Claimant alleges damages for extra work and delays incurred in performing hydrodemolition of concrete in a municipal parking garage of a complex occupied by the State and local municipalities. Defendant's motion for summary judgment dismissing the claim, alleging breach of a public improvement contract, was granted to the extent of dismissing the extra work and delay claim which was related to the performance of an illegal discharge of concrete slurry into the Susquehanna River. To the extent defendant argued that the contract was void pursuant to Labor Law 222-a following the claimant's alleged release of "harmful dust" into an office building, defendant failed to establish the existence of a "harmful dust" hazard so as to invoke the requirements of Labor Law 222-a. Lastly, several extra work and/or delay claims were dismissed based upon discrete contract provisions. However, the notice and recordkeeping provisions of the contract on which the defendant partially relied were inapplicable to field orders and, in any event, were not conditions precedent to recovery for which strict compliance is required.
|Claimant(s):||CRANE-HOGAN STRUCTURAL SYSTEMS, INC.|
|Claimant short name:||CRANE HOGAN|
|Footnote (claimant name) :|
|Defendant(s):||STATE OF NEW YORK|
|Footnote (defendant name) :|
|Judge:||FRANCIS T. COLLINS|
|Claimant's attorney:||Adams Bell Adams, P.C.
By: Daniel P. Adams, Esq.
|Defendant's attorney:||Honorable Barbara D. Underwood, Attorney General
By: Michael I. Getz, Esq., Assistant Attorney General
|Third-party defendant's attorney:|
|Signature date:||September 14, 2018|
|See also (multicaptioned case)|
Claimant, Crane-Hogan Structural Systems, Inc. (hereinafter referred to as Crane-Hogan or claimant), seeks damages for extra work and delays allegedly arising from the defendant's breach of a construction contract. The Note of Issue and Certificate of Readiness for Trial have been filed and defendant now moves for summary judgment dismissing the claim pursuant to CPLR 3212.
In 2008, the Office of General Services (OGS) entered into a contract with the claimant for the rehabilitation of the municipal parking garage at the Binghamton Government Center in Binghamton, New York. The building complex was occupied by the State, the County of Broome and the City of Binghamton, and a study commissioned in 2005 indicated that the concrete garage had a significant degree of deterioration (claimant's Exhibit 65).
Two events resulted in project delays and extra work - dust infiltration into the Broome County Office Building and the alleged discharge of pollutants into the Susquehanna River. With respect to the dust infiltration, Michael W. Murphy, the Engineer in Charge of the project for OGS,(1) avers that Crane-Hogan used chipping hammers in the elevator machine room which caused dust to enter the open elevator shaft and infiltrate the Broome County Office Building on April 14 and 15, 2009 (Murphy affidavit sworn to Jan. 23, 2018, ¶ 44). Mr. Murphy indicates the claimant did not enclose or isolate the dust and failed to utilize either local exhaust ventilation "or any system for collecting and removing air contaminants as defined by the Board of Standards and Appeals" (now the Industrial Board of Appeals) and Article 23 of the contract (id. at ¶ 45; see also defendant's Exhibit 1, Contract, p. 007213-15). Mark Pullyblank, Crane-Hogan's Project Manager, states that Crane-Hogan's work in the elevator machine room was the subject of Field Order C-6, which deleted note #9 on drawings S-101 and S-111A (see claimant's Exhibit 62).(2) While Crane-Hogan contends that the work in the elevator machine room was added by the deletion of note #9, defendant contends that Field Order C-6 served only to clarify a discrepancy and did not change the work or alter the quantities involved (Lewyckyj affidavit sworn to March 19, 2018, ¶ 6). In any event, Crane-Hogan contends that the dust incident was not its fault because it fulfilled its contractual obligations to erect dust barriers. The incident, according to Crane-Hogan, was the fault of the contractor responsible for the heating, ventilation and air-conditioning (HVAC contractor) which failed to provide the contractually required
ventilation. Mr. Pullyblank avers that after the incident, "OGS designed and installed a fully ducted exhaust system utilizing large exhaust fans and air locks" to facilitate completion of the work (Pullyblank affidavit, ¶ 93). Review of the actual field orders (Field Orders C-12,C-13, C-14), however, reflects that Crane-Hogan was directed to erect additional dust barriers at specified locations in addition to maintaining negative air pressure and ventilation in the work areas (see defendant's Exhibits 33 -43).
As a result of the dust incident, OGS issued a stop work order on April 16, 2009 (defendant's Exhibit 47), the Broome County Office building was closed for approximately one month (defendant's Exhibit 50, p. 61), Patrick Brennan of Broome County barred Mr. Pullyblank from the worksite (id. at pp. 111-119), and OGS directed Crane-Hogan to dismiss Mr. Pullyblank (defendant's Exhibit 47). The stop work order was rescinded on May 14, 2009 when the work included in Field Orders C-12, C-13 and C-14 was completed (defendant's Exhibit 48).
