Opinion
603043/03.
Decided July 8, 2008.
Dunnington, Bartholow Miller, LLP, New York, NY, (Carol A. Sigmond), for Plaintiff.
Dreifuss Bonacci Parker, LLP, New York, NY, (JoAnne M. Bonacci, Eli J. Rogers), for Defendants.
This action arises out of the construction of a new "vertical campus" for Baruch College, located at 55 Lexington Avenue, New York, NY (the Project). Plaintiff Premier-New York, Inc. (Premier), a subcontractor who worked on the Project, initiated this action against defendant Trataros Construction, Inc. (Trataros) and defendant Travelers Property Casualty Corp. (Travelers), Trataros's surety, for delay damages in the amount of $381,917.93.1 Premier's central claim is that a sample construction schedule it purportedly relied upon in preparing its bid was not adhered to during construction and, as a result, its work was allegedly performed inefficiently, and in a different sequence than anticipated.
Although Premier also originally sought $26,575.98 for "final retainage," it admits that Travelers paid the retainage in 2004, and that this amount is no longer at issue in this case ( see Opp Mem., at 23.
Defendants now move for an order, pursuant to CPLR 3212, granting them partial summary judgment dismissing Premier's claims for delay damages against Trataros on the basis of a "no-damage-for-delay" provision contained in Premier's subcontract with Trataros. Defendants also move for summary judgment on the ground that the surety bond sued upon by Premier was not issued in connection with the prime contract pursuant to which Premier's work was performed. Premier cross-moves for leave to amend the complaint to plead the correct surety bond.
As set forth below, defendants' motion for partial summary judgment is granted, and Premier's cross motion for leave to amend the complaint is denied.
The Project's owner was the Dormitory Authority of the State of New York (DASNY) (Aff. of Athena Curis, Trataros's Project Manager for the Project, ¶¶ 4-5). The Project's construction manager was TDX Construction Corp. (TDX). TDX's responsibilities on the Project included, inter alia, performing Critical Path (CPM) scheduling, and updating the construction schedule with information provided by Trataros and other prime contractors ( id.,
On April 22, 1998, Trataros entered into a prime contract with DASNY, entitled "Package No. 1 General Construction Work, Contract No. 15 at Baruch College, Site B, DANo. 6500 1802 2176" (Contract No. 15) ( id., ¶ 2; Exh A). Trataros separately bid on, and was separately awarded, a second co-prime contract on the Project, known as "General Construction #2, Contract No. 16 at Baruch College, Site B, DA# 6500 1802 2178, JDE# 61506" (Contract No. 16) ( id., ¶ 3; Exh B). On August 27, 1998, Trataros entered into Contract No. 16 with DASNY ( id., ¶ 4). DASNY is the "owner" identified in Contract Nos. 15 and 16 ( id., ¶ 5).
DASNY awarded 13 separate prime contracts for the Project's construction work ( id., ¶ 12). The prime contracts were bid out in a staggered fashion ( id.). The two prime contracts awarded to Trataros, Contract Nos. 15 and 16, were among the last prime contracts awarded on the Project ( id., ¶¶ 2-5, 12). At the time that Trataros bid on Contract Nos. 15 and 16, the Project was already under construction ( id., ¶ 12). After Trataros became involved in the Project, it did not have any duty to supervise the work performed under other prime contracts ( id., ¶¶ 7, 12).
Trataros obtained performance and payment bonds from Reliance Insurance Company (Reliance), naming Trataros as principal, and for the benefit of DASNY as obligee (Aff. of John Scarpellino, Sr., Traveler's Claims Manager, ¶¶ 3-4). Subsequently, Travelers agreed to act as administrator for certain bonds issued by Reliance, including the bond at issue in this action ( id., ¶ 5). Pursuant to the terms of the bonds, they were issued on behalf of subcontractors/suppliers to the extent that they performed labor/supplied materials under Contract Nos. 15 and 16 ( id; Exh A).
Trataros subcontracted a portion of its work under Contract No. 16 to Premier (the Subcontract) (Complaint, ¶ 12; Curis Aff., ¶ 13). The agreement is dated November 11, 1998 ( see Subcontract, at 1 [Curis Aff., Exh E]), but was not executed by Premier until April 29, 1999 ( see Subcontract, at 7). Premier's scope of work under the Subcontract required it to perform the roofing, flashing and roof accessories work required under Contract No. 16, including Inverted Hot Liquid Membrane Roofing, Stainless Flashing (with roofing only) and Roof Accessories ( id., ¶ 14; Subcontract, at 16). Trataros never subcontracted any work to Premier in connection with Contract No. 15 (Curis Aff., ¶ 17).
Because of the numerous prime contractors utilized by DASNY and/or TDX on the Project, and because Contract Nos. 15 and 16 were among the last prime contracts bid and awarded for the Project, Trataros' work under its two contracts depended upon related work by earlier co-prime contractors. For example, the roofing work subcontracted to Premier was performed upon concrete decks installed by others. The decks of the roof were not within the scope of Contract Nos. 15 and 16, and were not installed by Trataros ( id., ¶ 23).
At some point before commencing its work on the Project, Premier claims to have received the following materials: a blank form of its Subcontract agreement with Trataros; a sample construction schedule with a control date of April 15, 1998 ( see Subcontract, at 8, identifying a "Sample CPM Schedule" as part of the "Contract Documents) and the architectural plans, technical specifications and contract documents for Contract No. 16 ( see id., incorporating the Contract No. 16 plans, specifications and contract documents into the Subcontract). Specifically, Premier contends that, as part of the solicitation process, "Trataros provided Premier with a schedule for the construction of the Project showing, in pertinent part, that the roofing work on all the roofs would be performed prior to any curtain wall, in relatively good weather, at a time when hoisting for materials would be available as a matter of right and without undue delays caused by other trades, at a time when other trades would not be working in the roof areas or using the roofs for storage of construction materials" (Complaint, ¶ 13).
Robert Bland, Premier's owner, and Daniel Moriarty, Premier's former project manager, prepared Premier's bid estimate for the Project's roofing work (Bland Dep., at 51 [Aff. of Eli J. Rogers, Exh 5]; Bland Aff, ¶ 5). Premier contends that it relied on the Sample CPM Schedule in submitting its bid estimate to Trataros (Complaint, ¶ 14), and as a result, "submitted a lower price than it would have had it been told that it would have to work in the winter, with interference from other trades, with inadequate and inefficient storage areas, with hoisting delays and with work incomplete or areas unavailable when Premier was ready for them (id., ¶ 17).
