SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK:COMMERCIAL DIVISION
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BOVIS LEND LEASE LMB INC. (formerly known
as Lehrer McGovern Bovis, Inc.),
Plaintiff,
INDEX NO.105398/00
GCT VENTURE, INC., METROPOLITAN
TRANSPORTATION AUTHORITY, THE OWASCO
RIVER RAILWAY, INC., AMERICAN PREMIER
UNDERWRITERS, INC., THE NEW YORK AND
HARLEM RAILROAD COMPANY and "JOHN
DOE 1" through "JOHN DOE 100," being fictitious
and unknown to plaintiff,
Defendants.
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Charles Edward Ramos, J.S.C.:
Defendants GCT Venture, Inc. ("GCT") and Metropolitan Transportation Authority ("MTA") move pursuant to CPLR 3212 for summary judgment dismissing plaintiff's fourth cause of action. GCT is the active movant. By stipulation dated June 30, 2000 (exhibit B to Giordano affidavit), MTA agreed to be liable to plaintiff on this cause of action to the same extent as GCT (id.,
& 2).This is a contract dispute over costs for delays and additional work entailed in MTA's restoration of Grand Central Terminal. GCT was the project developer. Plaintiff, hired by GCT pursuant to contract, was the main construction contractor on the project. The delays and added costs at issue in plaintiff's fourth cause of action involve work done by plaintiff's electrical subcontractor, L.K. Comstock & Company, Inc. ("LKC"), in connection with the improvements to the terminal's retail space.
In the fourth cause of action of its amended complaint (exhibit A to Giordano affidavit), plaintiff alleges that GCT (and vicariously MTA) breached implied and express warranties and representations requiring it to co-operate with the performance of plaintiff's contract by actively impeding the work of plaintiff and LKC. From the evidence before the court, it appears that the majority of the delays at issue were due to design changes. As early as January 1997, MTA acknowledged that the number of design changes for the retail space were posing a problem for the subcontractors, and called a halt to further changes without its prior approval (see exhibits F-H to Sommer affidavit). In June 1997, the parties negotiated a global wrap-up agreement to deal with the plethora of design changes (see exhibit A to Valenti affidavit). Nonetheless, delay-causing changes continued to plague the project and LKC's work (see exhibits B-D to Valenti affidavit). The problem was so extensive that LKC threatened to cease operations in October 1998 (see exhibits G and P to Valenti affidavit). GCT and MTA were apparently unable to control the situation despite repeated efforts by plaintiff (see exhibits B, D and E to Sommer affidavit). Under plaintiff's December 1, 1995 contract with GCT ("the contract" at exhibit A to Tenanty affidavit), substantial completion of plaintiff's work was scheduled from December 1977 through February 1998 and final completion of the project was set for March 1, 1998 (
' 6.1). The actual substantial completion dates ranged from February 1998 through August 1999 (see Tenanty affidavit, & 13; but see, plaintiff's counterstatment of material facts, & 3).GCT does not deny that the delays were primarily attributable to changes. Rather, it now seeks to dismiss this claim as a matter of law on the ground that it is contractually barred under (a) the contract, which provides that certain delays were to be expected (
'' 6.3[a]-[b]) and costs therefor limited to plaintiff's actual costs (' 6.3[c]), and (b) LKC's GCT-approved contract with plaintiff ("the subcontract" at exhibit B to Tenanty affidavit), which contained an unconditional waiver of damages due to delay ('' 19.6, 19.8 and 19.9).Plaintiff counters that the contract and subcontract cannot be read in a vacuum, but must be read as modified by the 'global settlement' of close to $5 million worth of change orders reached between plaintiff, GCT, MTA and LKC. In addition to the provisions of the various global settlement documents, plaintiff relies on GCT's representation during those negotiations that there would not be any further deadline extensions or design changes.
At the outset, the court notes that the validity of plaintiff's liquidating agreement with LKC and consequent standing to assert its pass-through claims in the fourth cause of action have been upheld by the First Department (Bovis Lend Lease LMB, Inc. v GCT Venture, Inc., 285 AD2d 68 [1st Dept 2001]), and this court will not address those arguments by GCT which seek to relitigate that finding. However, such ruling, made under the facial sufficiency standard of CPLR 3211, is not tantamount to a finding that plaintiff has established through competent evidence its right to a trial of outstanding material issues, which is the issue now at bar (see Tenzer, Greenblatt, Fallon & Kaplan v. Capri Jewelry, Inc., 128 AD2d 467, 469 [1st Dept 1987]).
