Port Chester Electrical Construction Corp. v. Hbe Corporation and the Fireman's Fund Insurance Company

978 F.2d 820, 978 F.3d 820, 1992 U.S. App. LEXIS 29601
CourtCourt of Appeals for the Second Circuit
DecidedNovember 5, 1992
Docket1111, Docket 91-9113
StatusPublished
Cited by11 cases

This text of 978 F.2d 820 (Port Chester Electrical Construction Corp. v. Hbe Corporation and the Fireman's Fund Insurance Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Port Chester Electrical Construction Corp. v. Hbe Corporation and the Fireman's Fund Insurance Company, 978 F.2d 820, 978 F.3d 820, 1992 U.S. App. LEXIS 29601 (2d Cir. 1992).

Opinion

VAN GRAAFEILAND, Circuit Judge:

HBE Corporation, a general contractor, and its surety, The Fireman’s Fund Insurance Company, appeal from a judgment in favor of one of HBE’s subcontractors, Port Chester Electrical Construction Corporation, which followed a bench trial in the United States District Court for the Southern District of New York (Gershon, Mag. J.). This is the second time this case has been before us. On the first appeal, 894 F.2d 47, we reversed the grant of summary judgment in favor of the defendants on the ground that a clause in the subcontract, interpreted by the district court as a broad “no damages for delay” provision, in fact precluded recovery by Port Chester only for such increased costs as resulted from changes in work schedules. The trial following remand resulted in a verdict. of $831,776.55, which, when coupled with prejudgment interest, totals $1,226,586.30. For the reasons that follow, we again reverse and remand.

On July 16, 1981, HBE entered into a contract with Nyack Hospital to act as the design/build contractor for renovations and new construction at the Hospital. In the fall of 1982, HBE entered into a subcontract with Port Chester for the latter to do the electrical work on Phase II of the project, which encompassed the addition of a top floor to a new . hospital wing already under construction and the renovation of an existing building. The anticipated corn-pletion date for this work was late 1984. It was not completed, however, until June 1986.

In 1984, Port Chester and HBE agreed that Port Chester was entitled to be paid $35,000 because of compensable delays that had occurred prior to January 1 of that year. The award below was for delays that allegedly occurred after that date. Although the district court found, and the parties do not dispute, that many of these delays were caused by the ongoing operation of the Hospital during its remodelling, the improper and laggardly work of other subcontractors, the unexpected discovery of asbestos, and even by inclement weather, see, e.g., 782 F.Supp. 837, 840-41 (S.D.N.Y.1991), the court below held HBE responsible for every one of the delays. Id. at 846. In so doing, the court clearly erred.

Port Chester acknowledged at the outset that it was working in an existing hospital facility and that electrical work would have to be done at the convenience of the Hospital. Having agreed to work under such conditions, Port Chester could not expect to hold HBE responsible for the inevitable delays that resulted. See Phoenix Contracting Corp. v. New York City Health and Hospitals Corp., 118 A.D.2d 477, 478-79, 499 N.Y.S.2d 953 (1st Dep’t 1986) (mem.).

Port Chester’s subcontract also provided:

Contractor [HBE] may, ■ from time to time, modify or alter the work schedule, but, in such an event, no such modification or alteration shall entitle Subcontractor to any increase in the consideration of the Subcontract.

Port Chester’s brief (pp. 15-16) complains of five such schedule revisions. We do not understand the district court’s comment that Port Chester “does not seek recovery for mere changes in work schedule, but for massive delays, which it has proved and for which HBE is responsible.” 782 F.Supp. at 841. The above-quoted contractual provision does not preclude recovery for a schedule change qua a schedule change. *822 It precludes “any increase in the consideration of the Subcontract” as a result of a schedule change. To the extent that Port Chester’s claim for increased remuneration is based upon a modification or alteration of the work schedule, recovery is precluded by the terms of its contract. See 894 F.2d at 48.

To the extent that Port Chester seeks to hold HBE wholly responsible for delays caused by the Hospital, by other prime contractors or subcontractors, by the discovery of asbestos, or by the weather, its claim runs counter to controlling New York law. The New York Court of Appeals’ holding in Triangle Sheet Metal Works, Inc. v. James H. Merritt and Co., 79 N.Y.2d 801, 580 N.Y.S.2d 171, 588 N.E.2d 69 (1991) (mem.), is squarely in point. Triangle, a subcontractor of Merritt. on a construction project for the City of New York, sought recovery for performance delays, which were contributed to by acts and omissions of the City, its engineer, and other contractors, and also by inclement weather. Triangle’s counsel informed the trial court before resting its case that Triangle was unable to make an accurate allocation of damage resulting from delays caused solely by matters within Merritt’s control. Counsel argued that, irrespective of the causes of the delay, the total damage which was a consequence of the delay was attributable to Merritt. This is precisely what the district court held in the instant case.

In.affirming the trial court’s dismissal of the complaint at the close of Triangle’s case, the New York Court of Appeals said:

This case falls squarely within the general rule that, absent a contractual commitment to the contrary, a prime contractor is not responsible for' delays that its subcontractor may incur unless those delays are caused by some agency or circumstance under the prime contractor’s direction or control.

Id. at 802, 580 N.Y.S.2d 171, 588 N.E.2d 69 (citations omitted). The Triangle court concluded:

If a subcontractor wants a prime contractor to be a guarantor of job performance, it should bargain for the inclusion in its subcontract of a provision to that effect.

Id. at 803, 580 N.Y.S.2d 171, 588 N.E.2d 69 (citations omitted).

There was no such guaranty in the instant case. Indeed, the entire tenor of Port Chester’s subcontract was to the contrary; e.g., “Subcontractor is responsible for coordinating his work with all other subcontractors and is responsible for meeting the schedule of work as required by Contract.” Moreover, HBE’s contract with the Hospital provided that in HBE’s capacity as job architect it would not be responsible for the acts or omissions of any subcontractors or any other persons performing any of the work.

On remand, the district court should determine which, if any, of the alleged delays were attributable in whole or in part to HBE, and limit Port Chester’s recovery accordingly. See Tully & DiNapoli v. State of New York, 34 A.D.2d 439, 441, 311 N.Y.S.2d 941 (3d Dep’t 1970); Bero Constr. Corp. v. State of New York, 27 A.D.2d 974, 278 N.Y.S.2d 658 (4th Dep’t 1967) (mem.).

The district court also should find, either that Port Chester gave HBE proper written notice of claim with respect to the delays for which HBE could be faulted, or that there was a legally sufficient reason for its failure to do so. HBE’s contract with the Hospital provided that all of HBE’s subcontracts shall:

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Bluebook (online)
978 F.2d 820, 978 F.3d 820, 1992 U.S. App. LEXIS 29601, Counsel Stack Legal Research, https://law.counselstack.com/opinion/port-chester-electrical-construction-corp-v-hbe-corporation-and-the-ca2-1992.