Gerard Baril, Principal of Lawrence Environment Group, LLC, reviewed various documents and test results regarding the dust infiltration in related litigation.(3) Mr. Baril states that silica, a component of concrete, is one of the air contaminants regulated by the Occupational Safety and Health Administration (OSHA). In addition, recommendations for the permissible exposure limits to silica are set forth by the National Institute for Occupational Safety and Health (NIOSH) and the American Conference of Governmental Industrial Hygienists (ACGIH). Mr. Baril states "[b]ased upon [his] review of the Documents, the concrete dust that migrated into the Building on or about April 15, 2009 contained silica", and that the air in the building was contaminated with silica at levels that were above the NIOSH and/or ACGIH recommendations on April 15, 2009, April 23, 2009 and May 2, 2009 through May 5, 2009 (defendant's Exhibit 64, ¶ ¶ 13, 14).
With respect to Crane-Hogan's alleged discharge of pollutants into the river, the specification relating to the hydrodemolition portion of the contract (defendant's Exhibit 74 submitted in reply; § 02051), required Crane-Hogan to submit certain quality control plans for review and approval prior to the start of work, including plans for "identifying water supply source and water discharge location" as well as submitting "verification that appropriate planning has been made to prevent discharge of unacceptable pollutants into the local water system" (defendant's Exhibit 74, § 1.02 ). In addition, the hydrodemolition specification required that "[a]pplicable permits must be obtained" (id.). Crane-Hogan provided the required submittals, which included a description of the process by which water would be discharged from the sub-basement:
"The water will be pumped from the collection area into a 12 yard roll off dumpster equipped with a baffle to serve as a secondary filtering system. The dumpster will allow extra sediment to be collected before the water moves to the sump pump. The sump pump will be installed inside the 12 yard dumpster with filter stone. The water will then be pumped from the dumpster to a sub-basement level floor drain" (claimant's Exhibit 17).
Crane-Hogan also submitted a letter from Philip T. Krey, P.E., a City of Binghamton Engineer, stating that Crane-Hogan's water discharge plan "appears to be satisfactory", although Mr. Krey requested that "the entire water volume in each dumpster-load [be permitted] to settle undisturbed for a minimum of 45 minutes prior to the start of evacuation" (id.). In reply to the instant motion, defendant submits a photocopied undated affidavit of Mr. Krey who indicates that his office had no responsibility for the issuance of permits, that he was merely extending the courtesy of reviewing the proposed dumpster filtration system, and that he was not given any details of where Crane-Hogan intended to dispose of the filtered wastewater.
On September 22, 2009, Captain James Boylan of the New York State Department of Environmental Conservation (DEC) received a report of a discharge of what appeared to be a concrete-like material into the Susquehanna River from a storm system outfall near the Binghamton Government Center garage. Upon his arrival at the garage, he observed "water and untreated concrete sludge inside a floor drain in the garage, and deposition running from a storm system outfall located on the Susquehanna River near the garage" (Boylan affidavit sworn to December 21, 2017, ¶ 16). Captain Boylan directed claimant's representative at the site to cease discharging pollutants into the river and informed him that criminal and civil sanctions could result if they failed to do so. On September 21, 2009, one day before Captain Boylan's visit to the premises, Mr. Murphy, the Engineer-in-Charge of the project, directed that "Crane Hogan shall immediately cease hydro-demolition work and any water discharge into the garage's storm drain system until NYS DEC has completed their field investigation . . ." (claimant's Exhibit 20). He also indicated, however, that certain contract work activities such as clean-up, jack-hammering, shoring erection, form building, etc. could continue (id.). On October 30, 2009, the Binghamton-Johnson City Joint Sewage Board issued Crane-Hogan an Industrial Wastewater Discharge Permit for the Industrial Wastewater Pretreatment Program in relation to its hydrodemolition work, effective October 30, 2009 through October 30, 2010 (claimant's Exhibit 22). On November 13, 2009, after Crane-Hogan obtained a plumbing permit to tie into the City's sanitary sewer system and submitted a revised hydrodemolition plan, Robert K. Palmer, Jr., P.E., OGS' Director of the Division of Construction, rescinded the suspension of hydrodemolition work which he had previously directed by letter dated October 7, 2009 (claimant's Exhibit 23).(4) An investigation of the matter by the DEC resulted in both Crane-Hogan and Mark Pullyblank being charged with knowingly violating the Clean Water Act. Crane-Hogan pleaded guilty to Count 4 of a Superseding Indictment(5) which charged it with "knowingly inducing and procuring the discharge of pollutants from a point source to a navigable water of the United States, in violation of the Clean Water Act, in violation of 33 U.S.C. §§ 1311, 1317(d), 1319(c)(2) and 18 U.S.C. § 2(a)" (defendant's Exhibit 18, p. 2 of 10). As part of the plea, Crane- Hogan did not dispute that concrete, concrete residue and concrete slurry are "pollutants" within the meaning of the Clean Water Act, that the Clean Water Act prohibits the discharge of pollutants from a point source into navigable waters without a Clean Water Act permit known as a State Pollutant Discharge Elimination System (SPDES) permit, and that Crane-Hogan discharged concrete slurry into the Susquehanna River for 15 days, from December 15, 2008 through January 8, 2009, without a permit. In addition, Crane-Hogan agreed to the imposition of a $500,000 fine (see defendant's Exhibit 18).
