D & L Assoc., Inc. v New York City Sch. Constr. Auth.

Annotate this Case

Download PDF

D & L Assoc., Inc. v New York City Sch. Constr. Auth. 2008 NY Slip Op 33753(U) October 8, 2008 Supreme Court, New York County Docket Number: 102477/04 Judge: Eileen Bransten Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEWiYORK: PART THREE -------------------------',---------------------------------------------x I D & L ASSOCIATES, INC., Plaintiff, Index No. 102477/04 Motion Date: 5/30/08 Motion Seq. No.: 005 NEW YORK CITY SCHOOL CONSTRUCTION ! AUTHORITY, i _________________________l ________________________~~-~~~~~~-----Jf I . .. .. • \)\_, EILEEN BRANSTE~\l, J. ~v:fi \ \'P . ~i~~'ll ,..:\ I ~\\ 't) ..-.'f... ..-• C~ _,._1 ·.~r.. r::.. of.:'··\ .. .. \·\';·:..'.~.•;.·.~)·· ~ \ Pursuant to CPLR 321 l{a)(5) and (7) and CPLR 32tbd'Of~ndant, New York City School Construction Authority ("SCA"), moves for (1) dismissal of certain claims by plaintiffD&L Associqtes, Inc.("D&L") on the grounds that a Notice of Claim was not served dismissal of the com laint in its entirety as time-barred because D&L failed to commence this action within one1ear of accrual pursuant to Public Authorities Law§ 1744(2)(ii). D&L opposes the motion. I Background D&L is a const ction contractor who had entered into over 20 contracts with SCA, a public benefit corpo ation established by Title VI of the Public Authorities Law § 1725 (affirmation in suppo [aff supp] Exhibit A ifif 1-2, 8, 13, 18, 23). D&L commenced this action to recover $74 ,005.45 allegedly owed by SCA for the unpaid portions of four [* 2] D & L Associates, Inc. v New York City School Construction Authority Index No. 102477/04 Page2 contracts: Contract No. C000008759 ("New Utrecht Contract"); Contract No. 000008697 ("Walton Contract"}, C000002754 ("Van Arsdale Contract"), and C000008197 (Julia Richman Contract) (aff supp Exhibit A if~ 1- 8, 13, 18, 23). For each contjact, SCA and D&L executed a Certificate Substantial Completion in which D&L certified that "(i) all Work has been satisfactorily completed in accordance with the contract...and (ivf the Work can be safely used for its intended purpose" (aff supp Exhibits D, G). Specifically, a Certificate of Substantial Completion was executed for the Julia Richman Contrjct on April 13, 2001 (aff supp Exhibit D), for the Walton Contract on I January 25, 2002 (aff~upp ExhibitE), for the New Utrecht Contract on March 31, 2002 (aff supp Exhibit F), and n1 rthe Van Arsdale Contract on August 27, 2002 (affsupp Exhibit G). On September 24, 2002, D&L served a Notice of Claim upon SCA that set fourth breaches of 14 contra ts, including the four contracts at issue in this case (aff supp Exhibit H Nos. 6, 10, 11, 14). lfhe Notice of Claim asserted that ( 1) SCA failed "to make payments I due and owing pursucint to the 14 contracts", (aff supp Exhibit H "performed in confo ~A), (2) D & L had ance with the applicable contracts sufficient to require that SCA make payments to D&L," ( ff supp if B), and (3) that SCA was in continuous breach of the fourteen contracts sin], although Article 15 of SCA' s General Conditions allows SCA to "withhold payments o erwise due and owning to D&L," (aff supp Exhibit H if C), SCA [* 3] D & L Associates, Inc.: v New York City School Construction Authority Index No. 102477/04 Page 3 failed to give D&L rtotice of its intent to withhold payment and thus had no right to hold back money (aff supl Exhibit H ,, C - G). Although the aggregate value of the I 4 claims I amounted to $2, 979,1283.36, the Notice of Claim alleged that the amounts due on the four I contracts at issue her were: $240,572 for the New Utrech Contract; $106,315.33 for the Walton Contract; $6J2,195.15 for the Van Arsdale Contract, and $59,503.07 for the Julia Richman Contract (ff supp Exhibit H Nos. 6,10,11,14). According to i&L, "SCA responded to the 1" Notice of Claim by making payments pursuant to the contralcts." (affidavit in opposition [affid opp] at 5 , 21. The parties agreed that SCA would make some payments directly to subcontractors and that amount would be deducted from the tot! amount owed on the contracts. 