However, the plain language of the Subcontract put Premier on notice that the construction schedule provided was only a "sample" ( see Subcontract, at 8). Moreover, the Sample CPM Schedule had a control date of April 15, 1998, and was therefore at least seven months old before Premier engaged in negotiations with Trataros over the Project, and approximately a year old by the time Premier executed the Subcontract on April 29, 1999 ( see Sample CPM Schedule [Aff. of Eli Rogers, Exh 7], at lower left corner, citing "Data Date 15APR98").
Under the Subcontract, Premier agreed to perform its contractual scope of work for a flat fee of $910,000.00 (Subcontract, ¶ 2, at 1). Premier also agreed to be responsible for acquiring information about the state of the Project before entering into the Subcontract, including performing whatever independent review of the Project that it deemed important, and verifying that any information it received from Trataros was correct before submitting the bid ( see Subcontract, "Subcontractor's Investigations and Representation," ¶ 3, at 2 "General Conditions," ¶ A [9], at 15).
Pursuant to the Subcontract, Premier was required to waive any claim to additional compensation over its flat fee amount arising from any of the following site conditions: (1) the work was hindered by delays, disruptions or acceleration of the Project schedule; (2) the work was rescheduled; (3) the work was re-sequenced; and (4) the work was interrupted and re-started ( id., "Time Performance," 6 [d], at 2-3; "Time of Performance, ¶ D [3], at 17). Premier also agreed that the terms and conditions of the Subcontract would govern its rights to make any claims in connection with the Project:
This Subcontract contains the entire agreement between the Parties hereto with respect to the matters covered herein. No other agreements, representations, warranties, or other matters, oral or written, shall be deemed to bind the Parties hereto.
Subcontract, "Complete Agreement, ¶ 29, at 6.
Premier alleges that Trataros induced it to enter into the Subcontract by fraud, because the "Sample CPM Schedule" provided with the bid package had changed, and the work had allegedly been "re-sequenced" by Trataros ( see Complaint, ¶¶ 23-24 [Trataros, "without notice to or leave from Premier, materially changed the sequence of the physical work on the Project. . . . thereby depriving Premier of the conditions it anticipated based on the pre contract and subcontract Schedule"]). Premier alleges that, as a result of changes to the schedule and re-sequencing of the work, it incurred additional costs because it was forced to:
a)work in winter conditions;
b)perform additional and extra work as a result of the installation of curtain wall prior to the start of roofing work;
c)stop and start work as other trades had material stored on the roof or were working in areas needed for Premier for its work;
d)move materials onto and around the job by elevator, the hoist having been taken down, thereby wasting time sharing the elevator with other trades and having to store materials in inconvenient locations because areas were not available for work;
e)have inadequate storage area for materials requiring multiple handling of materials;
f)double flash the roof as curtain wall had been installed prior to Premier being allowed to mobilize and perform;
g)work in an inefficient and disrupted fashion as debris was on the roof, drains and curbs were not complete;
h)work in an inefficient and disrupted manner as roof decks were not properly finished and ready for roofing;
i)stop and start work in an inefficient and disrupted manner as areas were occupied by other trades such as the small roof hoist, and other trades had not completed work, such as the concrete on the 14th floor;
j)work inefficiently and in a disrupted manner as roof surfaces were not patched;
k)work inefficiently and in a disrupted manner due to poor pitch on the 14th floor roof; and
l)work for a prolonged period of time during which time there were prevailing wage increases mandated for the work force.
Id., ¶ 26. The above conditions thus relate to five basic sources of alleged delay damages: (1) scheduling/sequencing of construction; (2) work performed by concrete and masonry co-primes; (3) material storage; (4) hoist availability; and (5) debris removal. Premier alleges that these delays were uncontemplated because it had based its price for the roofing work on the Sample CPM Schedule ( id., ¶ 27).
Defendants contend that Premier's claims are barred by the "no-damage-for-delay" provisions contained in the Subcontract. The Subcontract provides that:
Should the Subcontractor's performance of this Subcontract be delayed, impacted or disrupted by any acts of the Contractor, other subcontractors, or the Contractor's suppliers, or delayed, impacted or disrupted by any acts or causes which would entitle Contractor to an extension of time under the Contract Documents, the Subcontractor shall receive an equitable extension of time for the performance of this Subcontract, but shall not be entitled to any increase in the Subcontract Price or to damages or additional compensation as a consequence of such delays, impacts, disruptions or acceleration resulting therefrom unless the Owner is liable and pays Contractor for such delays, impacts, disruptions or acceleration.
Subcontract, "Time Performance," ¶ 6 (d), at 2. The Subcontract also contains an exculpatory clause specifically precluding claims arising from re-sequencing of the construction work, and/or discontinuities in Premier's work:
The Subcontractor understands that work of this trade may not be continuous and that he may be required to work out of sequence and/or leave a portion of work out due to coordination at the direction of the General Contractor. There shall be no charges for "comeback time" or out of sequence work.
Subcontract, "Time of Performance," ¶ D (3), at 17. Trataros previously submitted Premier's claims in this action to the owner, DASNY and/or TDX (Curis Aff., ¶ 30). To date, DASNY has refused to settle Premier's delay claim.
The complaint contains three causes of action. In Count 1, Premier seeks a declaratory judgment voiding the no-damage-for-delay clause on the ground of fraud in the inducement. Count 2 is for breach of contract against Trataros. Count 3 is for breach of the payment bond against Travelers. However, as more fully discussed below, Premier mistakenly sued Travelers on the payment bond relating to Contract No. 15 ( see Complaint, ¶¶ 7, 46), rather than the one relating to Contract No. 16, under which Premier performed its work. Premier also seeks attorney's fees against both Premier and Travelers pursuant to State Finance Law § 137 (4) (c).
