Oakgrove Constr., Inc. v Genesee Val. Nurseries, Inc.
Annotate this CaseDecided on August 1, 2005
Supreme Court, Erie County
Oakgrove Construction, Inc., Plaintiff,
against
Genesee Valley Nurseries, Inc. and Colonial Surety Company, Defendants.
2002/3675
Robert W. Michalak, Esq.
Parrino, Cooper & Dobson
Attorneys for Plaintiff
Fernando Santiago, Esq.
Davidson, Fink, Cook, Kelly & Galbraith, LLP
Edward P. Yankelunas, Esq.
Damon & Morey, LLP
Attorneys for Defendants
Eugene M. Fahey, J.
Plaintiff, Oakgrove Construction, Inc., the contractor for the reconstruction of certain portions of the Niagara extension of the New York State Thruway, brings this action against Defendant, Genesee Valley Nurseries, Inc., its landscape subcontractor, and Defendant, Colonial Surety Company, Genesee's surety and issuer of a performance bond under the subcontract.
Defendant Colonial Surety now moves for summary judgment dismissing Plaintiff Oakgrove's action against it and Defendant Genesee's cross-claims against it.
Plaintiff Oakgrove cross-moves for summary judgment against Defendant Colonial Surety on the performance bond, for immediate trial on damages, interest from the date of denial, and attorneys' fees, expenses, and costs.
Defendant Colonial Surety's motion for summary judgment dismissing the Complaint and as to any cross claims is granted.
Plaintiff Oakgrove's cross-motion for summary judgment is denied.
On February 25, 1998, Plaintiff Oakgrove entered into a contract with the New York State [*2]Thruway Authority for a construction project for a portion of its Niagara Extension (Exhibit "4", Oakgrove Notice of Cross-Motion).
Article 2 of the Contract addressed the question of what documents formed the contract. "The Contract (and Contract Documents) shall be deemed to include the advertisement for proposals; the information for bidders adopted by the Authority for Thruway contracts; the contractor's proposal; the Schedule for Participation By Disadvantaged Business Enterprise Participation goals; the agreement; the 'Standard Specifications' referred to above; the plans; and addenda to specifications if the same are issued prior to date of receipt of proposal and all provisions required by law to be inserted in the contract whether actually inserted or not."
Article 4 of the Contract fixed December 10, 1999 as the date of completion of the work.
Section 611 of the project specifications, as contained in Addendum No. 1, adopted on November 18, 1993, dealt with the work of furnishing and placing trees, shrubs, and vines, with subsection 611-3.05 dealing with "Care of Planting" and initially reading:
"Care of planting shall begin immediately after each plant is planted and shall continue until the final acceptance of the contract and as required under §611-3.06, Period of Establishment (see Exhibit 1, Oakgrove Notice of Cross-Motion)."
Subsection 611-3.06(A) reads in its entirety:
"General. The Contractor (Oakgrove) shall be required to continue the work specified under §611-3.05 Care of Planting for a period of one year** following the satisfactory completion of all the planting on the contract as confirmed in writing by the Engineer, or for the duration of the contract, whichever is later. The Period of Establishment applies to all plantings unless otherwise specified (see Exhibit 2, Oakgrove Notice of Cross-Motion)."
Subsection 611-3.06(B) reads in its entirety:
"Period of Establishment Work Schedule. The Contractor shall propose and submit a Period of Establishment Work Schedule to the Engineer. The schedule shall describe how and when all work specified under §611-3.06A General shall be accomplished. The schedule shall be approved by the Engineer prior to the beginning of the Period of Establishment (see also Exhibit 2, Oakgrove Notice of [*3]Cross-Motion)."
**In at least two submissions the clause "[changed to two years in the NYSTA Proposal for this Project]" is inserted at this point, although such language is not to be found in the original language of the Addendum. If such an insertion represents an effort to establish that the period was unambiguously extended to two years, it is neither an adequate explanation nor in the proper form.
Exhibit "C" of the Colonial Notice of Motion is the N.Y.S. Department of Transportation Approval to Subcontract form which refers to the subcontract between Plaintiff Oakgrove and Defendant Genesee and is approved as of April 8, 1998. The document has an estimated beginning date of April, 1998, but the estimated completion dare was left blank.
The Period of Establishment is also addressed in New York State Department of Transportation Proposal Book 2 at page 108.
"-3.06 PERIOD OF ESTABLISHMENT:
The Contractors attention is directed to the specification 611-3.05, Care of Planting and 611-3.06 Period of Establishment.
Prior to establishing the date for the beginning of the Period of Establishment, the Contractor shall submit to the Engineer, for approval (in consultation with the RLA), his Care of Planting schedule of operations for the two year Period of Establishment.
