DTM Dev., Ltd. v Yorktown Cent. Sch. Dist.

[*1] DTM Dev., Ltd. v Yorktown Cent. Sch. Dist. 2014 NY Slip Op 51076(U) Decided on June 24, 2014 Supreme Court, Westchester County Connolly, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 24, 2014
Supreme Court, Westchester County

DTM Development, Ltd., Plaintiff,

against

Yorktown Central School District and TAM ENTERPRISES, INC., Defendants.



65665/2013



Giannasca & Shook, PLLC

Attorneys for the plaintiff

220 Ferris Avenue

White Plains, NY 10603

By NYSCEF

Zarin & Steinmetz

Attorneys for the Yorktown Central School District

81 Main Street, Suite 415

White Plains, NY 10601

By NYSCEF

Dickover, Donnelly, Donovan & Biagi, LLP

Attorney for the defendant TAM Enterprises, Inc.

28 Bruen Place

Goshen, NY 10924

By NYSCEF
Francesca E. Connolly, J.

The following documents were considered in connection with the motion of the defendant Yorktown Central School District to dismiss and the plaintiff's cross motion for leave to serve a late notice of claim:

The District's order to show cause, affidavits, affirmation, exhibits, memo of law1-17

The plaintiff's notice of cross motion, affidavit, exhibits, memo of law18-43

TAM's affidavit in opposition to the District's motion, affirmation, exhibits44-49

The District's reply affirmation, exhibit, memo of law50-52

The plaintiff commenced this action against the defendant Yorktown Central School District (hereinafter the School District) to recover the sum of $153,563 which is the amount it is allegedly owed for work performed at the School District's request in connection with a project known as the French Hill Elementary School Courtyard PCB Remediation and Reconstruction (hereinafter "French Hill" or "the project"). The plaintiff also seeks to hold the defendant TAM Enterprises, Inc. (hereinafter TAM) liable for its damages pursuant to its subcontractor's agreement. The plaintiff alleges, among other things, that it sustained damages as a result of TAM's failure to provide certain "close out" documents upon the completion of the project.

The School District's motion

The School District now moves to dismiss the complaint insofar as asserted against it pursuant to CPLR 3211 (a) (2) and (5) on the ground that the plaintiff failed to timely serve it with a notice of claim.

According to the School District, on July 30, 2012, it awarded the plaintiff a contract to oversee the removal of PCB laden soil from French Hill. The plaintiff hired TAM as a subcontractor to perform the removal/disposal work, which was completed in or about September 2012. Presently, the project is near completion and the School District's only remaining task is to submit various "close out" documents to the Environmental Protection Agency. The School District claims that the plaintiff and TAM have improperly withheld these closeout documents, which it contends constitutes a breach of the parties' contract. According to Scott Hillje of KSQ Architects, P.C. (hereinafter KSQ), who provided architectural and engineering services for the project, on October 5, 2012, the plaintiff submitted a change order in the amount of $109,350 to the project's construction manager, Arris Contracting Company (hereinafter Arris), for additional costs allegedly incurred in connection with the removal of "extra tonnage" of soil from the site. By letter dated November 27, 2012, KSQ wrote the plaintiff stating that "we find no basis for additional monies due to the contractor."[FN1] On December 7, 2012, representatives of the plaintiff and the School District met to discuss the issue. On or about December 27, 2012, the plaintiff submitted a letter to Arris again requesting payment [*2]for the purported additional work. By letter dated January 24, 2013, KSQ wrote to the plaintiff disapproving the change order in that the work was covered under the original contract. The plaintiff served the School District with a notice of claim on October 2, 2013, and commenced the instant action at or about the same time.

The School District argues that the Court lacks subject matter jurisdiction over the plaintiff's claims because the notice of claim required pursuant to Education Law § 3813 was untimely. It also contends that the plaintiff and TAM have wrongfully withheld the close out documents in violation of the parties' contract. Accordingly, the School District asks this Court to order those parties to provide it with the close out documents.

The plaintiff's opposition and cross motion

The plaintiff opposes the motion and cross-moves for an extension of time to serve a notice of claim (in effect, to deem its late notice of claim timely). The plaintiff's president, David Niemotko, avers that the project specifications outlined in the bidding process for the contract required the plaintiff to remove 400.4 tons of material, but that during the actual performance of the contract, which was subcontracted to TAM, an additional 216 tons of material were required to be removed from the site. The basis for the plaintiff's change order relates to an alleged discrepancy between, on the one hand, the volume and weight of the material specified for removal in the contract and, on the other hand, the purported volume and weight of material actually removed. The plaintiff submitted a change order request for $132,313 relating to the additional tonnage on October 5, 2012. Subsequent discussions occurred between the plaintiff and Arris, and on November 27, 2012, KSQ sent the plaintiff a letter disapproving the change order, stating that it found no basis for additional monies.

