R.P. Brennan Gen. Contrs. & Bldrs., Inc. v Bovis Lend Lease LMB Inc.
Annotate this CaseDecided on May 10, 2007
Supreme Court, New York County
R.P. Brennan General Contractors & Builders, Inc., Plaintiff,
against
Bovis Lend Lease LMB Inc., and the City of New York, Defendant.
602821/04
Plaintiff:
Mastropietro & Associates, LLC
111 Broadway - Suite 1403
New York, New York 10006
Of Counsel: Manny A Frade, Esq.
Defendants:
Michael A Cardozo
Corporation Counsel for the
City of New York
100 Church Street - Room 3-115
New York, New York 10007
Zetlin & De Chiara, LLP
For Bovis Lend Lease LMB, Inc.
801 Second Avenue
New York, New York 10017
Of Counsel: Chris Fladgate, Esq. &
Leigh Erin W. Schmeltz, Esq.
Bernard J. Fried, J.
Under motion sequence 003, plaintiff, R.P. Brennan General Contractors & Builders, Inc. (Brennan), moves, pursuant to CPLR 3212, for partial summary judgment against defendant Bovis Lend Lease LMB, Inc. (Bovis), on the issue of liability for amounts allegedly due and payable for work performed under construction contracts.
The parties do not dispute that Bovis is the Construction Manager under a Prime Contract with the City of New York Department of Design and Construction (the City), to construct a New [*2]York Hall of Science in Queens, New York (the Project). On December 4, 2001, Bovis entered into a $9,748,721.00 contract with Brennan, pursuant to which Brennan agreed to act as general contractor for the Project (the GC). On August 12, 2002, Bovis entered into a $1,900,550.00 agreement with Brennan for ornamental metal work on the Project (the Ornamental Contract). Contract Documents, incorporated by reference into the GC and Ornamental Contract, include but are not limited to, the Prime Contract, General Conditions, Special Conditions, Drawings and Specifications, Project Safety Program Outlines, and Contract Schedules.
Both the GC and the Ornamental Contract contain substantially the same terms. Both require Brennan to provide and furnish all labor, materials, tools, equipment, supervision, administration and other items necessary to complete the Project, "in strict accordance with the Contract Documents," and both contain a "pay-when-paid" clause that states, in part, "[p]ayment of the Contract Price and/or any other sums for the Work or any portion thereof and/or any other amounts due or claimed to be due to Contractor shall be made only from funds which Construction Manager has actually received in hand from the Owner and designated by Owner for disbursement to Contractor.... Receipt of such funds by the Construction Manager shall be a condition precedent to payment by Construction Manager to Contractor."
The parties do not dispute that during the course of performance on the Project, Brennan submitted periodic requisitions for payment to Bovis for work performed in the preceding month. In May 2004, Brennan submitted its requisition No. 27 under the General Contract for the sum of $554,393.00, and its requisition No.9 under the Ornamental Contract for the sum of $208,886.00. The total amount requisitioned, and in dispute on the motion for work performed by Brennan in April 2004 is, thus, $763,279.00.
Bovis admits that on May 12, 2004, it submitted its own requisition No. 31 to the City for payment, for the sum of $1,153,309.85, and that this requisition included the payments requisitioned by Brennan under its requisition Nos. 27 and 9. Printed on the bottom of the requisition form, and signed by Bovis' Senior Project Manager, James Dempsey, is a certification that "...all work and material included in this estimate has been inspected by me or my duly authorized assistants and has been found to comply with the terms and conditions of the corresponding construction contract documents and authorized changes thereto."