It is well settled that no-damage-for-delay clauses are enforceable in New York
( Corinno Civetta Constr. Corp. v City of New York, 67 NY2d 297; accord Universal/MMEC, Ltd. v Dormitory Auth. of State of New York , 50 AD3d 352 [1st Dept 2008]). Exculpatory clauses tend to be enforced because their presence in a contract evidences the parties' "unmistakable intent' that . . . the contractor rather than the contractee is to absorb damages occasioned by contractee-caused delay" ( Kalisch-Jarcho, Inc. v City of New York, 58 NY2d 377, 384). In support of its motion for partial summary judgment, Trataros contends that, pursuant to the no-damage-for-delay clause contained in the Subcontract, Premier is barred, as a matter of law, from asserting any claims against Trataros in the instant action that are based on delay.
In opposition to the motion, Premier contends that, although a no-damage-for-delay clause is generally enforceable, it does not erect an absolute bar to the assertion of a claim for breach of contract through conduct causing delay. There are four exceptions to a no-damage-for-delay clause:
Generally, even with such a clause, damages may be recovered for: (1) delays caused by the contractee's bad faith or its willful, malicious, or grossly negligent conduct, (2) uncontemplated delays, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee, and (4) delays resulting from the contractee's breach of a fundamental obligation of the contract.
Corinno Civetta Constr. Corp. v City of New York, 67 NY2d at 309. However, the party seeking to circumvent a no-damage-for-delay clause bears a heavy burden of proof ( Matter of Manshul Constr. Corp. v Board of Educ. of City of NY, 160 AD2d 643 [1st Dept 1990]).Premier argues that its claims are exempt from the no-damage-for-delay provision because fraud in the inducement vacates the contractual defense provided by the no-damage-for-delay clause. Premier further argues that no-damage-for-delay provision does not apply because the delays at issue were: (1) caused by Trataros' bad faith; (2) not contemplated at the time the Subcontract was entered into; and (3) were caused by Trataros's breach of a fundamental obligation of the Subcontract. Finally, Premier argues that the exculpatory provision does not apply because DASNY has already paid Trataros delay damages in connection with Premier's work. Premier, however, fails to raise a genuine issue of material fact with respect to any of these contentions and thus, the Subcontract's no-damage-for-delay clause bars the delay claims asserted by Premier in this action.
With respect to its contention that fraudulent inducement voids the no-damage-for-delay clause, Premier alleges that, in soliciting Premier's bid, Trataros provided materially inaccurate information about the project schedule so as to induce Premier to submit a lower price for the roofing work than it would have had it known the true sequence and timing of work, and despite knowing that the project already faced significant delays by the time Premier became involved ( see Complaint, ¶ 38; Bland Aff., ¶¶ 7-9). Premier further alleges that it reasonably relied on the information provided by Trataros in bidding for the contract, including the Sample CPM Schedule ( see Bland Aff., ¶ 6).
To properly plead a common-law fraud claim, a plaintiff must allege a misrepresentation of a material fact, falsity of the misrepresentation, scienter, plaintiff's reasonable reliance on the alleged misrepresentation, and injury resulting from the reliance ( Small v Lorillard Tobacco Co., Inc., 94 NY2d 43). The absence of any of these elements is fatal to a recovery on a claim for fraud ( Shea v Hambros PLC, 244 AD2d 39 [1st Dept 1998]).
The allegations set forth in the complaint, as well as Premier's submissions in opposition to the motion, are insufficient to support a claim of fraud in the inducement. First, Premier's claim does not relate to a representation of a material fact. Rather, Premier claims that the Sample CPM Schedule provided to it before contract formation was not followed. Specifically, Premier contends that the Sample CPM Schedule contemplated that the roofing subcontractor would have open access to the roof and relevant preparation areas, with minimal interference from other subcontractors and workers performing work on other portions of the building (Opp Br., at 3). However, a construction schedule, which is by definition a forward-looking document, and necessarily subject to amendment and revision as may be warranted by the continually changing nature of construction, cannot be characterized as a representation, upon which reliance can be reasonably placed ( see Black's Law Dictionary, 8th Ed [2004] [defining "representation" as a "presentation of fact either by words or by conduct made to induce someone to act, esp. to enter into a contract"]). This is particularly the case with respect to a construction schedule which is contractually stipulated as being a mere sample and subject to change ( see Subcontract, at 8; "Time of Performance," ¶ D (3), at 17).
In addition, a review of the Sample CPM Schedule reveals that it is merely a bar graph depicting TDX's anticipated plan for the construction activities of a single prime contract, Contract No. 16. Nothing on the bar graph relied upon by Premier "represents" anything at all regarding open access, preparation areas or the amount of interference to be expected from other subcontractors and workers on other parts of the building
Moreover, to the extent that Premier contends that the Sample CPM Schedule was a contractual promise of future performance, "[a] failure to perform promises of future acts is merely a breach of contract. . . . [and] [a] cause of action for fraud does not arise when the only fraud charged relates to a breach of contract" ( Tesoro Petroleum Corp. v Holborn Oil Co., 108 AD2d 607, 607 [1st Dept 1985]; see also J.E. Morgan Knitting Mills, Inc. v Reeves Bros., Inc., 243 AD2d 422, 423 [1st Dept 1997] [fraud claim properly dismissed as it was "based on the same facts as underlie the contract claim and is not collateral to the contract"]).
Premier also cannot establish that its reliance on the Sample CPM Schedule was reasonable. It is well settled that establishing reliance is "essential to a claim for fraud" ( Valassis Communications, Inc. v Weimer, 304 AD2d 448, 449 [1st Dept 2003], lv denied 2 NY3d 794 [2004]). To show reliance sufficient to prevail on a claim for fraud, a plaintiff must show that he acted or refrained from acting based on the alleged misrepresentation or omission ( id). In order to recover for fraud or fraudulent concealment, the reliance must be "reasonable" or "justifiable" ( Stuart Silver Assoc., Inc. v Baco Dev. Corp., 245 AD2d 96 [1st Dept 1997]; Matter of Jack Kent Cooke Inc. (Saatchi Saatchi N. Am.), 222 AD2d 334 [1st Dept 1995]). In this regard, courts have uniformly held that "[w] here a party has the means to discover the true nature of the transaction by the exercise of ordinary intelligence, and fails to make use of those means, he cannot claim justifiable reliance on defendant's misrepresentations" ( Stuart Silver Assoc., Inc. v Baco Dev. Corp., 245 AD2d at 98-99]). Thus, when a party to a transaction has been effectively "put on notice of the existence of material facts" contrary to the representations of the other contracting party, and then fails to make itself aware of those facts, the party "may truly be said to have willingly assumed the business risk that the facts may not be as represented" ( Rodas v Manitaras, 59 AD2d 341, 343 [1st Dept 1990]). When the purported reliance is unreasonable as a matter of law, summary judgment is appropriate ( see Global Minerals and Metals Corp. v Holme , 35 AD3d 93 [1st Dept 2006]).