Mark Pullyblank pleaded guilty to Count 6 of the Superseding Indictment which charged him with knowingly and intentionally discharging pollutants from hydrodemolition activities into drains within the Binghamton Government Center parking garage which were point sources discharging into the Susquehanna River, a navigable body of water of the United States, without a Clean Water Act permit for a period of 14 days, from August 31, 2009 through September 18, 2009, in violation of 33 U.S.C. §§1311, 1342, 1319(c)(2) and 18 U.S.C. § 2(a) (defendant's Exhibits 65 and 81, pp. 2,9; see also defendant's Exhibit 82).
The project was declared substantially complete and fully operational on September 30, 2010 and physically complete on November 30, 2010. Although completion of the project was delayed a total of 167 days, OGS determined that only18 days of the delay were within Crane-Hogan's control (defendant's Exhibit 23). In reaching this determination, OGS indicated that while multiple events caused the project to be delayed by 167 days, the project "was declared substantially complete and fully operational on 9/30/10, and taking into account the impact of the late issued field order C-50, it is recommended that Liquidated Damages be assessed only through 9/30/10, . . . a total of eighteen (18) days" (defendant's Exhibit 23, last page).
The claim, filed on July 6, 2012, seeks damages for breach of contract arising from extra work (first cause of action); delays caused by the wrongful shut-down of Crane-Hogan's hydrodemolition operations (second cause of action); the removal and replacement of additional concrete (third cause of action) and the improper withholding of liquidated damages (fourth cause of action). In support of its motion for summary judgment dismissing the claim, defendant argues that the contract is void due to Crane-Hogan's failure to comply with the requirements of Labor Law § 222-a relating to the prevention of dust hazards; Crane-Hogan illegally performed its contractual obligations by discharging concrete slurry into the Susquehanna River without a permit, thereby warranting dismissal; the doctrine of equitable estoppel precludes the claim; sovereign immunity shields the State from liability on Crane-Hogan's second cause of action; Crane-Hogan failed to comply with the notice and record keeping provisions of the contract which are conditions precedent to claims for delay damages and extra work, thereby requiring dismissal of its first cause of action, and, finally, that part of the work for which payment is sought was not extra work but included within the scope of the original contract or otherwise not compensable.
It is well established that " 'summary judgment is a drastic remedy and should not be granted where there is any doubt as to the existence of a triable issue' " (Rotuba Extruders v Ceppos, 46 NY2d 223, 231 [citation omitted]). "The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case" (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 ). At this stage, the evidence must be viewed " 'in the light most favorable to the non-moving party,' " (Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40, 49 , rearg denied 27 NY3d 957 , quoting Ortiz v Varsity Holdings, LLC, 18 NY3d 335, 339 ). Once the movant has made the required showing, the burden shifts to the party opposing the motion "to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action" (Alvarez v Prospect Hosp., 68 NY2d 320, 324 , citing Zuckerman v City of New York, 49 NY2d 557, 562 ). "It is not the function of a court deciding a summary judgment motion to make credibility determinations or findings of fact, but rather to identify material triable issues of fact (or point to the lack thereof)" (Vega v Restani Constr. Corp., 18 NY3d 499, 505 ).
Labor Law § 222-a, entitled Prevention of Dust Hazard in Public Works, states in pertinent part the following:
"In the construction of public works by the state or a public benefit corporation or a municipal corporation or a commission appointed pursuant to law wherein a harmful dust hazard is created for which appliances or methods for the elimination of harmful dust have been approved by the board of standards and appeals, a provision shall be inserted in each contract for the construction of such work requiring the installation, maintenance and effective operation of such appliances and methods, and a further provision shall be inserted in such contract that if this section is not complied with, the contract shall be void."
In compliance with the mandates of Labor Law § 222-a, the instant contract contains the following provision:
"If, in carrying out this Work, a harmful dust hazard is created for which appliances or methods for the elimination of harmful dust have been approved by the Board of Standards and Appeals,(6) then the Contractor shall install, maintain and effectively operate such appliances and methods during the life of this Contract; and in case of Contractor's failure to comply, as provided by Section 222-a of the Labor Law, the Contract shall be void" (defendant's Exhibit 1, § 23.2).
The first question to be resolved is whether the defendant established that a "harmful dust hazard" was created within the meaning of Labor Law § 222-a, thereby requiring the elimination methods set forth by the Industrial Board of Appeals. The elimination methods for "dangerous air contaminants" are set forth in 12 NYCRR 12-1.6 and include exhaust ventilation, dilution ventilation and enclosure or isolation. "Dangerous air contaminants" are defined as "[a]ir contaminants in concentrations tending to injure the health of persons. Air contaminants in quantities greater than 25 percent of the lower explosive level of any substance, mixture or compound which they may form" (12 NYCRR 12-1.3 [h]). The regulations include a list of air contaminant quantities which constitute "prima facie evidence that such contaminants are dangerous air contaminants" (12 NYCRR 12-3.1). The list includes Portland cement and Class I, II, and III silica at or above specific levels measured in millions of particles per cubic foot. Portland cement, for example, requires proof of 50 million particles per cubic foot.