Brennan asserts that on June 3, 2004, Bovis received payment from the City on its requisition No. 31, for the sum of $1,007,746.48, and that Bovis refused to remit any part of that payment to Brennan. Brennan alleges, based upon a June 28, 2004 letter from Dempsey, that payment was withheld due to a mechanic's lien filed against the Project by one of Brennan's subcontractors. The document annexed by Brennan to prove that Bovis received payment on June 3, 2004, shows that although the City approved $1,007,746.48 for payment, it only disbursement $303,766.64. There is no dispute that, on the date of the disbursement, there was a mechanic's lien against the Project, and according to Brennan's documents, a satisfaction of the lien was not filed with the Department of Finance until June 7, 2004. Bovis alleges, through the affidavit of James Dempsey, that the difference between the $1,007,746.46 actually approved for payment by the City on June 3, 2004, and the $303,766.44 actually paid represents 150% of the $469,319.88 lien filed against the project by one of Brennan's sub-contractors. Bovis asserts that the City was entitled to withhold that amount [*3]pending satisfaction of the lien.[FN1] Dempsey additionally alleges that none of the $303,766 actually disbursed by the City on June 3, 2004 was attributable to work performed by Brennan.
Bovis acknowledges that the mechanic's lien was satisfied on June 7, 2004. Bovis also acknowledges it received two more partial payments from the City in relation to Brennan's requisitions No. 27 and No.9. The documents annexed show that Bovis received $703,979.82 on or about June 21, 2004, and another $1,046,139.48 on or about July 8, 2004 in relation to Bovis' requisition No. 32, and it is unclear from this evidence, what portion of the amounts remitted were attributable to Brennan.
On or about July 1, 2004, Bovis notified Brennan, and its surety, Centennial Insurance Company (Centennial), that the GC was terminated. On July 14, 2004 Bovis notified Brennan and Centennial that the Ornamental Contract was terminated. The list of outstanding items of performance outlined by Bovis in its correspondence to Centennial consists primarily of missing doors, missing hardware, unfinished or defective flooring in various areas of the building, patch-work, some ceiling and electrical work, guardrails and other metal ornamental items, and "final cleaning."
Bovis annexes copies of two "Take Over" agreements dated August 3 and August 19, 2004, pursuant to which Centennial agreed to take over the GC and Ornamental Contract, and to complete the work, and Bovis alleges that all monies received from the City on account of work performed by Brennan were turned over to Centennial. However, in light of the amounts requisitioned by Bovis from May 2004 through July 2004, alleged to be for work performed by Brennan (see Bovis Requisition Nos. 31, 32, 33 and 34), the evidence submitted by Bovis, consisting of copies of two checks written to Centennial in August 2004, totaling $906,786.12, does not support Bovis' allegation, that as a result of the turnover, it retained no funds in its possession from which Brennan could seek payment under the agreements.
Brennan's verified complaint, filed on or about January 28, 2005, asserts 14 causes of action. The first four causes of action seek recovery against Bovis in the amount of $2,861,617.00, for breach of contract, quantum meruit, an account stated, and for wrongful termination, respectively. The fifth cause of action alleged in Brennan's complaint seeks a minimum of $673,000.00 in delay damages. The 12th, 13th and 14th causes of action, also asserted against Bovis, seek consequential damages, a declaratory judgment, and indemnification of at least $250,000.00 for claims asserted against Brennan by its surety. The remaining causes of action alleged in Brennan's complaint are asserted against the City.
Brennan's notice of motion purports to seek partial summary judgment, on the issue of liability, with respect to all causes of action asserted against Bovis. As the proponent of the motion for summary judgment, Brennan is required to tender sufficient evidence to eliminate any material issues of fact from the case, and establish a prima facie right to judgment (JMD Holding Corp. v [*4]Congress Financial Corp., 4 NY3d 373 [2005]; Alvarez v Prospect Hosp., 68 NY2d 320 [1986]; Friends of Animals, Inc. v Associated Fur Mfrs, Inc., 46 NY2d 1065 [1979]). Failure to establish a prima facie case, requires denial of the motion, regardless of the sufficiency of the opposing papers (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]). In this case, Brennan's evidence, and its arguments in support of summary judgment, are limited to the first cause of action alleged in its complaint, for breach of contract arising out of Bovis' alleged failure to "pay-when-paid" in accordance with the terms of the agreements, and to the fourth cause of action, for wrongful termination. Bovis' obligation to come forward with evidence, in admissible form, sufficient to establish the existence of material and triable issues of fact (see Zuckerman v City of New York, 49 NY2d 557, 562 [1980]), therefore, is limited to the first and fourth causes of action alleged in Brennan's complaint. No basis for judgment is alleged with respect to any other causes of action.