1 On October 9, 1003, Charles E. Williams, III, SCA' s Principal Attorney for Contracts, Construction and Re,! Estate, sent D&L a letter advising that, pursuant to the continuing investigation by SCt' s Office of the Inspector General, payments to D&L and its i subcontractors on thdl four contracts at issue in this case would be withheld (affid opp 1 Plaintiff claims t e following amounts are still due on four school construction projects: New Utre ct High School, Kings County $122,018 $47,447.92 Walton Hi School, Bronx County Arsdale H gh School, Queens County $524,705.84 $53,833.69 Julia Ric an High School, New York County [* 4] D & L Associates, Inc. v New York City School Construction Authority 1, Index No. 102477/04 Page4 I I Exhibit D ). The inveftigation allegedly concluded on November 24, 2003 (aff supp Exhibit I ~ :E,). I On Decembe I 0, 2003, D&L made a demand on SCA for full payment of the amounts due on the our contracts. In that demand, D&L set a deadline of December 29, I 2003 for SCA to remi~ payment. According to D&L, "SCA failed and refused to pay D&L all sums due and ow ing pursuant to the contracts ... notwithstanding D&L's demand for payment" (aff supp xhibit I ii G). On January 6, 2004, D&L served a second Notice of Claim on SCA which set forth that SCA' s failure pa or respond to the demand for payment is a breach of each of the contracts (aff supp E ibit I ii H). On February 18 2004, D&L commenced this breach of contract action claiming that, although it "performe all work required by the [four] Contract[s] .... SCA has breached the [four] Contract[s] in th!at the SCA has refused and continues to refuse to compensate D&L pursuant to the terms of the [four] Contract[s] so that compensation is due and owing pursuant to the terms nd conditions of the [four] Contract[s]" (aff supp Exhibit A at Complaint ifiI 9,10, 14, 5, 19, 20, 24, 25). On May 7, 200 SCA served its Answer denying the allegations of breach and asserting affirmative derenses of including, failure to state a cause of action, and expiration of the statute of limitafons. Defendant also asserted a counterclaim "seeking recision of [* 5] D & L Associates, Jnc1 v New York City School Construction Authority Index No. 102477/04 Page 5 I I three separate conicts between [D&L] and the SCA, on the ground that they were fraudulently inducer (memorandum in support [memo supp] at 2 Footnote 1). D&L, among other things, denied the counterclaim's allegations (aff supp Exhibit C). On May 30, I 2008, Defendant file~ this Motion to Dismiss and/or for Summary Judgement. Analysis Notice of Claim SCA moves to dismiss three of the four breach of contract claims on the grounds that D&L failed to timely lerve a Notice of Claim as required by Public Authorities Law Section I 744(2)(i). SCA argles that the claims accrued when the parties executed the Certificates of Substantial Compl ti on for each contract. D&L counters that the Notices of Claim were timely and asserts that the claims did not accrue until the scope and magnitude of its damages were known. ~s a condition recedent to mai~taining ~action.against ~CA for breach.of con~a~t, an aggrieved party m st serve a "detailed, wntten, venfied notice of each claim ... w1thm 1 three months after the ccr1.1:al of such claim" (Public Authorities Law § l 744(2)(i); see also C.S.A. Contracting Co p. v New York City School Construction Authority, 5 NY3d 189, 192 [2005]). A Notice of laim allows "municipal defendants to conduct an investigation ... and to determine whether the claims should be adjusted or satisfied before the parties are [* 6] D & L Associates, Inc. v New York City School Construction Authority I Index No. I 02477/04 Page6 subjected to the expfnse oflitigation" (Koren-DiResta Construction Co., Inc., v New York City School Construction Authority, 293 AD2d 189, 193 [1st Dept 2002], quoting Davidson v Bronx Mun. Hosp. 64 NY2d 59, 62 [1984]). Failure to comply with the Notice of Claim requirement is fatal and mandates dismissal of the claim (see P&C Giampills Contracting \ Co., Inc. v New Yori City School Construction Authority, 21 l AD2d 524, 524 [lst Dept 1995]). It is a claimant's "obligation to plead and prove that its Notice of Claim was served within three months lfter the accrual ofits claim" (CSA Contracting Corp. v New York City School Construction \ uthority, 5 NY3 d 189, 192 (200 5], citing Parochial Bus Sys. v Board ofEducofCityofNY, 60NY2d 539, 547 [1983] andRogersv Village ofPortchester234 NY 182, 185 [1922]). Generally, a c ntractor' s breach of contract "claim accrues when its damages are ascertainable" (CSA ontracting Corp. v