Here, Premier's claim of reliance on the Sample CPM Schedule is unreasonable as a matter of law. The Subcontract clearly identifies the document as being only a "sample" schedule ( see Subcontract, at 8). Moreover, the Sample CPM Schedule had a control date of April 15, 1998, and therefore was at least seven months old before Premier began negotiating with Trataros. Indeed, by the time Premier finalized the Subcontract on April 29, 1999, the Sample CPM Schedule indicated that temporary roofing an activity within Premier's scope of the work began in early March of 1999, one month earlier than Premier's execution of the Subcontract ( see Sample CPM Schedule, at Activity 1129, "Temporary Roof," scheduled to begin circa March 7, 1999]).
Furthermore, a claim of detrimental reliance predicated upon a failure to disclose cannot be sustained where "the clear provisions of the negotiated, arms-length [contract] . . . explicitly anticipated" future actions contrary to the purported misrepresentation ( DePinto v Ashley Scott, Inc., 222 AD2d 288, 289 (1stDept 1995] [consultant's failure to disclose terminal illness was negated by contract provision specifying that contractee remains obligated to pay consultant's estate following his death]). Likewise, here, the Subcontract makes clear that the enclosed schedule was merely a "sample," specifically contemplates changes to the schedule and/or re-sequencing of Premier's work, and that Premier will work "when and where directed by Trataros" {see Subcontract, "Time of Performance, ¶¶ D [1] and [3], at 17). Thus, Premier's alleged reliance on the precise order and timing of the Sample CPM Schedule was unreasonable as a matter of law.
Additionally, the Subcontract obligated Premier to undertake an independent investigation of the Project site and all information provided by Trataros:
Subcontractor . . . acknowledges that, prior to the execution of this Subcontract, it has (a) by its own independent investigation . . . ascertained (i) the Work required by this Subcontract, (ii) the conditions involved in performing the Work, and (iii) the obligations of this Subcontract and the Contract Documents; and (b) verified all information furnished by Contractor or others satisfying itself as to the correctness and accuracy of that information. Any failure by Subcontractor to independently investigate and become fully informed will not relieve Subcontractor for its responsibilities hereunder.
Subcontract, "Subcontractor's Investigations and Representations," ¶ 3, at 2. The Subcontract also provides:
The Subcontractor has visited and carefully examined the project site and is familiar with the existing conditions and difficulties that may affect the execution of own work. . . . The Subcontractor is cautioned that due to the location of this job he may encounter certain areas of special coordination involving traffic congestion, building access, security requirements, material delivery, etc. It is understood that the Subcontractor is aware of these conditions and that the Subcontractor will not attempt to seek additional monies for hardships that may arise due to his having to take special measures and precautions regarding the same.
Id., "General Conditions," ¶ 9, at 15. Contractual clauses like these, which obligate a bidder to inspect site conditions and investigate the requirements of its work, are routinely enforced according to their terms, even when the disappointed party alleges that the contractee misrepresented site conditions ( see IFD Constr. Corp. v Corddry Carpenter Dietz and Zack, 253 AD2d 89, 94] ["In the face of its contractual obligations and responsibilities to the contrary, [plaintiff] as a matter of law, cannot be heard to say that it reasonably relied upon any alleged misrepresentations"]).
Despite its contractual obligation to investigate the Project site, the conditions that would be implicated in performing its work, and its obligations under the Subcontract and Contract Documents, Premier admits that it never visited the Project site before executing Subcontract. Bland testified that he did not inspect the site before executing the Subcontract, nor did he contact TDX, the construction manager, for any information regarding the Project (Bland Dep, at 90). Bland reviewed the entire Subcontract before executing it ( id. at 156). The Subcontract was also reviewed by Premier's in-house counsel, Michael Feinberg ( id. at 23-24; Feinberg Dep., at 13-14 [Rogers Aff., Exh 9]). Neither Feinberg nor Moriarty, Premier's former Project Manager, performed any inspection of the Project site before Premier executed the Subcontract (Moriarty Dep., at 58 [Rogers Aff., Exh 8]; Feinberg Dep., at 16). Indeed, before submitting its bid estimate, Premier undertook no independent investigation of the Project other than to review the contract documents it had received (Bland Dep., at 154; Moriarty Dep., at 58).
In the complaint, Premier alleges that it was impacted by lack of storage space, by other contractors' use of the roofs for materials storage, by the presence of other contractors on the roofs, and by the ongoing nature of the curtainwall operations, despite Trataros' alleged representation that such work would not be ongoing during Premier's subcontract performance. However, Trataros presents evidence photographs of the building's exterior taken by TDX between November 2, 1998 and December 30, 1998, during the time of Premier's bid period which indicates that an inspection of the site by Premier would have disclosed that exterior paneling, windows and curtainwalls had not yet been installed, the lack of space for storage materials, and that scaffolding had been installed on top of two of the roofs within Premier's scope of work ( see Curis Aff., Exh G and ¶¶ 19-21). Thus, Premier's alleged reliance is unreasonable as a matter of law for this reason as well.
Finally, other than wholly conclusory allegations, Premier has proffered no evidence to even suggest that Trataros knew that any of its representations were false, or that it intended Premiere to rely ( see Bland Aff., ¶¶ 11 ["Trataros knowingly withheld material information from Plaintiff through and including April 29, 1999"]; Bland Aff., ¶ 13 ["The only reason for defendant Trataros to have withheld (the material information) was to induce me to give a price for the roofing work that was unreasonably low"]).