In support of its first cause of action, Brennan asserts a right to payment, as a matter of law, pursuant to paragraph 43.5 of the Prime Contract, which states, in pertinent part:
The Contractor shall pay each subcontractor...not later than seven (7) days after receipt of payment out of amounts paid to the Contractor by the City for work performed by the Subcontractor or supplier under this Contract.
Brennan asserts that Bovis' failure to make payment within seven days of its receipt of payment from the City constitutes a material breach of contract, and violates State Finance Law §139-f and General Municipal Law §106-b.[FN2]
In order to demonstrate a prima facie right to payment, however, Brennan was not only required to come forward with evidence of failure to make payment in accordance with the terms of the contract but also satisfactory completion of the work (see Oakwood Realty Corp. v HRH Constr. Corp.,19 AD3d 668 [2d Dept 2005]). Brennan's proof of satisfactory completion of the work is based solely upon the signed certification statements appearing on the face of the payment requisition forms, and even if it may be said that such proof is sufficient to make a prima facie showing of satisfactory completion of the work, Brennan's evidence is countered by paragraph 18.15 of the General Conditions of the contracts which states, in pertinent part:
No certificate issued or payment made to Contractor...shall be an acceptance of any Work not in accordance with the Contract Documents or be deemed evidence of proper performance of the Work, either in whole or in part, or be construed as an acceptance of defective workmanship or improper materials.[*5]
The fact that Bovis and/or the City signed the certifications authorizing payment on Brennan's requisitions, therefore, is not conclusive evidence of satisfactory completion of the work, or a waiver of any right with respect thereto, and Brennan submits no substantive evidence to demonstrate the value of the work performed or the materials provided.
Moreover, in opposition to the motion, Bovis asserts, through the affidavit of its Senior Project Manager James Dempsey, that at the time Bovis received payment from the City on Brennan's outstanding requisitions, on or about June 21, 2004, Brennan was in substantial default under the contracts, and failed to cure those defaults, notwithstanding repeated demand to do so. Bovis annexes a number of documents in support of this assertion, including but not limited to: a notice of default and demand to cure dated December 18, 2003; a letter, dated December 30, 2003, outlining the progress and problems with the work performed by Brennan; a letter dated January 13, 2004, detailing the nature of the alleged defaults; an agenda for a meeting regarding Brennan's alleged defaults, which Dempsey alleges took place on January 22, 2004; correspondence from Bovis, in March 2004, regarding its concerns over Brennan's reduction in work force and the pre-existing delays; Brennan's request for an extension of time to complete the work, dated March 30, 2004; and Bovis' notice of default and demand to cure, dated June 23, 2004. Dempsey alleges that Brennan's defaults under the contracts were material and substantial, and that Brennan's failure to cure after five days notice triggered Bovis' right terminate the contract and take action to mitigate damages, as outlined under paragraphs 6.2 and 6.3 of the General Conditions, pursuant to which Bovis had a right to cancel the contracts and withhold payment to cover the cost of mitigation. [FN3] Brennan's attorney asserts, in reply, that Dempsey's self-serving allegations of default are a ruse to avoid payment, and directly contradict his payment certification statements. The discrepancies in Dempsey's various statements and allegations, however, raise issues of credibility that are beyond the scope of a motion for summary judgment (Ferrante v American Lung Assn., 90 NY2d 623, 631 [1997]; Lawrence Properties, Inc. v Brown Harris Stevens Residential Management, LLC, 38 AD3d 377 [1st Dept 2007]).