Mr. Baril's affidavit, submitted by defendant in support of its motion, does not constitute prima facie evidence that the dust hazard was a dangerous air contaminant for several reasons. First, the Court notes the fact that Mr. Baril's photocopied affidavit (defendant's Exhibit 64) includes no mention of the laboratory reports attached thereto, the laboratory reports are uncertified, the test samples were taken by another firm, Jennings Environmental Management, and although Mr. Baril indicates that he reviewed the examination before trial transcript of Wayne Jennings (presumably a principal of Jennings Environmental Management), this transcript is not in the motion record. The fact that Mr. Baril's affidavit is grounded in facts that are neither personally known to him nor based upon documents in admissible form forecloses its consideration in support of the instant motion (Cassano v Hagstrom, 5 NY2d 643, 646 , rearg denied 6 NY2d 882 ; Altamirano v Door Automation Corp., 48 AD3d 308, 308 [1st Dept 2008]; Wagman v Bradshaw, 292 AD2d 84 [2d Dept 2002]; cf. State of New York v 158th St. & Riverside Dr. Hous. Co., Inc., 100 AD3d 1293, 1297 [3d Dept 2012], lv denied 20 NY3d 858  [expert's opinion could be based upon contractor's records that were properly admitted into evidence as a business record]).
In any event, the substance of Mr. Baril's affidavit fails to establish the prima facie existence of dangerous air contaminants requiring any of the control methods specified by the Industrial Board of Appeals in 12 NYCRR 12-1.6. Mr. Baril did not opine that the dust which infiltrated the county complex exceeded the permissible silica levels set forth in the applicable regulations. Rather, he stated his opinion that "the air in the Building was contaminated with silica at a level that were (sic) above the NIOSH and/or ACGIH recommendations" on April 15, 2009, April 23, 2009 and May 2, 2009 through May 5, 2009 (Exhibit 64, ¶ 14).
The prima facie existence of dangerous air contaminants requiring the control methods specified by the Industrial Board of Appeals in 12 NYCRR 12-1.6 is established only if air contaminants exceed the levels specified in tables included in 12 NYCRR 12-3.1 or a "physician representing the industrial commissioner" opines that a lesser quantity constitutes a dangerous air contaminant (12 NYCRR 12-3.1). Mr. Baril makes no mention of the regulation in his affidavit and the quantities specified therein do not appear to exceed the limits specified in the tables included in § 12-3.1. Moreover, Mr. Baril does not indicate whether the silica that allegedly infiltrated the building was class I, II, or III, as to each of which a separate standard applies. Nor was the method of counting the particles disclosed. 12 NYCRR 12-3.1 specifically requires that particles per cubic foot be measured "[u]sing the light field low-power method of counting as described in the U.S. Public Health Report 47 No. 12, March 12, 1932, pp 669-672 or its equivalent and a standard type impinger or other equivalent instrument for taking atmospheric dust samples." Thus, defendant failed to establish the prima facie existence of dangerous air contaminants requiring the control methods specified by the Industrial Board of Appeals in 12 NYCRR 12-1.6. Accordingly, defendant failed to meet its prima facie burden of establishing that the control methods specified by the Industrial Board of Appeals in 12 NYCRR 12-1.6 were required but not provided in violation of Labor Law § 222-a.
Defendant next argues that Crane-Hogan's illegal conduct in discharging concrete slurry
into the Susquehanna River bars recovery on the instant contract claim. "It is well settled that contracts, although legal in their inducement and capable of being performed in a legal manner, which have nonetheless been performed in an illegal manner, will not be enforced" (Prote Contr. Co. v Board of Educ. of City of N.Y., 230 AD2d 32, 40 [1st Dept 1997], citing McConnell v Commonwealth Pictures Corp., 7 NY2d 465 ). The Court of Appeals in McConnell made clear, however, that not every minor wrongdoing in the course of contract performance will insulate the other contracting party from liability. "There must at least be a direct connection between the illegal transaction and the obligation sued upon. Connection is a matter of degree. Some illegalities are merely incidental to the contract sued on" (McConnell, 7 NY2d at 471).
The contract at issue here was legal in its inception (cf. S.T. Grand, Inc. v City of New York, 32 NY2d 300 , rearg denied 33 NY2d 658 ) but partially performed without a proper water discharge permit. Both Crane-Hogan and its agent, Mark Pullyblank, had a full and fair opportunity to contest the criminal charge that they knowingly violated the Clean Water Act. This is the identical issue raised by the defendant in support of its motion for summary judgment dismissing the claim on the ground the contract was performed illegally (see Schwartz v Public Adm'r of County of Bronx, 24 NY2d 65 ). Notwithstanding Crane-Hogan's contrary contention, Crane-Hogan is estopped from relitigating the legality of its conduct in the context of the instant proceeding (see S.T. Grand, Inc. v City of New York, 32 NY2d at 304-305,). The criminal convictions of Crane-Hogan and its agent, Mark Pullyblank, are therefore conclusive proof of its discharge of water from a point source into navigable waters without a Clean Water Act permit as required.
Although illegal contracts are generally unenforceable, the violation of a statute that is merely malum prohibitum, as opposed to malum in se, does not render a contract illegal (Benjamin v Koeppel, 85 NY2d 549, 553 ). As made clear by the Benjamin Court:
"[W]here the procuring of a license is merely for the purpose of raising revenue it would seem that acts performed without securing a license would be valid. But where the statute looks beyond the question of revenue and has for its purpose the protection of public health or morals or the prevention of fraud, a non-compliance with its terms would affect the legality of the business" (id. at 553 [inner quotation marks and citations omitted]).