In opposition to the motion, Premier contends, for the first time, that fraudulent concealment also bars the no-damage-for-delay clause, because prior to the time that Premier signed the Subcontract, Trataros withheld significant information about delays to the Project, including updated project schedules and notices of delay. Specifically, Premier alleges that during 1998 and up until April 28, 1999, Trataros received additional Project Schedules from DASNY, but failed to disclose this information to Premier ( see Bland Aff., ¶ 7). Premier also alleges that Trataros failed to give notice to Premier of a November 1998 stop work order on the curtainwall, and failed to disclose a major revision to the Project embodied in Bulletin 25, dated December 1, 1998, pursuant to which the size of the building and the curtainwall were changed ( see Premier's Statement of Disputed and Material Facts, ¶¶ 4, 6). Finally, Premier alleges that Trataros failed to disclose that it was issuing demands for time extensions and notices of delay to DASNY as a result of the stop work order and Bulletin 25 (Bland Aff., ¶ 8).
It is well established that, absent a fiduciary relationship between the parties, a duty to disclose arises under the "special facts" doctrine where "one party's superior knowledge of essential facts renders a transaction without disclosure inherently unfair'" ( Jana L. v West 129th St. Realty Corp. , 22 AD3d 274, 277 [1st Dept 2005], quoting Swersky v Dreyer and Traub, 219 AD2d 321, 327 [1st Dept 1996], appeal withdrawn 89 NY2d 983; see also P.T. Bank Cent. Asia NY Branch v ABN AMRO Bank N. V., 301 AD2d 373 [1st Dept 2003]). The "special facts" doctrine requires the satisfaction of a two-prong test: that the material fact was information "peculiarly within the knowledge of" Trataros, and that the information was not such that could have been discovered by Premier through the "exercise of ordinary intelligence'" ( Jana L. v West 129th St. Realty Corp., 22 AD3d at 278, quoting Black v Chittenden, 69 NY2d 665, 669).
Premier's effort to bring its claim within the "special facts" exception is unsuccessful, as Premier completely fails to present any evidence with respect to Trataros's knowledge of the schedule revisions, the ways that the allegedly concealed facts would have been material or essential to its bid calculation, or any attempt to meet its duty of inquiry.
First, as discussed above, in light of the duty to investigate imposed upon Premier by the explicit terms of the Subcontract ( see Subcontract, "Subcontractor's Investigations and Representations, ¶ 3, at 2; "General Conditions," ¶ A [9], at 15), as well as the evident facial inaccuracies of the Sample CPM Schedule, Premier clearly had an obligation to make inquiries beyond simply perusing the contract documents. Thus, Premier fails to establish that the information was not such that could have been discovered by Premier through the" exercise of ordinary intelligence'" ( Jana L. v West 129th St. Realty Corp., 22 AD3d at 278).
Likewise, although Premier claims that Trataros "concealed" the schedule revisions in order to induce Premier to agree to perform the Subcontract for a lower price (Bland Aff., ¶ 13), Premier fails to submit any evidence that any of the schedules it relies upon were ever received by Trataros. There are no facts in evidence demonstrating that the schedules were circulated to the co-prime contractors generally, or to Trataros specifically. To the contrary, Tom Spinthourakis, former Trataros' employee and current TDX employee, testified that he did not recall ever seeing either the November 16, 1998 or December 15, 1998 schedules referenced by Premier in the Bland Affidavit (Spinthourakis Dep., at 33-36, 43 [Second Rogers Aff., Exh C]). Further, despite Bland's recitation to the contrary, Premier fails to present cover letters forwarding the schedules to Trataros or even a single co-prime. Thus, Premier fails to establish that the schedule revisions were "peculiarly with the knowledge of" Trataros ( Jana L. v West 129th St. Realty Corp., 22 AD3d at 278).
Furthermore, Premier fails to present any evidence linking the November 1998 stop work order and Bulletin 25 to any damages that it suffered, other than conclusory claims that it was substantially delayed by the stop work order and by Bulletin 25. Thus, Premier offers no proof of how the assumptions reputedly derived from the Sample CPM Schedule impacted the dollar values used in its bid, or what its bid would have been if Trataros had provided it with the updated schedules, and informed it about Bulletin 25 and the stop work order.
Rather, Premier merely states, in a wholly conclusory fashion, that if it had been furnished with the above information, it "would not have signed the subcontract or demanded a higher price" ( see Bland Aff., ¶ 11). Unsupported, conclusory statements such as this are insufficient as a matter of law to create a triable issue of fact ( Maiorano v Price Chopper Operating Co., Inc., 221 AD2d 698, 699 [3d Dept 1995] ["Mere conclusions based upon surmise, conjecture, speculation or assertions are without probative value" in opposing a motion for summary judgment]; see also Black v Loomis, 236 AD2d 338 [1st Dept 1997]).
In fact, Premier presents evidence that the stop work order was lifted on December 9, 1998, more than four months before Premier ever executed the Subcontract (Second Rogers Aff., ¶¶ 2-3; Exhs A and B). Moreover, contrary to Premier's representations, by its own terms, the stop work order was not a general stop work order on the whole project but related only to a separate prime contract Contract 15 and merely placed a hold upon "the release and fabrication" of components for the exterior siding, curtainwall and related windows ( id.). Thus, given that the stop work order was released almost two weeks after it was put in place on a separate prime contract, Premier does not raise any triable issue of fact with respect to the causal connection between the stop work order and its damages.
Similarly, Bulletin 25 on its face requires revisions to a number of contract drawings set forth as an attachment. Yet, none of the drawings identified explicitly refer to the Project's roof or roofing work ( see Premier's Statement of Material and Disputed Facts, Exhibit I). Premier offers no evidence to connect its alleged damages to Bulletin 25 other than further conclusory allegations ( see Opp Br., at 9 ["lack of access to roofs, issues in hoisting materials, and inefficiencies in installation of roofs . . . all . . . were part of Bulletin 25"]).
Because Premier submits no evidence demonstrating the linkage between the stop work order and Bulletin 25 and Premier's alleged damages, neither the stop work order, Bulletin 25, nor the associated "notices of delay" submitted in connection therewith, can be considered to be "essential facts," such that Trataros was obligated to disclose them to Premier before privity existed between these parties ( see Swersky v Dreyer and Traub, 219 AD2d 321, 327 [1st Dept 1996]).