Plaintiff has introduced evidence that the amount of changes and ensuing length of delays were unanticipated when the contractual waivers were signed, and that the delays were not caused by plaintiff's or LKC's conduct. "[D]amages resulting from uncontemplated delays caused by the contractee are actionable, despite the existence of a broad exculpatory 'no-damage-for-delay' clause. . . . [S]uch a clause will, however, foreclose recovery for delays or their causes which were contemplated at the time the parties entered into the contract, unless the contractee engaged in conduct which 'smacks of intentional wrongdoing'" (Nab-Tern Constructors v City of New York, 123 AD2d 571, 572 [1st Dept 1986], citations omitted; see also Honeywell, Inc. v City of New York, 108 AD2d 125, 126-127 [1st Dept 1985], affd in Corinno Civetta Construction Corp. v City of New York, 67 NY2d 297 [1986], rearg den in Honeywell, Inc. v City of New York, 68 NY2d 753 [1986]; Landis & Gyr Powers, Inc. v Berley Industries, Inc., 298 AD2d 435, 436-437 [2d Dept 2002], citations omitted). Such "intentional wrongdoing. . . . can be explicit, as when it is fraudulent, malicious . . . or prompted by the sinister intention of one acting in bad faith. . . . Or, when, as in gross negligence, it betokens a reckless indifference to the rights of others" (Kalisch-Jarcho, Inc. v City of New York, 58 NY2d 377, 385 [1983], mot amend remittitur den 60 NY2d 645 [1983], citing Matter of Karp [Hults], 12 AD2d 718 [3d Dept 1960], affd 9 NY2d 857 [1961], footnotes omitted).
Even where, as here, delays of a certain nature are anticipated by the parties, they could be compensable if they are of inordinate and unexpected duration and attributable to bad faith. For example, a 28-month delay in project completion attributable "solely to the city's 'endless' revisions of scores of plans and drawings, to its failure to co-ordinate the activities of its prime contractors, . . . and to other acts of omission or commission interfering with the sequence and timing of the work" (Kalisch-Jarcho, Inc. v City of New York, supra, 58 NY2d at 381) would bar enforcement of a "no damages for delay" clause only upon a factual finding that the city "acted in bad faith and with deliberate intent delayed the plaintiff in the performance of its obligation" (id. at 386). Conduct which caused delays but "amounted to no more than inept administration" does not suffice (S.N. Tannor, Inc. v A.F.C. Enterprises, Inc., 276 AD2d 363, 364 [1st Dept 2000], citing Martin Mechanical Corp. v P.J. Carlin Construction Co., 132 AD2d 688 [2d Dept 1987] and Buckley & Company, Inc. v City of New York, 121 AD2d 933 [1st Dept 1986], app dism 69 NY2d 742 [1987]).
Plaintiff, aided by the benefit of all reasonable favorable inferences (see Garcia v J.C. Duggan, Inc., 180 AD2d 579, 580 [1st Dept 1992], citing Assaf v Ropog Cab Corp., 153 AD2d 520, 521 [1st Dept 1989]), has raised two outstanding factual questions which preclude the award of summary judgment dismissing plaintiff's fourth cause of action. First, whether "the conduct sought to be exculpated was within the contemplation of the parties" (see Kalisch-Jarcho, Inc. v City of New York, supra, 58 NY2d at 395). If the delays were caused by GCT and/or MTA and unanticipated by plaintiff and LKC, which plaintiff argues, the contract provisions relied on by movants are inapplicable. Second, even if the delays were expected, the "no damages for delay" provisions will not bar plaintiff's recovery if the trier of facts finds "(i) delays caused by the contractee's bad faith or its willful, malicious, or grossly negligent conduct, (ii) uncontemplated delays, (iii) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee, [or] (iv) delays resulting from the contractee's breach of a fundamental obligation of the contract" (Corinno Civetta Construction Corp. v City of New York, supra, 67 NY2d at 309; see also Clifford R. Gray, Inc. v City School District of Albany, 277 AD2d 843, 844 [3d Dept 2000]; S.N. Tannor, Inc. v A.F.C. Enterprises, Inc., supra, 276 AD2d at 363-364), all of which are alleged by plaintiff and supported by some evidence.
While it is true that under the contract and the subcontract design changes were anticipated for the retail space, plaintiff has submitted evidence capable of supporting a finding that the actual changes that occurred "were of a character and magnitude not ordinarily encountered or anticipated by parties to a contract of this nature" (Clifford R. Gray, Inc. v City School District of Albany, supra, 277 AD2d at 845). In a case involving a 25-month delay, the court found triable issues of fact warranting a trial, including "whether the no-delay clause was intended by the parties to immunize defendant from its own alleged delay causing acts" (J.J. Flannery, Inc. v Kerby Saunders, Inc., 173 AD2d 415, 415-416 [1st Dept 1991], citing Corinno Civetta Construction Corp. v City of New York, supra).
Accordingly, the motion by defendants GCT and MTA pursuant to CPLR 3212 for summary judgment dismissing plaintiff's fourth cause of action is denied in its entirety.
This decision constitutes the order of the court.
Dated: November 14, 2003
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