Subsequently, on December 7, 2012, the plaintiff's attorney wrote to Jackie Carbone, the School District's board president on the subject of the French Hill project and "Request for change order balance due: $132,313" (see Plaintiff's Exhibit H). The letter states in relevant part:

I am the attorney representing [the plaintiff]. The $132,313 balance due represents additional costs that originated from inconsistent information present in the bid documents. Regarding the disposal of contaminated soil, your bid documents identify both a volume and an assigned weight as a basis for cost. However, the assigned weight in the bid documents does not correlate to the volume specified in the bid documents. Clearly, there was an error in the calculation and presentation of this information.

Further, when questioned as to how the weight was determined by your consultants, their response was that it was based upon their "assumption" for the given volume. This "assumption" was off by $132,313 — the actual weight, for we have documentation, was 216 tons or 54% more than what was "assumed" in the bid documents. The actual cost of remediation was based upon the actual weight of [*3]disposal; unfortunately, Clean Earth would not charge for disposal based upon your assumed weight.

There is no legal basis for your refusal to make payment since this miscalculation is in your bid documents. That the work was authorized and done properly is not in dispute per the meeting with your consultants this morning. Accordingly, please remit the balance due to preclude the commencement of legal action.

(Plaintiff's Exhibit H [emphasis added]).

After a further exchange of letters, on January 24, 2013, KSQ again denied the plaintiff's request for additional payments, stating that the "initial determination is unchanged and final." From that point forward, according to the plaintiff, the parties continued to engage in settlement negotiations, exchanging letters and e-mails in February through August of 2013. On or about August 28, 2013, the parties outlined the terms of a settlement agreement but, "after that date, communication from [the School District] ceased" (Niemotko affidavit ¶¶ 43-44). On October 2, 2013, the plaintiff received further correspondence from the School District's attorneys regarding the settlement and, under the belief that the settlement negotiations had broken down, served a notice of claim and commenced this action.

The plaintiff contends that the School District's motion is premature. Further, the School District never formally denied its change order and, therefore, the claim never accrued so as to require the plaintiff to file a notice of claim. The plaintiff also contends that its December 7, 2012 letter to the District's board president put the School District on notice of its claim to sufficiently satisfy the notice of claim requirement, and that the School District should be estopped from seeking dismissal based upon the notice of claim requirement due to the prolonged settlement negotiations. Finally, the plaintiff requests, in the alternative, that the Court grant its cross motion to extend its time to answer and deem the October 2, 2013 notice of claim timely.

TAM's opposition

In opposition, TAM contends, among other things, that it has not been paid for work performed in connection with the project, that it has no direct contractual relationship with the School District, and that the School District's request that it be directed to provide close out documentation lacks specificity.

The School District's reply and opposition to the cross motion

In reply, the School District argues, among other things, that the plaintiff's claim accrued as early as November 27, 2012, but in no case later than January 24, 2013.

DISCUSSION

I. THE NOTICE OF CLAIM REQUIREMENT

A. The claim accrued on November 27, 2012

"Education Law § 3813 (1) requires a party to serve a notice of claim upon a school district within three months after the accrual of such claim as a condition precedent to the commencement of an action" (Capstone Enters. of Port Chester, Inc. v Board of Educ. Irvington Union Free Sch. Dist., 106 AD3d 856, 860 [2d Dept 2013])

As an initial matter, the Court finds that the plaintiff's claim accrued on November 27, 2012. "A cause of action to recover damages for breach of contract arises, and the statute of limitations begins to run, from the time of the breach" (Mainline Elec. Corp. v East Quogue Union Free School Dist., 46 AD3d 859, 860 [2d Dept 2007]). "A breach of contract can be said to occur when the claimant's bill is expressly rejected, or when the party seeking payment should have viewed his claim as having been constructively rejected" (Henry Boeckmann, Jr. & Assocs. v Board of Educ., 207 AD2d 773, 775 [2d Dept 1994] [internal quotation marks omitted]; see also Education Law § 3813 [1] ["In the case of an action or special proceeding for monies due arising out of contract, accrual of such claim shall be deemed to have occurred as of the date payment for the amount claimed was denied."]). Here, the November 27, 2012 letter from KSQ, the designated "Initial Decision Maker" under the parties' contract, which rendered a determination that "we find no basis for additional monies due to the contractor," constituted an express rejection of the plaintiff's demand for payment through the change order and related correspondence. Accordingly, the plaintiff's three month period to serve a notice of claim was triggered on that date.