The stated objective of the Clean Water Act "is to restore and maintain the chemical, physical and biological integrity of the Nation's waters" (33 USC § 1251 [a]). The Clean Water Act therefore makes it unlawful to discharge pollutants into the Nation's waters without a permit (see 33 USC §§1311 [a], 1342 [a]). Given the objective of the statute, the requirement for a permit is obviously more than a revenue-raising measure; rather, it is designed to protect the public health and safety (see Richards Conditioning Corp. v Oleet, 21 NY2d 895 ). The violations of the Clean Water Act which occurred during the performance of the instant contract constitute malum in se and may, therefore, appropriately form the basis for vitiating all or part of the contract.
While the hydrodemolition work was a central part of the contract, the illegal discharge of wastewater was not so inextricably connected with the overall performance of the contract work so as to completely bar recovery on public policy grounds. Cases holding otherwise are distinguishable to the extent the illegality was inextricably intertwined with contract performance such that any recovery would reward the wrongdoer for the fruits of a crime or other wrongful conduct. The plaintiff in McConnell, for example, sought commissions for the procurement of motion picture distribution rights he obtained through bribery. The Court barred recovery under the contract since the illegality was "central to or a dominant part of the plaintiff's whole course of conduct" (McConnell 7 NY2d at 471). In B.D. Estate Planning Corp. v Trachtenberg (134 AD3d 650 [1st Dept 2015]) the Court permitted defendant to amend her answer to allege that the plaintiff could not recover the fruits of a crime allegedly involving a scheme to defraud insurance companies. In CPN Mech., Inc. v Madison Park Owner, LLC (120 AD3d 1148 [1st Dept 2014]) plaintiff sought recovery for work on a renovation contract following its guilty plea for grand larceny in connection with overbilling on the contract. While the plaintiff argued the theft only amounted to 1.25% of the overall contract amount, the Court noted that the overbilling occurred during the entire two-year period of the project and was therefore central to or a dominant part of the contract (see also Alpha Interiors, Inc. v Tulger Constr. Corp., 101 AD3d 660 [2d Dept 2012] [amounts sought by the plaintiff on a contract had a direct connection to illegal kick back scheme and was central to or a dominant part of the contract]; Prote Contr. Co., 230 AD2d at 32 [1st Dept 1997] [alleged conduct of contractor in bribing public official to rule in his favor on issue of contract interpretation may, if established, vitiate contract since it was of a kind gravely immoral and inextricably intertwined with the question of performance]). Here, by contrast, the illegal discharge occurred over a period of 29 days during the course of a project that required more than two years to complete. In reaching its determination, the Court is guided by two competing concepts: First, the general policy "of preventing people from getting other people's property for nothing when they purport to be buying it" (Lloyd Capital Corp. v Pat Henchar, Inc., 80 NY2d 124, 129 ) and, second, that "public policy closes the doors of our courts to those who sue to collect the rewards of corruption" (McConnell, 7 NY2d at 469). Balancing these competing policies, the Court finds that portion of the claim related to extra work and delays arising from the illegal discharge of concrete slurry into the Susquehanna River to be barred. By limiting Crane-Hogan's recovery in such a manner, public policy will be vindicated by foreclosing recovery for the fruits of a criminal act without completely depriving a contracting party of proceeds to which it may be legitimately entitled. Consequently, Crane-Hogan's second cause of action, denominated its "Water Processing Claim", is dismissed.
Defendant next relies on the contract's notice provisions in seeking dismissal of Crane-Hogan's claims related to Field Orders C-1, C-12, C-13, C-14 and C-26, all of which are included as part of Crane-Hogan's first cause of action. The manner in which changes to the contract may be made as well as notice and documentation requirements in the event of disagreements are set forth in Article 10, which, as pertinent here, states the following:
"10.1 The State may make changes by altering, adding to or deleting from the Work, and adjusting the Contract sum accordingly. All changed work shall be executed in conformity with the terms and conditions of the Contract Documents unless otherwise provided in the order on contract. Any change in the Contract sum or time for completion of the described work of the Order On Contract shall be contained in the Order on Contract . . .
10.2 No written or oral instruction shall be construed as directing a change in the Work unless in the form of an order on contract signed by the Contracting Officer . . . . If the Contractor disagrees as to any element of the order on contract, the Contractor shall promptly indicate such disagreement in writing by certified mail directed to the Contracting Officer and shall promptly proceed in accordance with the order on contract . . . . The letter of disagreement shall be accompanied by documentation of every material element of the Contractor's basis for disagreement . . .
10.3 If the Contractor is required to perform Work for which the Contractor believes it is entitled to an order on contract, the Contractor shall give the Director prompt written notice and await instructions before proceeding to execute such Work. The Contractor shall thereafter proceed diligently with the performance of the contract in accordance with the Director's instructions. The Contractor shall maintain complete cost records . . . . Failure to maintain such records shall waive any right to extra and additional costs beyond those costs supported by actual cost records.