Premier has also failed to raise a material issue of fact in support of its allegations regarding Trataros's gross negligence or willful misconduct. Although an exculpatory clause will not exonerate a party from its acts of gross negligence or willful misconduct, a determination of gross negligence requires a finding of something more than active interference, i.e., willfulness, maliciousness, or bad faith ( see Kalisch-Jarcho, Inc. v City of New York, 58 NY2d 377, supra). The standard of proof required under the "bad faith" exception is particularly high the wrongdoing must be so extreme as to "contravene[e] . . . acceptable notions of mortality" ( id. at 385). Thus, in order to establish bad faith, Premier must make "an extraordinary showing of a disingenuous or dishonest failure to carry out a contract" ( Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, 437, cert denied 410 US 931). Premier has failed to satisfy its evidentiary burden by providing any evidence demonstrating Trataros's alleged gross negligence or misconduct.
In support of its allegations of bad faith, Premier repeats its fraudulent inducement claim, and alleges that Trataros "obtained a lower price from Premier by fraud in the inducement" by making materially false and misleading statements concerning the sequencing and timing of the work (Complaint, ¶ 40). However, other than wholly conclusory allegations ( see Bland Aff., ¶¶ 11 ["Trataros knowingly withheld material information from Plaintiff through and including April 29, 1999"]; ¶ 12 ["That Defendant Trataros withheld significant information about delays to the Project pre-dating my signing the subcontract was an act of bad faith"]; ¶ 13 ["The only reason for Defendant Trataros to have withheld the updated job schedules and notices of delay . . . was to induce me to give a price for roofing that was unreasonably low"]), Premier has failed to provide any concrete evidence of Trataros's malice or willful misconduct regarding the scheduling or sequencing of Premier's work.
Because the record contains no evidence of willful misconduct or "conduct by [Trataros] so grossly negligent as to constitute a predicate for a delay damage claim in the face of the contract's broad exculpatory clause," Premier cannot avoid the contractual bar to such damages ( Buckley Co. v City of New York, 121 AD2d 933, 934 [1st Dept 1986], appeal dismissed 69 NY2d 742; see Bac-Jat Contr., Inc. v New York City Hous. Auth. , 1 AD3d 128 [1st Dept 2003] [affirming lower court's order granting defendant's motion for summary judgment dismissing plaintiff's delay claims based on plaintiff's failure to demonstrate defendant's gross negligence]; T.J.D. Constr. Co., Inc. v City of New York, 295 AD2d 180 [1st Dept 2002] [same]; Landis Gyr Powers, Inc. v Berley Indus., Inc., 298 AD2d 435 [2d Dept 2002] [same]).
Next, Premier argues that its delay claims are based on delays that were not contemplated when it entered into the Subcontract. The "uncontemplated delay" exception only applies if the claimant can demonstrate that "the delays were wholly unanticipated" ( Matter ofManshul Constr. Corp. v Board of Educ. of City of NY, 160 AD2d at 644). If the alleged delays were foreseeable under a project's particular circumstances, or were discussed in the contract, damages arising from those delays are barred ( Corinno Civetta Constr. Corp. v City of New York, 67 NY2d at 310 (exculpatory clauses encompass delays that were "reasonably foreseeable, arise from the contractor's work during performance, or which are mentioned in the contract"]). For example, when an owner uses multiple co-prime contractors to construct a project, the risk of poor performance, and/or inactivity, by other co-primes is foreseeable, and within the parties' contemplation ( Gottlieb Contr., Inc. v City of New York, 86 AD2d 588, 589 [1st Dept 1982], affd 58 NY2d 1-51 [1983] ["other prime contractors' inaction, faulty performance and defaults under their contracts" are all contemplated delays]). Similarly, a general contractor's inept administration of its contract, allegedly causing delays for its subcontractor, is foreseeable and therefore, contemplated ( S.N. Tannor, Inc. v A.F.C. Enters., Inc., 276 AD2d 363 [1st Dept 2000]; see also T.J.D. Constr. Co., Inc. v City of New York, 295 AD2d 180, supra [poor planning and scheduling was within scope of no-damage-for-delay clause]).
Premier complains of being required to perform its roofing work concurrently with other trade contractors and/or having to coordinate its work with that of other trade contractors (Complaint, ¶ 26). Premier alleges, inter alia, that it had to "stop and start work," because certain areas on the roof were "occupied by other trades," ( id., ¶ 26 [i]) and/or because other trade contractors "had not completed [their] work" ( id.), and/or because "other trades had material stored on the roof or were working in areas needed for Premier for its work" ( id., ¶ 26 [c]); that "roof surfaces were not patched" by other trades ( id., ¶ 26 [j]); that other trades had installed the 14th floor roof incorrectly, resulting in "poor pitch" ( id., ¶ 26 [k]); that the "roof decks were not properly finished and ready for roofing" ( id., ¶ 26 [h]); and that "the roof, dains and curbs" to be performed by other trades "were not complete" ( id., ¶ 26 [g]). These allegations amount to nothing more than allegations of poor contract administration, poor performance by other co-prime contracts and/or subcontractors, and inactivity of other co-primes and/or subcontracts. Therefore, these delays are all associated with foreseeable risks of construction formation and thus, were within the parties' contemplation ( see Gottlieb Contr., Inc. v City of New York, 86 AD2d 588, supra; S.N. Tannor, Inc. v A.F.C. Enters., Inc., 276 AD2d 363, supra).
The delays alleged by Premier were also contemplated by the Subcontract. Where, as here, a subcontract discusses a potential cause (or class of causes) of delay, subsequent delays arising from that cause are considered to have been contemplated by the parties ( see Blau Mech. Corp. v City of New York, 158 AD2d 373, 375 [1st Dept 1990] [court held that the parties had contemplated claimant's work may change during performance, because the contract gave contractee "the right . . . to modify or change the contract, and . . . set forth methods of payment for . . . extra work" and therefore, delay damages were not recoverable]; Visconti Corp. v LaBarge Bros. Co., 272 AD2d 948 [4th Dept 2000] [subcontract provision prohibiting claims arising from subsurface conditions on site was sufficient to establish that delays arising from unknown subsurface conditions were within the parties' contemplation at contract formation]). It is not necessary that the contract specifically contemplate the exact occurrences giving rise to the delay; all that is required is that the class of occurrence have been contemplated ( Blau Mech. Corp. v City of New York, 158 AD2d 373, supra; Buckley Co. v City of New York, 121 AD2d at 934 ["while the conditions themselves may not have been anticipated, the possibility . . . of their arising was contemplated and addressed by the parties in their agreement"]).