Requirements: At the conclusion of the first year of the PoE, the Contractor shall remove and replace all unacceptable plants, as determined by the RLA. At the conclusion of the second year of the PoE, the Contractor shall again remove all unacceptable plants, as determined by the RLA. Fertilizer shall then be applied within the top two (2) inches of all plant pits at the manufacturer's recommended rate (Exhibit "B", Colonial Notice of Motion)."
Thus, subsection 611-3.06(A) of the Specifications Addendum requires the Contractor to continue the work for a period of one year following the completion of the planting, while the Proposal Book references Section 3.06 but requires the work to continue for a period of [*4]two years.
On March 30, 1998, Plaintiff Oakgrove entered into the subcontract with Defendant Genesee. The subcontract provided that "The Subcontractor shall be under the same obligations to the Contractor to maintain the work performed by it as the Contractor is obligated to the Owner under the General Contract (see Exhibit 7, Oakgrove Notice of Cross-Motion)." Oakgrove and Genesee then started work on the project.
On July 22, 1999, Defendant Colonial Surety issued a performance bond referencing Contractor Genesee, Owner Oakgrove and the landscape subcontract work in the amount of $340,000.00.
The language of the bond begins:
"1. The Contractors and the Surety, jointly and severally, bind themselves, their heirs, executors, administrators, successors and assigns to the Owner for the performance of the Construction Contract, which is incorporated herein by reference (see Exhibit 16, Oakgrove Notice of Cross-Motion)."
By Notice dated February 29, 2000, and letter dated March 24, 2000, to Oakgrove, the New York State Thruway Authority, by its Engineer, accepted the contract, and established the 29th as the date for guarantees, warrantees, and establishment periods. (See Exhibit 8, pp. 6 and 7, Oakgrove Notice of Cross-Motion).
The Court notes that pages 1 through 5 of Exhibit 8 are another letter from the Thruway Authority to Oakgrove and an attachment to the above containing an Uncompleted Work Agreement executed by the Authority and Oakgrove, which withheld $88,533.80 in payment from Oakgrove until satisfactory completion of the work, and dated March 14, 2000. Oakgrove then withheld some $35,000.00 in payments from Genesee.
By letter dated May 22, 2000, William Whitfield of Parsons Transportation Group informed Plaintiff Oakgrove that the Period of Establishment had started on December 31, 1999 and would end two years later. The letter added "Please inform your landscape subcontractor of this notice and remind them of their contractual obligations under Specification 611-3.06." (See Exhibit "R", Oakgrove Notice of Cross-Motion).
This stance on the part of the Thruway Authority appears to have come as news to both Contractor Oakgrove based on the testimony of Vincent Barbara, its Vice-President at pp. 115-116 (see Exhibit "P", Oakgrove Notice of Cross-Motion) and to Subcontractor Genesee, based on its President's letter to Oakgrove dated May 5, 2000, which reads in its entirety:
"Dear Ken:
Enclosed is a copy of the two year period of establishment schedule as requested. This letter affirms that according to our conversation this morning the establishment period will begin effective November 1999. [*5]
I originally submitted a one year schedule because the paperwork in my file provided by your office refers only to the standard specification, which is one year, for the establishment period. I do not have a copy of page 108 in my files and unfortunately we were not aware of the two year period.
Please let me know if you should need any additional information."
Thus, it would appear that Defendant Oakgrove had earlier submitted a one year schedule conforming to the one-year requirements of Subsection 611-3.06(B), and that neither the Contractor, not the Authority objected to its time frame.
It also appears that Defendant Genesee continued to perform work maintaining the planting through the remainder of 2000, and that Defendant Oakgrove released some $10,000.00 to Genesee in that period.
By letter dated April 12, 2001, Plaintiff Oakgrove notified Defendant Colonial that Defendant Genesee had gone out of business and that they were making a claim under the bond.
The letter concluded...
" The work to be completed consists of maintaining the existing plantings during the Summer of 2001 and then replacing any dead material in the Fall. The dollar value of this work is uncertain at this time until an inspection of the existing plantings is completed.
Please be advised that we are currently holding from Genesee Valley $24,307.14 for work performed under this contract. This was monies retained to guarantee work performance under the Period of Establishment portion of the uncompleted work agreement as defined and required by the New York State Thruway Authority. Again, it is uncertain at this time whether the above amount owing to Genesee Valley Nurseries is sufficient to cover the remaining work. The NYSTA is holding on us $88,532.80 to guaranty this same work (Exhibit "V", Colonial Notice of Motion)."
By letter dated May 18, 2001, Defendant Colonial denied the bond claim.