Brennan additionally asserts that Bovis could not legally terminate the GC and Ornamental Contract, which Brennan alleges were 98%, or substantially complete when Bovis sent the notices of termination in July 2004 (see 845 UN Ltd. Partnership v Flour City Architectural Metals, Inc., 28 AD3d 271 [1st Dept 2006][owner may not terminate substantially completed contract; see also F. Garofalo Elec. Co., Inc. v New York Univ., 300 AD2d 186, 189 [1st Dept 2002] [upon substantial performance, contractor is entitled to amount due under the contract less the cost of any correction [*6]of defects in its performance]). In support of this assertion, Brennan annexes a number of payment requisitions, the most pertinent of which appears to be Part A of Bovis' payment requisition No. 34, signed by Dempsey on July 26, 2004, requesting an additional $503,443.00 for Brennan on the GC, which the form states represents 98% of the original contract price, and $152,520.00 for Brennan on the Ornamental Contract, which the form states represents 87.1% of the original contract price. However, while some inferences may be drawn in Brennan's favor given the certifications, the amount of money paid out under the contracts, and the nature of the defaults outlined in Bovis' July 2004 correspondence to Centennial, Brennan failed to submit substantive evidence of substantial performance as that term is defined pursuant to Section 33.A of the Special Conditions of the contracts, such as proof of delivery of certificates of inspection, the connection of utilities, or habitability,[FN4] and Bovis submits affidavits with evidence in support of its allegations that the GC and Ornamental contract were not substantially completed. The court's role on a motion for summary judgment is solely to determine whether there are triable issues of fact, with all reasonable inferences drawn in favor of the non-moving party (F. Garofalo Electric Co., Inc. v New York Univ., 300 AD2d 188). Moreover, where there is any doubt as to substantial completion, the issue is one for the trier of fact (F. Garofalo Electric Co., Inc. v New York Univ., 300 AD2d at 189). In this case, therefore, summary judgment must be denied (see e.g. Enviroclean Services, LLC v Cem, Inc.,12 AD3d 1042 [4th Dept 2004]; City of New York v Cotroneo & Marino's United Elec. Co., Inc., 269 AD2d 154, 155 [1st Dept 2000]).
Accordingly, for the reasons stated, it is
ORDERED, that plaintiff's motion for summary judgment is denied.
DATED:
E N T E R:
________________________
J.S.C.
[*7]
Footnotes
Footnote 1:The City's right to withhold payment upon the filing of a mechanic's lien against the property or project is outlined under Paragraph 24.4 of the Prime Contract, which states, in part, "If any time before or within thirty days after the whole Work ...is completed and accepted by the City, any persons...shall file...any notice as is described in the Lien Law...the City shall retain, from the moneys due or to become due under this Agreement, so much of such moneys as shall be sufficient to pay the account claimed...together with reasonable costs...until the Lien...shall be discharged....
Footnote 2:State Finance Law §139-f and General Municipal Law §106-b state, in pertinent part:
Within fifteen calendar days of the receipt of any payment from the public owner, the contractor shall pay each of his subcontractors and materialmen the proceeds from the payment representing the value of the work performed and/or materials furnished by the subcontractor and/or materialman and reflecting the percentage of the subcontractor's work completed or the materialman's material supplied in the requisition approved by the owner and based upon the actual value of the subcontract or purchase order less an amount necessary to satisfy any claims, liens or judgments against the subcontractor or materialman which have not been suitably discharged and less any retained amount as hereafter described.
Footnote 3:Mitigating actions under paragraph 6.2 of the General Conditions include taking possession of the site and using existing subcontractors, or hiring new subcontractors at the Contractor's expense. Paragraph 6.3 states of the General Conditions states, in pertinent part:
Upon the happening of an Event of Default and to effectuate the provisions of Paragraph 6.2...Contractor shall not be entitled to receive any further payment until the Work shall be wholly completed to the satisfaction of Construction Manager and Owner and shall have been accepted Construction Manager and Owner, at which time, if the unpaid balance, if any, of the Contract Price at time of Contractor's default shall exceed the costs and expenses incurred in completing the Work and curing Contractor's default, such excess shall be paid to Contractor....
Footnote 4:Section 33 A of the Special Conditions to the contract states, for instance, in part:
a project is not substantially complete unless the Department of Design and Construction agree that it is substantially complete. Substantial Completion shall occur when, in the sole determination of the Construction Manager the following conditions have been satisfied:
I. Subcontractor has obtained and delivered to Construction Manager all certificates of inspection for the work;
II. All Utilities and equipment specified or required under the Contract are connected and function properly;
III. The City of New York can use and occupy the facility for the intended use and purpose;
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