Premier's central argument is that the purported re-sequencing of the Sample CPM Schedule led to extensive delays and impacts, as a result of having to work while subject to inefficiencies imposed by DASNY, TDX and other co-primes and/or subcontractors on the Project. Premier further alleges that Trataros guaranteed it could perform the Subcontract unimpeded by any inefficiency. This position, however, is flatly contradicted by the language of the Subcontract. The Subcontract provides that "work of this trade may not be continuous," and that Premier "may be required to work out of sequence and/or leave a portion of work out due to coordination [and] at the direction of the General Contractor" (Subcontract, "Time of Performance, ¶ D [3], at 17). The Subcontract also provides that "there shall be no charges for "comeback time" or "out of sequence work" ( id.). Similarly, Premier was advised that its work will "commence . . . as directed by General Contractor provided that the work of others has advanced sufficient to permit such a start" ( id., ¶ D [4]). Premier was further required to "coordinate its work with the work of Contractor, other subcontractors and Owner's other builders, if any, so no delays or interference will occur in any part of all of the Project" ( id., "Time Performance," ¶ 6 [d], at 2). The Subcontract also advises that:
Subcontractor is cautioned that due to the location of this job he may encounter areas of special coordination involving traffic congestion, building access, security requirements, material delivery, etc. It is understood that the Subcontractor is aware of these conditions and that the Subcontractor will not attempt to seek additional monies for hardships that may arise due to his having to take special measures and precautions regarding the same.
Id., "General Conditions," ¶ A(9), at 15.
Thus, the Subcontract contemplates changes to the sequence of Premier's work, that its work may be interrupted, that the start of its work is contingent upon the work of unspecified "others" having "advanced sufficiently," and that Premier will work as directed by Trataros, subject to the requirements of Project coordination.
Further, the Subcontract explicitly contemplates revisions and changes to the construction schedule:
[w]ork under this Subcontract shall commence immediately upon receipt of instructions from the General Contractor and shall proceed when and where directed, with sufficient labor and manpower, to allow the entire Project to be completed in accordance with the Project Construction Schedule. The work under this Subcontractor shall follow all interim schedules that may be issued by the General Contractor, as the job conditions require.
Id., "Time of Performance," ¶ D (1), at 17. Paragraph 6 of the Subcontract also provides that:
a. Subcontractor will proceed with the Work . . . in accordance with the Contractor's schedule, as reasonably amended from time to time. . . . Subcontractor shall be entitled to additional compensation for compliance with schedule amendments only to the extent, if any, that the Contract Documents entitle to Contractor to reimbursement.
b. If requested by the Contractor, Subcontractor shall submit a detailed schedule for performance of the Subcontract. . . . Contractor may, at its sole discretion, direct Subcontractor to make reasonable modifications and revisions in said schedule.
Id., "Time Performance, ¶¶ 6 (A), 6(B), at 2. Thus, the Subcontract specifically contemplates that interim schedules will be issued, that amendments may occur to the schedule, that Premier may be required to submit its own schedule for its work, and that Trataros may modify and revise Premier's schedule "at its sole discretion." In light of this, the Subcontract clearly contemplates that the Sample CPM Schedule is just that, a sample, which may be altered, and that Premier's work may be re-sequenced. Thus, the delays complained of by Premier were well within the parties' contemplation at the time of contract formation, and therefore, Premier's claims are wholly within the scope of the exculpatory clauses in its Subcontract.
Thus, Premier has failed to raise a genuine issue of material fact in support of its allegations that the delays encountered by Premier were not contemplated by Premier when it entered into the Subcontract ( see Visconti Corp. v LaBarge Bros. Co., Inc., 272 AD2d 948, supra). "[W]here, as here, the conduct was specifically contemplated by the parties when they entered into the agreement," the no-damage-for-delay clause precludes recovery of delay damages ( North Star Contr. Corp. v City of New York, 203 AD2d 214, 214-215 [1stDept 1994]; accord A.R. Mack Constr. Co., Inc. v Central Sq. Cent. School Dist, 278 AD2d 839 [4th Dept 2000], lv denied 96 NY2d 712; see also Matter of Teddy Giannopulos Gen. Contrs., Inc. v New York City Hous. Auth., 260 AD2d 253, 253 [1st Dept 1999] [denying petitioner's claims for delay damages where "all of the delays petitioner points to were of a type contemplated by the contract"]).
Premier also argues that its delay claims are not precluded by the no-damage-for-delay clause, because the delay claims resulted from Trataros's fundamental breach of an affirmative obligation expressly imposed upon Trataros by the Subcontract. Specifically, Premier alleges that Sample CPM Schedule "constituted a fundamental contract obligation which was breached by Trataros to the detriment of Premier when the work on the Project was resequenced" (Complaint, ¶ 38).
In Corinno Civetta, the Court of Appeals addressed the issue of what type of conduct constitutes a "fundamental" breach of a contract that would render a no-damage-for-delay clause unenforceable. After noting that this exception should only be "applied to an especially narrow range of circumstances," the Court held that:
Because the exculpatory clause is specifically designed to protect the contractee from claims for delay damages resulting from its failure of performance in ordinary, garden variety ways, delay damages may be recovered in a breach of contract action only for the breach of a fundamental, affirmative obligation the agreement expressly imposes on the contractee.
67 NY2d at 313 (emphasis added); see also Earthbank Co., Inc. v City of New York, 172 AD2d 250, 250 [1st Dept], appeal denied 78 NY2d 855 ["While delay damages may still be recovered even though a no-damage-for-delay clause is contained in the contract when there is a breach by the City of a fundamental, affirmative obligation,' such obligation must be express and not implied"]).
Traditionally, a breach of such a "fundamental, affirmative obligation" has been found in circumstances where the subcontractor's access to the work or ability to proceed is blocked, such as where the contractee "failed in its obligation to obtain title to the work site or make it available to the contractor so it may commence construction of the agreed upon improvements" ( Corinno Civetta Constr. Corp. v City of New York, 67 NY2d at 313). Here, in contrast, Premier's allegations have no bearing upon an alleged failure to obtain property rights. Rather, Premier claims that the sequence of work activities outlined in the Sample CPM Schedule constituted a fundamental contractual obligation. However, the Subcontract itself explicitly provides that the schedule is subject to change.