In a letter dated September 5, 2001, attorney Larry Miller of Defendant Colonial produced a number of justifications for Colonial's denial. The Third, appearing at the top of page 2 of the letter, goes to the heart of the matter: [*6]
" Third, as you are aware, GVN bid the Project based upon the standard one year period of establishment. GVN never intended to perform an extra year of work for its bid price. The one year period ended in November or December of 2000. Accordingly, it appears a contract amendment was required to add another year. Because one was never issued, Colonial believes that GVN had no responsibility for the extra year of establishment (Exhibit "AA", Colonial Notice of Motion)."
Conclusions of Law
A surety's obligation is limited to those it undertakes in its bond, the bond attaching to the principal contract, and the obligation being construed in conjunction therewith (see Vartotta Construction Corp. v. Sette-Juliano Construction Corp., 234 AD2d 183 [1st Dept. 1996]).
The application of this general principal, in our own case, with the obligation of the surety attaching first to the subcontract, can only be construed in additional conjunction with the contract, given that the obligation of the subcontractor Genesee for its work to the contractor Oakgrove is the same as that of Oakgrove to the Thruway Authority.
The Court therefore must examine precisely the description of the work of the furnishing and planting in Section 611 of the specifications, with particular emphasis on subsection 611-3.06.
The Court is fully mindful of its own obligations relating to contract interpretation:
"When interpreting a written contract, the court should give effect to the intent of the parties as revealed by the language and structure of the contract and should ascertain such intent by examining the document as a whole. Effect and meaning must be given to every term of the contract and reasonable effort must be made to harmonize all of its terms. Moreover, the contract must be interpreted so as to give effect to, not nullify, its general or primary purpose. (citations omitted) (Reda v. Eastman Kodak Company, 233 AD2d 914, 649 N.Y.S.2d 555 to 557."
Yet there are times when it is impossible to harmonize all of the contract terms, and indeed, when consideration of extrinsic evidence serves no worthwhile purpose.
In our case, in the Specifications Addendum, Subsection 611-3.06(A) requires Genesee to continue the work for a period of one year, which the Court takes to be the year 2000.
But the Proposal Book in its subsection 611-3.06 treatment, after directing the Contractor to the Specifications, which of course refers to a one-year period, then addresses a two-y[*7]ear period as to the Care of Planting Schedule, which would include 2001.
The Court has been unable to uncover any mechanism within the contract for resolving the contradiction. Article 2 of the Contract simply includes both Specification, Addendum, and Proposal. And even if the Proposal were to be taken as an effort to modify the Specification and Addendum, only express language to that effect would unambiguously do so. The language here lacks that definitive quality.
No attorney submissions have directly engaged the question, while the Court cannot simply gloss over a clear ambiguity.
The Court is therefore driven to only one conclusion.
"In the event of doubt or ambiguity as to the meaning of the terms of a contract, the language must be construed most strongly against the party who prepared it or supplied a form for the agreement. This is particularly true as to a contract of adhesion. Where there is an inconsistency in verbiage in an instrument, the language must be construed strongly against the drawer of the instrument. Thus where one party has only slight participation in the process by which the agreement is drafted, the court may decline to consider extrinsic evidence and further decline to search out the meaning of ambiguous language, instead reaching a coherent and reasonable interpretation of the ambiguity by construing the agreement against the drafter. As a corollary to the general rule, a contract drawn by one party must be construed, if its meaning is doubtful, most favorably to the other party (footnotes omitted), 22 N.Y.Jur.2d, Contracts Section 200)."
"* * * [F]ailure to recite clearly the intention of the parties to a contract for the construction of public works may create liability against the State of New York if the true meaning of such a contract is so obscurely expressed that a bidder is likely to be misled and is misled thereby. (Aldrich v. New York Life Ins. Co., 235 NY 214, 139 N.E. 245 [1923]). * * *"
The interpretation of the drafters of the contract and subsequently adopted by Plaintiff Oakgrove - that a two-year care of planting period started on 12-31-99 - cannot stand. Rather the one-year period, commencing 2-29-00, the date that the engineer confirmed in writing that the work has been satisfactorily completed, under the requirements of 611-3.06(A), is controlling.
Therefore, as of 2-29-01, Oakgrove's obligation to the Thruway Authority in regard to care of planting, and Genesee and Colonial's subsidiary obligations, all came to a close. The [*8]concerns of the Complaint, relating to the period after that time, are outside the contract.
As the result of this conclusion, the Court need not reach a variety of other questions raised in the parties' papers.
The Court is not prepared to grant Defendant Genesee summary judgment on its own motion, but is persuaded that, under the circumstances, none of its cross-claims against Defendant Colonial properly lie.
Defendant Colonial Surety's motion for summary judgment dismissing the Complaint and as to any cross claims is granted.
Plaintiff Oakgrove's cross-motion for summary judgment is denied.
Submit order upon notice to opposing counsel.
EUGENE M. FAHEY, J.S.C.
Dated: August 1, 2005
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