10.6 Unless otherwise specifically provided for in a change order, the compensation specified therein for extra work includes full payment for both the extra work covered thereby and for any damage or expense caused the Contractor by any delays to other work to be done under the Contract resulting from or on account of said extra work, and the Contractor waives all rights to any other compensation for said extra work, damage or expense" (defendant's Exhibit 1, Article 10).
Crane-Hogan argues in opposition to defendant's motion that the notice requirements of Article 10 are inapplicable to field orders. Indeed, the plain language of § 10.1 makes clear that "[a]ny change in the Contract sum or time for completion of the described work of the Order On Contract shall be contained in the Order on Contract" and § 10.2 states that "[n]o written or oral instructions shall be construed as directing a change in the Work unless in the form of an order on contract signed by the Contracting Officer" (defendant's Exhibit 1, § 10.2). While, as indicated by the title, change orders are clearly subject to the dictates of Article 10 of the General Conditions, entitled "Orders on Contract (Change Orders)", the term field order is not mentioned in Article 10. Field Orders C-1, C-12, C-13, C-14 and C-26 are each designated as a "field order" on the OGS Division of Design and Construction forms memorializing the orders (defendant's Exhibit 27, Exhibit 9 and Exhibit 4, respectively). While neither "order on contract" nor "field order" are defined in the contract, the repeated use of the two terms in the disjunctive, particularly in Section 01220 (Cost Computations), indicates a distinction exists between them. What those distinctions (and/or any similarities) might be is unknown, however, because while the contract language is clear with regard to the nature, use and limitations of orders on contract/change orders, the defendant has provided no evidence with regard to the contractual requirements applicable to field orders. For example, § 15.1 of the General Conditions excludes "the value of any order on contract or field order (issued pursuant to Division 01-General Requirements)." Although apparently relevant to the issuance of both orders on contracts and field orders, and despite the parties' voluminous submissions, "Directive 01-General Requirements" is not a part of the motion record.
Mr. Lewyckyj states in a reply affidavit that "it is OGS [Design and Construction Group] . . . policy to group both Field Orders and Change Orders together for purposes of directing contractors on how to submit disputes under Article 10 of the General Conditions" (Lewyckyj reply affidavit, ¶ 3). While this may be OGS' policy, the contract itself appears to draw a distinction between the two devices and parole evidence may not be used to vary the otherwise unambiguous terms of a contract (see Niagara Foods, Inc. v Ferguson Elec. Serv. Co., Inc.,111 AD3d 1374 [4th Dept 2013], lv denied 22 NY3d 864 ; New York TRW Tit. Ins. v Wade's Canadian Inn & Cocktail, 241 AD2d 845 [3d Dept 1997], lv dismissed 91 NY2d 848 ). Consequently, defendant's reliance on the notice and documentation requirements of § 10.2 is misplaced as the record does not support its contention that the section applies to the field orders at issue herein.
With respect to Field Order C-6, however, Crane-Hogan cannot prevail on its extra work claim because it failed to request an order on contract as required by § 10.3. This section requires prompt written notice to the Director "[i]f the Contractor is required to perform Work for which the Contractor believes it is entitled to an order on contract" (defendant's Exhibit 1, § 10.3). In such circumstances, once notice is provided the contractor is required to "await instructions before proceeding to execute such Work" (id.). Here, it is undisputed that Crane-Hogan did not notify the Director of its extra work claim involving Field Order C-6 until after the completion of the work. Consequently, Crane-Hogan's contention that the deletion of note 9 on Drawings S-101 and S-111A resulted in additional work for which compensation is required was waived.
Moreover, to the extent claimant's alleged damages include the wrongful dismissal of Mark Pullyblank and uncompensated field and home office expense arising from delay (see claim, ¶ 9 and defendant's Exhibit 13, p. 1 and 2 relating to Field Order C-6), such damages may not be recovered. With respect to the dismissal of Mark Pullyblank from the worksite, § 6.2 of the contract requires dismissal of any employee deemed by the Director to be incompetent, negligent or unfit for any reason. With respect to Crane-Hogan's request for delay damages for its field and home office expense, the delay was under 30 days and therefore not compensable (see defendant's Exhibit 1, contract, § 12.3).
The dispute regarding Field Orders C-12, C-13 and C-14 centers upon whether or not payment for two management personnel is appropriate. Although these field orders required the erection of additional dust barriers and ventilation which the defendant asserts were contractually required (see defendant's Exhibit 1, Art. 23; specifications § 01500 [1.06], § 02050 [3.01] [E] [F] [G]), OGS paid Crane-Hogan to install these additional protective measures and does not now claim that this payment was not required. Instead, defendant contends that compensation for certain management personnel above the rank of foreman is not permitted when other work is performed during the original contract duration. However, the contract actually provides for the fair and reasonable cost of "(i) labor, including all wages, required wage supplements . . . paid to or on behalf of foremen, workers and other employees below the rank of the Contractor's designated representative directly employed at the Site of the Project . . ." (defendant's Exhibit 1, § 01220 [1.01] [A] ). Mr. Pullyblank indicates that the management personnel as to whom additional payment is sought, Crane-Hogan's General Superintendent and Field Engineer, are below the rank of Crane-Hogan's Project Manager who is its designated site representative (Pullyblank affidavit, ¶ 109). Consequently, questions of fact exist which preclude summary judgment with regard to Field Orders C-12, C-13 and C-14.(7)
Field Order C-52, issued on February 2, 2011, increased the quantity of concrete removal and replacement in certain areas to 1,646 square feet by five inches deep and directed Crane-Hogan to submit a proposal in accordance with specification § 01220 (defendant's Exhibit 5). The field order was signed by Mr. Murphy as the Engineer in Charge. The next day, Mr. Pullyblank responded by email indicating that a significant quantity of deep removals was not included in Field Order 52 and requesting that Mr. Murphy "revisit the projected quantity for this Field Order" (defendant's Exhibit 6). Mr. Murphy denied the request by email dated February 8, 2011 (defendant's Exhibit 7) and Crane-Hogan filed a notice of dispute on March 17, 2011 (defendant's Exhibit 8). Defendant now contends that the notice of dispute filed on March 17, 2011 was untimely under Article 15 of the contract.
