Allstate Dev., Inc. v Dormitory Auth. of the State of N.Y.
Annotate this CaseDecided on March 9, 2006
Supreme Court, Erie County
Allstate Development, Inc./PROGRESSIVE WEATHERPROOFING, INC. JOINT VENTURE, Plaintiff
against
Dormitory Authority of the State of New York, Defendant
2002/10247
RICHARD A, CLACK, ESQ.
AMIGONE, SANCHEZ, MATTREY & MARSHALL, LLP
Attorneys for Plaintiff
EIDEN BEIRNE, ESQ.
.ELIOT SPITZER, ESQ.
Attorneys for Defendant
Eugene M. Fahey, J.
Plaintiff, Allstate Development, Inc./Progressive Weatherproofing, Inc. Joint Venture, brings this action for breach of contract against Defendant, Dormitory Authority of the State of New York, out of an agreement to perform masonry rehabilitation work at the State University of New York at Buffalo.
Plaintiff Venture now moves for summary judgment.
Defendant Authority cross-moves for summary judgment dismissing the Complaint.
Plaintiff Venture's motion for summary judgment is granted.
Defendant Authority's motion for summary judgment dismissing the Complaint is denied.
Plaintiff Venture was the low bidder on a public improvement project to restore, on an emergency basis, certain brick masonry facades on a number of dormitory buildings at the Ellicott Complex of the State University, at Buffalo in Amherst. The advertisement for bids was let out on [*2]January 25, 2000 with the bid made on March 1, 2000, and the contract executed by the parties on April 14, 2000 in the amount of $6,648,000.00. The actual work was to begin that summer and end by August 18, 2000. Plaintiff Venture's bid was some $5.67 million below the bid of the next lowest bidder.
Paragraph 1 of the Contract refers to work performance in terms of a second document, the General Conditions, and reads in its entirety:
"The CONTRACTOR shall provide and shall perform all Work of every kind or nature whatsoever required and all other things necessary to complete in a proper and workmanlike manner the Masonry Rehabilitation - Phase II at the SUNY at Buffalo - Amherst Campus - Ellicott Complex, DA No. 72307 in strict accordance with the Contract Documents as defined in the General Conditions (and of which a listing of specifications and drawings are attached hereto) and in strict accordance with such changes as are ordered and approved pursuant to the Contract, and shall perform all other obligations imposed on such CONTRACTOR by the Contract." (see Exhibit "H", Plaintiff Venture's Notice of Motion).
The General Conditions (contained in part as Exhibit "J", Plaintiff Venture's Notice of Motion with additional parts contained in Defendant Authority's Notice of Cross-Motion, Exhibits "1", "2", "3", "4", and "5") imposed a series of additional contract terms and a supplemental general requirements section which outlined the work in more specific terms.
Section 5.06 imposed an error/discrepancy reporting requirement. Section 6.02 imposed a dimension/condition reporting requirement echoing Section 5.06.
Section 17.02 mandated that Plaintiff Venture's acceptance of payment would work as a release of any claims against Defendant Authority.
Articles 3 and 8 gave broad discretionary powers to Defendant Authority in relationship to interpreting contract documents and altering, adding to, or deducting from the work, and ordering Extra Work, "the Contract consideration being adjusted accordingly" (see Section 8.01 A at lines 2 and 3, Exhibit "J", Plaintiff Notice of Motion).
The work appears to have proceeded that summer without major incident and on schedule.
Defendant Authority has provided the Court with an Affidavit from Wayne Morse, a claims analyst of the Defendant Authority, which alleges that at some time during the restoration work, that a construction manager for the Authority noticed that there appeared to be less pointing and grinding work going on in an underground tunnel area than was shown in certain drawings contained as part of the Contract. It appears that the drawings depicted one or more measurements in units of feet rather then inches, rendering the actual area of pointing and grinding in the tunnel area some 64,331 of lineal footage rather than 149,789 feet (see Morse Affidavit of November 22, 2005, para. 7).
In his Affidavit of November 28, 2005 at paragraphs 4 and 5, Thomas Alico of the Plaintiff Venture disputes Morse's arithmetic, that the difference in lineal footage is nowhere near that which would be produced by an error of twelve to one, that the Venture itself never discovered the error which was limited to five elevations shown on one drawing out of 108 total elevations shown on 32 [*3]drawings.
After the discovery of the error in the drawing, the parties appear to have engaged in a dispute over whether the Authority was entitled to a deduction in the contract price.
Eventually, Defendant Authority issued a Force Credit Change Order dated March 29, 2001, numbered "3" which decreased the original contract amount by some $120,704.46 (labor and material) as the result of the "pointing discrepancy" and attaching a letter showing their calculations of the cost in the Change Order (see Exhibit "K", Plaintiff Notice of Motion).
There appears to have been another dispute which evolved into Force Credit Change Order 10, of an indeterminate date, which decreased payments in the amount of $64,038.95 (see Exhibit "L", Plaintiff Notice of Motion).