New York City School Construction Authority, 5 NY3d 189, 192 [2005 ; see also Matter ofBoard ofEducation ofEnlarged Ogdensburg City School Dist. 37 NY2d 283, 290 [1975]). "Although the determination of the date on which damages are ascertain, hie may vary based on the facts and circumstances of each particular case, 'it generally has been recognized that damages are ascertainable once the work is substantially complete or a detailed invoice of the work performed is submitted'" (CSA Contracting Corp. vNi York City School Construction Authority, 5NY3d189, 192 [2005], [* 7] D & L Associates, Jn,;. v New York City School Construction Authority Index No. 102477/04 Page 7 I quoting New York \ty School Construction Authority v Kallen & Leme/son 290 AD2d 497, 497 [2d Dept 2002]). SCA claims \hat the four Certificates of Substantial Completion mark the point at which the damages in this case were ascertainable since each Certificate was signed by an authorized represen~ative of both parties certifying that "all work has been satisfactorily completed in accordbce of the contract" (aff supp iiiI 10 - 12). \ D&L argues \hat accrual must be measured from the point at which the scope and magnitude of its daJages became known, which, at the very earliest, was the date on which it received SCA's October 9, 2003 letter notifying it that payments on the four specific contracts would remLn withheld due to an investigation by the Office of the Inspector General (see affid opi ~ 8; memorandum in opposition [mem opp] at 3 ). D&L contends that before that time it wis impossible for it to ascertain the scope and magnitude of damages because SCA's "Gerral Conditions," which the four contracts in question allegedly incorporate, allowed · e SCA to withhold payment (see mem opp at 3; affid opp Exhibit B § 15.05). D&L' s argum nt is unavailing. Knowledge of the scope and magnitude of the damages is irrelevant i determining accrual for purposes oftimely serving a Notice of Claim (see Koren-DiResta C ·nstruction Co., Inc., vNew York City School Construction Authority, 293 AD2d 189, 192 11 st Dept 2002]). It is well settled under New York law that "a [* 8] D & L Associates, Inc. v New York City School Construction Authority Index No. 102477/04 Page 8 contractor's claim ilcrues when its damages are ascertainable," not when the contractor actually ascertains t 'at it has suffered damages (see CSA Contracting Corp. v New York City School Construction Authority, 5 NY3d 189, 192 [2005]; Koren-DiResta Construction Co., School Construction Authority, 293 AD2d 189, 192 [1st Dept 2002] Inc., v New York Ci ["a contractor's cl im 'accrues' when it can ascertain the amount appropriate as compensation for th items of work performed"]). In fact, for "purposes of the notice of claim, it matters not ne wit that no breach has yet occurred, such as the refusal to pay for the work in question" (Koren-DiResta Construction Co., Inc., v New York City School Construction AuthoJty, 293 AD2d 189, 192 [1st Dept 2002]; see also CSA Contracting Corp. v New York Ci4School Construction Authority, 5 NY3d 189, 192 [2005] ["Although... the date on which da ages are ascertainable [could depend] on the facts and circumstances of [a] case," generally "'damages are ascertainable once the work is substantially completed or a detailed invoice Construction or the work performed is submitted"'] quoting New York City School Authori~ v Kallen & Lemelson 290 AD2d 497, 497 [2d Dept 2002]; CSA Contracting Corp. v M w York City School Construction Authority, 5 NY3d 189, 194 [2005] [plaintiff's claim coul be time-barred before there was reason to expect litigation]. Thus, 1 the General Condition , which allow SCA to withhold payment, are irrelevant as is the fact that D&L did not kno the exact amount of its damages until October 9, 2003. [* 9] D & L Associates, Inc. y New York City School Construction Authority Index No. 102477/04 Page 9 D&L's furthej argument that use of the substantial completion date for purposes of accrual is merely a "general rule" that should not serve as the basis for dismissal (see memo opp at 6) and that thr Court must consider all the facts and circumstances of a case to determine when the claim accrues, which, in this case, would necessitate denial of the Defendant's motions ee id.) is also unavailing. Although Courts have relied on factors such as the actual date