In Modern Mosaic Ltd. v Sweet Assocs. (23 AD3d 880 [3d Dept 2005]), a remarkably similar case, a subcontractor brought suit against a contractor alleging "delay damages" caused by a change to the start date shown on the project schedule, and by the contractor's alleged failure to provide adequate hoisting. Under the subcontract, the contractor reserved the right to change the schedule during the course of the project. Further, nothing in the subcontract granted the subcontractor exclusive use of the hoist; to the contrary, the subcontract provided that access to the hoist was shared with other trades on the project. The Court ruled that the subcontractor's claims of breach and damages were irreconcilable with the unambiguous terms of the subcontract, which provided the subcontractor with "full knowledge" and "notice" that the schedule was subject to change and that unimpeded access to the hoist was not provided for in the subcontract. And that the contractor's "postponement of the start date" of the project "did not constitute a breach of the subcontract," despite the subcontractor's allegation that its costs increased as a result. The Court further dismissed the subcontractor's claim for delay damages arising from impeded access to the hoist, because the subcontractor had notice from the outset that hoist service was going to be shared among various trades.
Likewise, here, Premier's claim that the Sample CPM Schedule constituted a fundamental contractual obligation cannot be reconciled with the Subcontract's provisions. The Subcontract itself characterizes the construction schedule in question as a "sample," and further provides that the schedule is subject to change, and that Premier's work may be re-sequenced (Subcontract, "Time of Performance," ¶ D [3], at 17). The Subcontract further provides that Premier's commencement of work is contingent upon the status of work performed by others, and Premier will work when and where directed by Trataros. Thus, Premier had notice from the outset that the schedule was subject to change.
Since, Premier has failed to raise a genuine issue of material fact regarding Trataros's alleged fundamental breach of an affirmative obligation expressly imposed upon Trataros by the Subcontract, its delay claims must thus be dismissed ( see Corinno Civetta Constr. Corp. v City of New York, 67 NY2d 297, supra [holding that plaintiffs failure to identify affirmative obligation express in contract that city allegedly failed to perform warranted dismissal of plaintiffs delay claims due to no-damage-for-delay clause]; S.N. Tannor, Inc. v A.F.C. Enters., Inc., 276 AD2d 363, supra [same]; Earthbank Co., Inc. v City of New York, 172 AD2d 250, supra [same]).
Finally, Premier argues that Trataros may not rely on the no-damage-for-delay clause because, pursuant to the Subcontract, Premier may receive delay damages if "the Owner is liable and pays Contractor for such delays, impacts, disruptions or acceleration" (Subcontract, "Time of Performance," ¶ 6 [d]). Premier alleges that "there are at least 7 change orders issued to Trataros for delay damages" (Bland Aff., ¶ 16 and Exh D) and that thus, it is obvious that Trataros "was paid for delays and disruptions" by DASNY ( id., ¶ 17). However, of the nine change orders attached to the Bland Affidavit, only one facially relates to a claim for delay damages, and this change order had nothing to do with Premier. Rather, it related one of the "interior" subcontractors ( see id., change order GC2-126 [reciting that it was issued in settlement of the lost productivity portion of a delay claim asserted by G.M. Crocetti, Inc., a flooring subcontractor]). Thus, Premier fails to raise any issue of fact with respect to DASNY's payment to Trataros of delay damages relating to Premier's work under the Subcontract.
Accordingly, Trataros's motion for summary judgment dismissing the complaint against it is granted.
Defendants also move for summary judgment dismissing the complaint against Travelers on the ground that Premier does not have a cognizable claim against the bond sued upon in the complaint. Defendants' motion for summary judgment on this basis is granted.
A surety's obligation under its bond "is construed strictissimi juris in the surety's favor and [a surety] is not liable beyond the express terms of the contract" ( Bankers Trust Hudson Valley N.A. v Christie, 68 AD2d 969, 969 [3d Dept 1979]; see also Varlotta Constr. Corp. v Sette-Juliano Constr. Corp., 234 AD2d 183, 183 [1st Dept 1996] ["a surety's obligations are limited to those it undertakes in its bond"]).
While Premier has asserted a claim against a bond administered by Travelers in connection with Contract No. 15 ( see Complaint, ¶¶ 7, 46 [referencing bond issued in connection with Contract No. 15]), all labor and materials Premier provided for the Project were under Contract No. 16 ( see Curis Aff., ¶ 17). This is explicit on the face of the Subcontract ( see Subcontract, at 1 ["WHEREAS, Contractor desires to subcontract certain work specified in the Contract (No. 16), and the Subcontractor desires to perform said work at the prices and upon the terms and conditions hereinafter expressed"]). The bond sued upon by Premier recites on its face that the surety's obligation relates to "all labor and material used or reasonably required for use in the performance of . . . Contract [No. 15] [ see Scarpellino Aff., ¶ 10 and Exh A, ¶ 1). Because Premier's claim does not come within the bond's scope Contract No. 15 its claim against Travelers must be dismissed.
Although Premier cross-moves to amend the complaint to plead the correct surety bond relating to Contract No. 16, the cross motion is denied. It is well settled that payment bonds attach to the underlying construction contract, and must be construed in conjunction therewith ( Varlotta Constr. Corp. v Sette-Juliano Constr. Corp., 234 AD2d 183, supra). Thus, the surety's exposure is co-extensive with the liability assumed by its named "principal," the contractor ( Lamparter Acoustical Prods. Ltd. v Maryland Cas. Co., 64 AD2d 693 [2d Dept 1978]). Where, as here, the underlying contract between the contractor and the subcontractor contains an exculpatory clause prohibiting delay damages, "the surety cannot be held liable for delay damages" ( id. at 693; see also Universal/MMEC, Ltd. v Dormitory Auth. of State of New York , 50 AD3d 352 ). Therefore, even if Premier were permitted to amend the complaint to plead the bond that covers Contract No. 16, Travelers would have no liability under the bond. Accordingly, Premier's cross motion for leave to amend the complaint is denied.
Finally, I note that although defendants denote their motion as one for "partial summary judgment," in light of the above determination, the entire complaint is being dismissed against both defendants.
I have considered the remaining claims, and I find them to be without merit.
Accordingly, it is
ORDERED that defendants' motion for summary judgment is granted and the complaint is dismissed with costs and disbursements to defendants as taxed by the Clerk of the Court upon the submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff's cross motion for leave to amend the complaint is denied; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly.