Triboro Hardware & Supply Corp. v. Federal Insurance

45 A.D.3d 134, 841 N.Y.S.2d 600

This text of 45 A.D.3d 134 (Triboro Hardware & Supply Corp. v. Federal Insurance) 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
Triboro Hardware & Supply Corp. v. Federal Insurance, 45 A.D.3d 134, 841 N.Y.S.2d 600 (N.Y. Ct. App. 2007).

Opinion

OPINION OF THE COURT

Angiolillo, J.

In Specialty Prods. & Insulation Co. v St. Paul Fire & Mar. Ins. Co. (99 NY2d 459 [2003]), the Court of Appeals held that on a public improvement project subject to State Finance Law § 137, the time within which a supplier of materials must give notice of a claim for payment under the statutory payment bond, in order to be timely, is measured from the final delivery of materials for which claim is made, rather than from the date of each separate delivery of materials. Similarly, we now hold that the timeliness of the claim of the plaintiff in this case for payment under a private payment bond, on a project which is not a public improvement project and which is therefore not governed by State Finance Law § 137, is also measured by the final delivery of materials for which claim is made.

The plaintiff, Triboro Hardware & Supply Corp. (hereinafter Triboro), contracted to supply construction material to a subcontractor, Carlton Concrete Corp. (hereinafter Carlton), for the construction of an apartment building known as Jefferson Place Residence, which was not a public improvement project. Carlton contracted with the general contractor, HRH Construction, LLC (hereinafter HRH), to provide all the material and labor in connection with the performance of the structural/post tension concrete aspect of the project. To assure payment for all labor, material, and equipment furnished for use in the perfor[136]*136manee of the entire project, HRH, as contractor, obtained a private payment bond from the defendants, as sureties, in the amount of $62,913,000. The owner of the project, as noted on the payment bond, was Jefferson at White Plains, LLC.

Triboro supplied construction hardware and supplies to Carlton between September 2003 and August 2004 for use on the project. When Carlton, which filed for bankruptcy protection, failed to make payment for that material, Triboro provided notice of its claim to the defendant Vigilant Insurance Company by letter dated September 27, 2004, and requested payment under the payment bond. When payment was not made by the defendants within 45 days of notice of the claim, Triboro commenced the instant action.

Triboro moved for summary judgment on the complaint. The defendants cross-moved for summary judgment dismissing so much of the complaint as sought to recover for materials supplied before June 11, 2004, on the ground that Triboro’s notice of claim was untimely as to materials supplied before that date. The defendants asserted that Triboro had an “open account” arrangement for the delivery of material for Carlton and therefore, under the defendants’ interpretation of the notice provisions of the payment bond, Triboro was required to give notice within 90 days of each separate delivery of materials to the project. The defendants asserted that Triboro’s notice was untimely as to any material supplied before June 11, 2004. In opposition to the cross motion, Triboro asserted that its arrangement with Carlton was not an open account; rather, the 78 deliveries of material by Triboro to Carlton were part of Triboro’s comprehensive agreement with Carlton to supply all the general construction material for Carlton’s portion of the project. The Supreme Court found that there was a question of fact as to whether the relationship between Triboro and Carlton was a single contract, with notice of partial performance evidenced by invoices after each delivery, or whether each invoice represented a separate contract, and denied the motion and cross motion for summary judgment. The Supreme Court indicated its view that, if the parties had an open account relationship, each delivery would require notice within 90 days, citing to New York Plumbers’ Specialties Co. v Barney Corp. (52 AD2d 832, 833 [1976]).

This appeal and cross appeal present the question of whether the contract-based analysis of the notice of claim provisions of a construction payment bond, utilized by the First Department in [137]*137New York Plumbers’ (supra) and by the Fourth Department in Haun Welding Supply v National Union Fire Ins. Co. of Pittsburgh, Pa. (222 AD2d 1099 [1995]), should be applied in this case. The Court of Appeals, in Specialty Prods. & Insulation Co. v St. Paul Fire & Mar. Ins. Co. (supra) did not follow a contract-based analysis in its interpretation of the notice of claim language required in payment bonds issued to secure payment on public improvement projects pursuant to State Finance Law § 137. At the conclusion of that decision, the Court of Appeals stated that since New York Plumbers’ and Haun Welding Supply involved private bond terms, it had no occasion to consider the continued viability of those holdings. If the holdings of the First and Fourth Departments are not followed, the question identified by the Supreme Court in this case is not relevant to the determination of the motion and cross motion for summary judgment.

The claimant in Specialty Prods. had an open account arrangement to supply material to a subcontractor on a public improvement project. The subcontractor placed a separate purchase order and the supplier submitted a separate invoice for each corresponding delivery. The payment bond contained the statutory notice provisions required by State Finance Law § 137 (3) on a claim by an entity not having a direct contractual relationship with the contractor who furnished the payment bond. The notice provision in the private payment bond issued in this case is substantially the same as that required by State Finance Law § 137, the distinction being that notice was required within 90 days of the triggering event as opposed to the statute’s requirement of such notice within 120 days.

The payment bond provided in this case was issued on a standard form developed and copyrighted by the American Institute of Architects, known as form A312. In order for the sureties to have an obligation to a claimant who does not have a direct contract with the contractor, that claimant must “[h]ave furnished written notice to the contractor and sent a copy, or notice thereof, to the Owner, within 90 days after having last performed labor or last furnished materials or equipment included in the claim stating, with substantial accuracy, the amount of the claim and the name of the party to whom the materials were furnished or supplied or for whom the labor was done or performed.” It is the phrase “having last performed labor or last furnished materials or equipment included in the claim” that is at issue in this case. The corresponding phrase in [138]*138State Finance Law § 137 (3) is “from the date on which the last of the labor was performed or the last of the material was furnished, for which his claim is made.”

In Specialty Prods., the Court of Appeals identified two benefits flowing from the enactment of the present notice provisions of State Finance Law § 137. The notice provision significantly simplified the procedures for laborers and material suppliers to obtain prompt payment for their services or goods, eliminating the necessity of their first exhausting remedies under the Labor Law or the Lien Law. The notice provisions also benefit contractors in investigating claims and withholding payments to subcontractors on these claims.

The Court of Appeals, in Specialty Prods., agreed with the rejection by the Appellate Division, Third Department, of the trial court’s contract-based analysis of the notice requirements.

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Related

Specialty Products & Insulation Co. v. St. Paul Fire & Marine Insurance
788 N.E.2d 604 (New York Court of Appeals, 2003)
Incorporated Village of North Hills v. Avr Links Development Corp.
33 A.D.3d 588 (Appellate Division of the Supreme Court of New York, 2006)
New York Plumbers' Specialties Co. v. W. J. Barney Corp.
52 A.D.2d 832 (Appellate Division of the Supreme Court of New York, 1976)
Haun Welding Supply, Inc. v. National Union Fire Insurance Co. of Pittsburgh
222 A.D.2d 1099 (Appellate Division of the Supreme Court of New York, 1995)
Lynbrook Glass & Architectural Metals Corp. v. Elite Associates, Inc.
225 A.D.2d 525 (Appellate Division of the Supreme Court of New York, 1996)

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Bluebook (online)
45 A.D.3d 134, 841 N.Y.S.2d 600, Counsel Stack Legal Research, https://law.counselstack.com/opinion/triboro-hardware-supply-corp-v-federal-insurance-nyappdiv-2007.