The Court takes the liberty of quoting from a portion of Change Order 10, in which the Defendant Authority provided a rationale for the disallowances:
"Description of Work:
UNUSED ALLOWANCES ON DRAWINGS - Drawing 1, Title Sheet, Note #7 required the Contractor to include in their Bid Price a certain number of square footages for depicted repair assemblies. This Contract did not require all of these amounts being used. Therefore, MAS 01 had 155.29 square feet and MAS 05 had 112.7 square feet that were not used. The Contractor was also erroneously paid 100% for the 200 square feet required for MAS 04. Plan views of the exterior stairs required the Contractor provide a certain amount of ceiling repair (CLG 01). These amounts were also not totally used in the field. We have attached a spreadsheet depicting the quantities that were not required in the field and used Superstructures estimated unit costs to devlop (sic) this change order amount." (Exhibit "L", Plaintiff Venture Notice of Motion).
The Affidavit of Wayne Morse at paragraph 10 advances the claim that this particular work, the furnishing of the repair assemblies, was referenced as allocated work for which the quantities could not be precisely determined until the work began, and that, as an allocation item, once the actual quantity of work had been determined, a change order would be issued adjusting the contract price.
In his Affidavit at paragraph 7, Thomas Alico of Plaintiff Venture affirms that there were only two such allowances for allocated work in the Contract, one for on-site security, and one for contingencies, and that the items here are nothing more than the difference between estimated versus actual work, that the note on the title page required them to be designated as allocation items and they were not.
As the result of the two disputes, Plaintiff Venture declined to accept some $429,459.31 of payments, in that acceptance of the money would work a release as to the disputed monies, as per Section 17.02, until the two parties stipulated that acceptance of the money would not work such an [*4]effect.
Plaintiff Venture now seeks summary judgment on the two disputed amounts (some $184,743.41) and on the interest on the $429,459.31 for the period until it was turned over. Defendant Authority moves for dismissal of the claims.
Conclusions of Law
Plaintiff Venture's core argument is that it is entitled to summary judgment in that (1) the contract here is a "lump sum" contract rather than "unit price" contract, which effectively binds each party, the contractor to performance of the described work for the price of the bid, and the State to making that payment for the work, even if the nature and the quality of the described work vary from any party's initial estimate of the nature and quality of the work; that (2) the Force Credit Change Orders are not authorized under the contract here, although (3) certain other change orders which benefitted the Venture were authorized under the contract.
The Court is persuaded that there is merit to each of these contentions.
The Supplemental General Requirements (found attached to the General Conditions, Exhibit "J" to Plaintiff Venture's Notice of Motion) provides the summary of the work at Division 01010 at B: "The Project consists of the following scope of work as shown on Contract Drawings listed below," and then listed some 32 drawings of buildings, masonry details, and various other site details.
The document then goes on to describe the scope of the work - "restoration of portions of the exterior of the subject drawings, as shown..." before concluding - "All items indicated on the contract drawings shall be included in the lump sum base bid" (emphasis added).
The section went on to provide a $75,000.00 allowance for On-Site Security and a $200,000.00 Contingency Allowance for related work, to be included in the bid, but the monies returned to the Authority if not expended.
Plaintiff Venture has also submitted as Exhibit "N" the Authority Schedule Cost Loading Data, which does break down the costs into specific descriptions of work, in a long column, while in each case using the term "lump sum". Nowhere is the work factored on a unit price basis.
The Court is persuaded that Plaintiff Venture has met its initial burden demonstrating its entitlement to summary judgment based on its submission and the record reviewed.
In this regard, the Court has reviewed Article 8 - Changes in the Work (contained in Exhibit "5" of Defendant Authority's Notice of Cross-Motion), which reads in pertinent part: "...the Owner may order Extra Work or make changes by altering, adding to, or deducting from the Work, the Contract consideration being adjusted accordingly...by the Owner by one (1) or more of the following methods:1. By applying the applicable unit price or prices contained in the Contract.2. By estimating the fair and reasonable cost of the extra work." (emphasis added)[*5]
Neither of these categories allows a reduction in payment in a lump sum contract context. Category one is only applicable in a unit price context. Category two provides the avenue for making additional payments in a "lump-sum-contract-with-extra-work" context.
The Court can only conclude that the contract provides for doing the described work for a specific sum, that it provides for additional payments for additional work, but that it does not provide any mechanism for reduced payment for the described work.
The burden having shifted to Defendant Authority, the Court concludes that the Authority has failed to produce any evidence demonstrating the presence of an issue of fact here.
In its cross-motion, Defendant Dormitory has emphasized the Venture's duty to report discrepancies in conditions under Section 6.02, and fixing upon the inch rather than feet error. But, while this matter may have played a minor role in how the Authority initially evaluated the price of the described work in total - on this record an internalized calculation - it is simply irrelevant to the requirement to make payments under the Contract, in the full amount.
The deduction of some $184,743.41, as contained in the two Force Credit Change Orders, from the total of $6,648,000.00 are improper under the terms of the Contract.
Plaintiff Venture's motion for summary judgment is granted.
Defendant Authority's motion for summary judgment dismissing the Complaint is denied.
Submit order upon notice to opposing counsel.
EUGENE M. FAHEY, J.S.C.
Dated: March 9, 2006
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