B. The October 2, 2013 formal notice of claim cannot be deemed timely

Turning to the formal notice of claim served on October 2, 2013, the Court agrees with the School District's contention that this notice of claim, served just over ten months from the date of accrual, was untimely. Moreover, the plaintiff's cross motion to deem this notice of claim timely cannot be granted since the plaintiff did not move for leave to extend the time to serve the notice of claim or deem it timely until January 30, 2014, beyond the one-year statute of limitations (see Fapco Landscaping, Inc. v Valhalla Union Free School Dist., 61 AD3d 922, 923 [2d Dept 2009] ["Since the School District established that the one-year statute of limitations had expired, it established that the Supreme Court was without jurisdiction to grant the plaintiffs leave to serve a late notice of claim"]; Consolidated Constr. Group, LLC v Bethpage Union Free School Dist., 39 AD3d 792, 794 [2d Dept 2007] ["Although Education Law § 3813 (2-a) permits a claimant to seek an extension to file a late notice of claim, an application under section 3813 (2-a) must be made within the period of limitations for such claims, which is one year pursuant to section 3813 (2-b)"]; see also Mainline Elec. Corp. v East Quogue Union Free School Dist., 46 AD3d 859, 860 [2d Dept 2007] ["Education Law § 3813 (2-b) provides that no action may be maintained against a school district more than one [*4]year after the cause of action arose"]).[FN2] In any event, the cross motion is academic in light of the reason set forth below.

C. The December 7, 2012 letter substantially complied with the notice of claim requirement

Notwithstanding that the formal notice of claim served on October 2, 2013 is untimely, the School District is not entitled to dismissal under the circumstances of this case, since the plaintiff has established that the December 7, 2012 letter served on the School District's board president substantially complied with the notice of claim requirement. "A paper which is not denominated as a notice of claim may satisfy that requirement if it provides the necessary information as to the nature of the claim, the time when, the place where, and the manner in which the claim arose" (Matter of Mennella v Uniondale Union Free Sch. Dist., 287 AD2d 636, 636 [2d Dept 2001]; see Parochial Bus Systems, Inc. v Board of Education, 60 NY2d 539, 547 [1983]). Although Education Law § 3813 (1) requires strict compliance as to matters of notice, it only requires substantial compliance with respect to matters of form (see Murray v LeRoy Cent. School Dist., 67 NY2d 775 [1986]). Applying this test, courts have held that documents such as letters (see e.g. Pope v Hempstead Union Free Sch. Dist. Bd. of Educ., 194 AD2d 654 [2d Dept 1993]), billing invoices (see e.g. Hygrade Insulators v Board of Educ., 207 AD2d 430, 431 [2d Dept 1994]), and administrative petitions (see e.g Matter of Mennella v Uniondale Union Free Sch. Dist., 287 AD2d at 637) constituted the functional equivalent of a formal notice of claim.

Here, the December 7, 2012 letter provides notice of the plaintiff's claim for additional compensation demanded in a change order during the plaintiff's work on the French Hill project and explains the manner in which the claim arose. The letter states that the bid proposal misrepresented the weight and/or volume of soil to be removed from the site. Specifically, the weight of the material removed exceeded the contract amount by 216 tons. Notably, the letter specifies a precise monetary demand (see Parochial Bus Systems, Inc. v Board of Education, 60 NY2d at 547 ["where an action in contract is involved" the notice of claim should specify "the monetary demand and some explanation of its computation"]), and further threatens "the commencement of legal action" in the event that the demanded payment is not made (see Matter of Cummings v Board of Educ. of Sharon Springs Cent. School Dist., 60 AD3d 1138, 1139 [3d Dept 2009] ["the letter sent by petitioner's [*5]counsel to respondent recites, among other things . . . her intent to pursue litigation in the event the matter was not resolved in her favor"]).[FN3] Additionally, the fact the letter was unverified is not fatal to deeming it a substantially compliant notice of claim since the letter is sufficiently detailed as to the nature of the claim (see Pope v Hempstead Union Free Sch. Dist. Bd. of Educ., 194 AD2d at 655 ["the March 22, 1989, letter constituted substantial compliance with the notice of claim requirement, despite the fact that it was not verified"]; see also Matter of Cummings v Board of Educ. of Sharon Springs Cent. School Dist., 60 AD3d 1138, 1139 [3d Dept 2009] ["Substantial compliance with the notice requirement of Education Law § 3813 has been held to be sufficient, even in the absence of verification as set forth in the statute, so long as the purported notice contain[s] a sufficient degree of descriptive detail and was adequately served upon the [respondent]" (internal quotation marks omitted)]; cf. Jones v City of New York, 300 AD2d 359 [2d Dept 2002] [finding that an unverified letter was not substantially compliant where it lacked sufficient details as to the nature of the claim: "The letter was not verified, and did not set forth the nature of the medical malpractice claim with the specificity required by General Municipal Law § 50-e (2)" (emphasis added)]). Further, the letter at bar was presented to the School District's board president, a member of its governing body (cf. Jackson v Board of Educ., 194 AD2d 901, 903 [3d Dept 1993] [notice of claim served on superintendent of schools was not compliant with Education Law § 3813 [1], since superintendent was not a member of governing body or the clerk of the governing body]) and, in reply, the School District does not deny receipt of the letter.