of c mpletion of the project to constitute the date of accrual of a claim (see CSA Contracting Col v New York City School Construction Authority, 5 NY3d 189, 192- 193 [2005]; New Yor,.City School Construction Authority v Kallen & Lemelson 290 AD2d 497, 497 [2d Dept 2°12]), D&L did not set forth any fact or circumstance that occurred between the dates of ny of the Certificates of Completion and the September 24, 2002 Notice of Claim thatw uldjustify use ofa later accrual date.2 D&L's only assertion was that SCA withheld paymenl and did not attempt to resolve the unpaid amounts until a later date. Those facts are immaterial. Since D&L ha1 served Defendant with a Notice of Claim on September 24, 2002, only claims that accrued on or before June 24, 2002 (within three months) would survive a motion to dismiss ifthe Certificate of Substantial Completion is used to mark accrual. In this case, only the claim re ated to the Van Arsdale Contract would survive since the relevant 2 Although Sectio 9.0l(A) of SCA's General Considerations provides that the contract itself notes the date of "F nal Completion," D&L fails to argue or establish that the parties' agreement contained sue a date. [* 10] D & L Associates, Inc., v New York City School Construction Authority Index No. 102477/04 Page 10 Certificate of Substaral Completion was executed August 27, 2002. The claims for breach ofthe New Utrecht C ntract, Walton Contract and Julia Richman Contract are thus dismissed I for failure to timely s rve a Notice of Claim within three months of substantial completion. One Year Statute of Limitations I Public Autho{ties Law § 1744(2)(ii) provides that an action against SCA must be "commenced within o e year after the happening ofthe event upon which the claim is based" (Public Authorities L w §1744(2)(ii)). Here, D&L's claim is based on breach of the Van Arsdale Contract and n "New York, a breach of contract cause of action accrues at the time I of the breach" (Ely-1uikshank Co., Inc. v Bank ofMontreal, 81NY2d399, 402 [1993]). SCA moves to dismiss the Van Arsdale Contract claim on the ground that it is time barred by the Public luthorities Law's one year statute oflimitations. According to SCA, the cause of action ace ued no later than September 24, 2002, when D&L served its original "to make payments du and owing" in the amount of $672, 195.15 (see affid supp Exhibit C at ~; affid supp E ibit C at No. 11) and that its failure to give notice of its intent to withhold payment was a "continuing breach" of the Van Arsdale Contract (see affid supp Exhibit C if F). [* 11] ,. D & L' Associates, Inc. Index No. 102477/04 Page 11 New York City School Construction Authority l D&L counters that the date of accrual was October 9, 2003 when the scope and i : magnitude of its damiges became ascertainable because it received a letter informing it of SCA' s intent to withhrd further payment. Alternatively, D&L urges that the claim accrued on December 29, 2001, when SCA failed to answer or pay the demand for payment. Once again, DkL is mistaken. The Court of Appeals has made clear that "[t]he I Statute of Limitations begins to run at the time of the breach though no damage occurs until later" regardless of w ether the injured party knows of the existence of the wrong or injury. (Ely-Cruikshank Co., nc. v. Bank ofMontreal, 81 NY2d 399, 399 [1993]). D&L acknowl dged that SCA breached the Van Arsdale Contract in its September 24, 2002 Notice of Cl im, which unequivocally states that SCA was in continuous breach. Thus, the breach, by I &L's own admission, happened on or before September 24, 2002 marking the opening o the one year window for commencement of an action against SCA. Since the one year ex ired on September 24, 2003, the February 18, 2004 action based on the Van Arsdale Conlct is time barred and Defendant's motion to Dismiss the Breach of Contract No. C000002 54 ("Van Arsdale Contract") is granted. · Accordingly, it s ORDERED that the motion to dismiss is granted~ the complaint is dismissed and the C erk is directed to enter judgement acc2:l:dtn~~;.. ,_ ... ~' •. · This constitutes the Decision and Order of the Court. ~~'1 r-~ \ ~ ~.•f.. <'~Y'v<t;, <\.\.,'\ '\J Dated: New York, Ne York October 8, 2008 . E.NTER Hon. Eileen Bransten ~.! C" · o~ ·~ :,.,,f: 't\\vci";;,,-v"' ~'~ ~~~ cP lr--' ~ . ·~~

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.