did assign, to Mars, the construction of the school portion.

By three written contracts, all dated January 19, 1973, Mars subcontracted with Martin Mechanical Corporation (Martin) to perform the mechanical work for the heating, ventilating and air conditioning; with A. I. Smith Co., Inc. (Smith), to perform the electrical work; and with S & M Plumbing Company, Inc. (S&M), to perform the plumbing and drainage work. Incidentally, Martin, in turn, subcontracted some of its work to General Sheet Metal Works, Inc. (General).

Demolition of the armory then occupying the site began on or about February 7, 1972. Three Park (and its assignee Mars) agreed, in section 309.1 of the Development Agreement, to [183]*183complete and make available for use "the school portion of the Project * * * within nine hundred (900) consecutive calendar days from * * * [the] commencement date [of the demolition]”. Since demolition began on or about February 7, 1972, we will take judicial notice (Richardson, Evidence § 14 [Prince 10th ed]) of the fact that 900 consecutive days from that date was July 27, 1974. Section 323.2 of the Development Agreement provides that the Fund is entitled to liquidated damages for any delay in the completion of the school portion in "the sum of $500 for each and every calendar day that the time consumed in completing the School Portion exceeds the time allowed therefor”.

Our examination of the record indicates that an executive of Mars testified that Mars did not complete the school portion by the required completion date. In fact, the Board did not begin using the school portion until some 426 days after the Mars promised completion date, when a temporary certificate of occupancy (TCO) was issued by the Department of Buildings.

Although the usual Statute of Limitations for actions arising from construction contracts is six years (Cowper Co. v Buffalo Hotel Dev. Venture, 115 AD2d 346, 347 [1985], lv dismissed 67 NY2d 605 [1986]; CPLR 213 [2]), CPLR 201 permits the parties to a written agreement to prescribe "a shorter time”. A unanimous Court of Appeals held in Kassner & Co. v City of New York (46 NY2d 544, 550-551 [1979]) that: "The parties may cut back on the Statute of Limitations by agreeing that any suit must be commenced within a shorter period than is prescribed by law. Such an agreement does not conflict with public policy but, in fact, 'more effectively secures the end sought to be attained by the statute of limitations’ (Ripley v Aetna Ins. Co., 30 NY 136, 163)”. In section 332 of the Development Agreement, Three Park and Mars as Three Park’s assignee, agreed that any action against the Fund would be barred, if it was commenced more than "eighteen (18) months after the date of completion of the work”.

In July 1977, Mars commenced its instant action against the Fund. The amended complaint contains eight causes of action. The first and third causes of action seek damages for alleged unpaid, extracontractual work performed by Mars at the Fund’s request, while the second cause of action seeks damages for alleged amounts due for change orders. The fourth cause of action claims damages, based upon delays allegedly caused by the Fund and the Board. In the remaining fifth [184]*184through eighth causes of action, Mars claims-over against the Fund for amounts that Mars alleges subcontractors Martin, Smith and S&M claimed against it, due to alleged delays in, and suspension of, the subcontractors’ work.

Specifically, the sixth and seventh causes of action seek indemnification for damages sought against Mars by Martin, in an action, commenced in April 1977, entitled: Martin v Mars and Federal (Martin action). Moreover, the fifth and eighth causes of action are alleged to be brought by Mars "on behalf of’ subcontractors Smith and S&M, respectively.

Sometime before instituting the Mars action, Mars had entered into settlement agreements with subcontractors Martin, Smith and S&M. Our examination of the settlement agreements indicate that they are nearly identical, since each agreement provides, in pertinent part, that Martin, Smith and S&M agree to accept in settlement of their respective claims against Mars, whatever amount, if any, Mars is able to recover from the Fund.

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Bluebook (online)
126 A.D.2d 178, 513 N.Y.S.2d 125, 1987 N.Y. App. Div. LEXIS 41142, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mars-associates-inc-v-new-york-city-educational-construction-fund-nyappdiv-1987.