Under these circumstances, the purpose of the notice of claim requirement was met, since the letter would have given the School District the opportunity to explore the merits of the plaintiff's claim while information relating to the claim was still readily available (see Teresta v New York, 304 NY 440, 443 [1952]). Since the December 7, 2012 letter was served ten days after the claim accrued on November 27, 2012, the plaintiff satisfied the condition precedent to suit and, accordingly, the School District's motion to dismiss is denied.

II. THE "CLOSE OUT" DOCUMENTS

In its motion, the School District also requests that the Court direct the plaintiff and TAM to turn over certain "close out" documents in connection with the project. The School District's reply brief clarifies that this request is for "specific performance" of a provision of the contract. This branch of the motion is premature and procedurally improper given that the School District has not asserted a cause of action or counterclaim for breach of contract. Accordingly, as there is no cause of action on which to grant specific performance, this branch of the School District's motion is denied.

Accordingly, it is hereby,

ORDERED that the defendant Yorktown Central School District's motion to dismiss and for specific performance is denied in its entirety; and it is further

ORDERED that the plaintiff's cross motion for an extension of time of to serve a notice of claim is denied as academic since the December 7, 2012 letter constituted a timely notice of claim; and it is further

ORDERED that the parties are directed to appear in the Preliminary Conference Part on August 11, 2014, at 9:30 a.m., in Room 811 of the Westchester County Courthouse at 111 Dr. Martin Luther King, Jr., Boulevard, White Plains, New York 10601; and it is further

ORDERED that all other relief requested and not decided herein is denied.

This constitutes the decision and order of the Court.

Dated:White Plains, New York

June 24, 2014

_____________________________________HON. FRANCESCA E. CONNOLLY, J.S.C. Footnotes

Footnote 1: The letter also indicates that, in denying the plaintiff's claim for additional monies, KSQ was acting in its role as "initial decision maker" pursuant to the parties' contract.

Footnote 2: The Court notes that the Uniform Notice of Claim Act took effect on June 15, 2013, effectively extending the statute limitations for actions against, among others, school districts from one-year to one-year and ninety days (see CPLR 217-a ["every action . . against any political subdivision of the state, or any instrumentality or agency of the state or a political subdivision, any public authority or any public benefit corporation that is entitled to receive a notice of claim . . . shall not be commenced more than one year and ninety days after the cause of action therefor shall have accrued or within the time period otherwise prescribed by any special provision of law, whichever is longer"]; see also General Construction Law § 66 [1] [the term "public corporation" includes "municipal corporation"]; General Construction Law § 66 [2] [the term "municipal corporation" includes "school districts"]). Although the action at bar was commenced after the effective date of the act, the longer statute of limitations only applies to actions with an accrual date after the effective date of the act (see L 2012, ch 500, § 79 ["This act shall take effect on [June 15, 2013] and shall apply to all actions and proceedings accruing on or after such date" (emphasis added)]). Here, the action accrued before the effective date and is, therefore, governed by a one-year statute of limitations.

Footnote 3: In reply, the School District contends that the December 7, 2012 letter "does not notify [the School District] that Plaintiff is actually planning to sue or what the precise claims will be" (Reply memo of law at 15). To the contrary, the letter explicitly threatens "the commencement of legal action" and identifies the underestimation of the material to be removed from the project site by 216 tons as the precise basis of the claim.