Article 15 requires disputes "relating to the performance of this Contract" (defendant's Exhibit 1, § 15.1) to be submitted to the Group Director "no more than fifteen days after the Contractor knew or ought to have known of the facts which are the basis of the dispute or disagreement" (id. at § 15.2). By its own terms,
"this clause does not apply to any dispute or disagreement which involves delay, acceleration, interference, or any other act or omission constituting a breach of contract; any matter relating to extensions of time, bonuses or liquidated damages; to the value of any order on contract or field order (issued pursuant to Division 01-General Requirements) . . . " (id. at § 15.1).
Quantity disputes are disputes regarding value. The greater the quantity the greater the cost. Accordingly, Article 15 does not apply. While Article 10 governs the dispute procedure involving the value of orders on contract, as previously indicated herein, its express provisions do not apply to field orders. Even if the notice requirements of Article 10 applied to field orders, however, the requirement for prompt notice is not an express condition precedent to suit requiring strict compliance. "A condition precedent is 'an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises" (Oppenheimer & Co. v Oppenheim, Appel, Dixon & Co., 86 NY2d 685, 690  [citation omitted]). Language customarily employed to signal a condition precedent ("if," "unless and until") and the need for strict compliance was not included in §10.2 (MHR Capital Partners LP v Presstek, Inc., 12 NY3d 640, 645 ). Nor does §10.2 indicate waiver would result for a Contractor's failure to strictly comply with the prompt notice requirement (cf. A.H.A. Gen. Constr. v New York City Hous. Auth., 92 NY2d 20 , rearg denied 92 NY2d 920 ; Schindler El. Corp. v Tully Constr. Co., Inc., 139 AD3d 930, [2d Dept 2016]). Thus, even if Article 10 applied to field orders, substantial compliance was all that was required (Peter Scalamandre & Sons, Inc. v FC 80 Dekalb Assoc., LLC, 129 AD3d 807 [2d Dept 2015]). The motion is therefore denied with respect to the dismissal of that portion of the claim relating to Field Order 52.
Change Order C-62175 deleted work related to the installation of an entrance canopy and entrance height increase at the plaza level (defendant's Exhibit 11). Crane-Hogan proposed a $37,492 credit to the contract price on November 29, 2010 (id.), which OGS increased to $41,231.00 on April 11, 2011 (defendant's Exhibit 12). Various email communications between Mark Pullyblank and OGS representatives resulted in OGS advising Crane-Hogan that absent further response by April 13, 2011, OGS would assume that Crane-Hogan agreed with the adjusted amount of the field order. Mr. Pullyblank responded on April 13, 2011 advising OGS that it did not agree with the revised credit amount and would follow the procedures set forth in § 10.2 if they decided to file a letter of disagreement (id.). On May 6, 2011 a letter of disagreement was sent which included multiple disagreements on various items, including Change Order 62175 (defendant's Exhibit 13). Defendant contends that the letter of disagreement was untimely since it was sent 25 days after OGS rendered its final determination on April 11, 2011 (defendant's Memorandum of Law, p. 25). In the Court's view, defendant did not establish that Crane-Hogan failed to "promptly indicate such disagreement in writing" (defendant's Exhibit 1, § 10.2). Whether Crane-Hogan's May 6th letter substantially complied with the requirements of § 10.2 remains a question of fact (see Peter Scalamandre & Sons, Inc. v FC 80 Dekalb Assoc., LLC, supra).
Crane-Hogan alleges that OGS unreasonably required it to cease its concrete removals for a period of three and one-half hours on February 16, 2010 (defendant's Exhibit 60, claim, ¶ 11). Mr. Lewyckyj indicates that inasmuch as this three-hour delay was not caused by any of the circumstances set forth in Article 17A, "the most that Crane Hogan would be entitled to recover was actual costs incurred due to the extension of time" (Lewyckyj affidavit sworn to Jan. 24, 2018, ¶ 24). Nevertheless, Mr. Lewyckyj indicates that Crane-Hogan failed to provide notice within 15 days as required by §17A.3. According to Mr. Lewyckyj, notice of this claim was not provided to him as the contracting officer until May 6, 2011, over 13 months after OGS denied the claim. There being no contrary proof submitted in opposition, this portion of the claim must be dismissed.
With respect to Crane-Hogan's third cause of action for unpaid concrete removals and replacements, defendant contends Crane-Hogan failed to provide the notice required by §11.1, applicable to subsurface or other latent physical conditions at the site. Crane-Hogan, on the other hand, contends that the quantity of concrete removal and replacement at issue is not a subsurface or other latent condition because the contract was for the removal and replacement of concrete and there was, therefore, no surprise.
Defendant's contention that the notice requirements of § 11.1 apply to preclude recovery does not withstand close scrutiny. OGS denied the mass concrete claim, not because of a lack of notice of a latent condition, but because it claimed Crane-Hogan misunderstood the contract quantities at the outset. In response to Crane-Hogan's letter dated February 10, 2010, Mr. Murphy stated:
-"Your subtraction of deep repair square footage from the shallow repair square footage was either an error or misunderstanding on your part of pertinent information on Dwg. S-101A.
-Keystone Associates' survey quantities are meaningless since they do not provide calculations and/or back/up (e.g., field notes and/or survey data). Furthermore, any survey data or information Crane Hogan references to a claim of this magnitude should at the very least be signed by a responsible Keystone Associates' representative, and include their professional title" (defendant's Exhibit 21).
Mr. Clements explains at length in his affidavit the manner by which he estimated the concrete quantity based upon his reading of Drawings S-101A and S-501 and that the actual concrete quantities exceeded his estimate (claimant's Exhibits 1 and 2; see also Clement's affidavit sworn to March 2, 2018). The issue to be resolved, therefore, are the concrete quantities required to be removed and replaced pursuant to the contract documents. This argument, however, was not raised by the defendant in support of its motion dismissing this portion of the claim. Inasmuch as the Court finds that the notice requirements applicable to subsurface or other latent conditions are inapplicable to Crane-Hogan's concrete quantity claims, defendant failed to demonstrate its prima facie entitlement to summary judgment dismissing claimant's third cause of action.
Lastly, defendant seeks dismissal of that portion of Crane-Hogan's fourth cause of action which seeks $9,000 representing the amount withheld from its contract payments as liquidated damages. Liquidated damages are appropriately assessed for certain delays at the rate of "$500 times the number of days of delay in physical completion of the work" (defendant's Exhibit 1, § 13.3). The contractor is not, however, responsible for delays that are "beyond the control and without the fault or negligence of the Contractor" (id. at § 13.4.1). Mr. Lewyckyj explains that the 18-day delay charged to Crane-Hogan was related to the stop work order that OGS imposed on the project after DEC's directive to cease discharging concrete slurry into the Susquehanna River.(8) Defendant therefore demonstrated that the 18-day shutdown was due entirely to Crane-Hogan's violation of the Clean Water Act. Accordingly, the 18-day assessment of liquidated damages was proper. Crane-Hogan's claim for the amount of the liquidated damages assessed, which is included as a part of its fourth cause of action, is dismissed.
Based on the foregoing, defendant's motion for summary judgment is granted to the following extent:
(a) Crane-Hogan's claim for damages allegedly incurred in performing the work associated with Field Order C-6, all of which were alleged in paragraph 9 of the claim, is DISMISSED;
(b) Crane-Hogan's claim for damages allegedly arising from a directive to cease work for three hours on February 16, 2010, which is alleged in paragraph 11 of the claim, is DISMISSED;
(c) Crane-Hogan's second cause of action (water processing claim) is DISMISSED, and
(c) Crane-Hogan's claim for the wrongful deduction of liquidated damages, included in its fourth cause of action, is DISMISSED.
September 14, 2018
Saratoga Springs, New York
FRANCIS T. COLLINS
Judge of the Court of Claims
1. OGS retained Gilbane Building Company to serve as Construction Manager on the project. Mr. Murphy was employed by Gilbane.
2. Neither S-101 nor S-111A are in the motion record. Drawing S-101A is attached as Crane-Hogan's Exhibit 1. However, this drawing is not mentioned in Field Order C-6. To the extent Crane-Hogan supports its extra work claim relating to Field Order C-6 with size-reduced copies of drawings as part of its Exhibit 62, the Court is unable to determine which drawings were submitted. Nor is the Court able to read note #9 at its reduced size.
3. Following the dust incident, various litigation ensued, including an action by Broome County against Travelers Indemnity Company for breach of an insurance policy (Broome County v Travelers Indem. Co., 125 AD3d 1241[3d Dept 2015], lv denied 25 NY3d 908 ); an action by Broome County against the State (Broome County v State of New York, UID 2014-044-538 [Ct Cl, 2014]); an action by Broome County against Crane-Hogan (Index No. 2010-312 [Broome Co.]); an action by Crane-Hogan against Broome County (Index No. 2010-1789 [Broome Co.]), and an action by Mark Pullyblank against Broome County (Index No. 2010-1796 [Broome Co.]).
4. Mr. Palmer's October 7, 2009 letter is not in the motion record.
5. The superceding indictment was not filed until March 5, 2014.
6. The Board of Standards and Appeals is now the Industrial Board of Appeals.
7. Defendant did not argue that § 10.3 of the contract precludes payment for extra work on any field orders other than Field Order C-6.
8. In fact, Mr. Lewyckyj avers that although the modified contract completion date was September 12, 2010, the physical completion date was delayed until November 30, 2010, a total of 167 days.