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Aniero Concrete Co., Inc. v. the Aetna Cas. Surety Co.

United States District Court, S.D. New York
Oct 24, 2002
94 Civ. 9111 (CSH) (S.D.N.Y. Oct. 24, 2002)

Summary

stating that the Najjar court had held that amounts paid to a subcontractor should be counted in tabulating damages and quoting from the case that "the amount of [an arbitration] award plus other amounts paid to [the subcontractor] would seem to constitute the total amount paid or owed to [the subcontractor]"

Summary of this case from Fluor Daniel Caribbean, Inc. v. Humphreys (Cayman) Limited

Opinion

94 Civ. 9111 (CSH)

October 24, 2002


MEMORANDUM OPINION AND ORDER


This Order resolves two motions in limine brought by Aetna Casualty and Surety Company [hereafter "Aetna"] that, if granted, would prevent Aniero Concrete Company [hereafter "Aniero"] from presenting evidence relating to two categories of alleged damages, bond premium payments and attorneys' fees and arbitration fees. Aetna contends that the exclusions are appropriate because the costs involved do not fall within the scope of recoverable damages under a quantum meruit claim.

Under a quantum meruit claim, a party may "recover its actual job costs for work, labor and services performed and material furnished, plus an allowance for overhead and profit." Maris Equip. v. Morganti, 163 F. Supp.2d 174, 186 (E.D.N.Y. 2001). Quantum meruit damages must be "based upon `a definite and logical connection between what is proven and the damages sought to be recovered' and cannot be speculative or conjectural." Clifford R. Gray, Inc. v. New York, 674 N.Y.S.2d 440, 442 (N.Y.App.Div. 1998) (citations omitted). Although overhead and profit may sometimes be established as a percentage above direct costs, courts may require specific evidence of overhead and profit. Maris Equipment, 163 F. Supp. 2nd at 191-92. Courts have permitted compensation in quantum meruit for overhead costs such as the "rent of small tools and equipment, the cost of a new axle to be used to replace a broken one on a rented truck, sharpening tools, rental of trucks, spare parts for trucks, drill bits, equipment rental, replacement of tires on rented trucks, telephone calls, transportation of truck and tractor to the site, copying invoices, and the like." Central Steel Erection Col., v. Will, 304 F.2d 548, 554 (9th Cir. 1962) (applying Washington law). In the present case, Aniero must show "that the reasonable value of its work exceeds the payments it has received from Aetna" and the parameter of the damages claim is "the value, if any, of the work — including base Contract Work, Corrective Work and Change Order Work — for which . . . [Aniero] has not been compensated." Aniero III, 2000 WL 863208 at *11.

Aetna's first motion in limine seeks the exclusion of evidence relating to premiums paid by Aniero for a payment and performance bond. Aniero obtained a payment and performance bond for its work on the Project. Pl's Br. in Opp'n at 22. This bond was entered into pursuant to the contracting agreement between Aetna and Aniero. Id. The agreement was subsequently held void by this Court, as was the performance bond. Aniero II, 1998 WL 148324, at *6 (S.D.N.Y. 1998) ("Because the Completion Agreement is invalid due to the absence of the SCA's written consent, the performance bond issued by General as security for the Completion Agreement is also a nullity."). Aetna now submits that Aniero should not be able to present evidence about amounts that it paid for the premiums on the payment and performance bond because (1) bond premiums do not fall within the scope of the "reasonable value" of Aniero's work and (2) the bonds are unenforceable and therefore the costs incurred for paying the premiums on them are not compensable.

Aetna's second motion in limine asks this Court to exclude the presentation at trial of all evidence of attorneys' fees and arbitration fees. As clarified by Aniero in its response papers, Aniero does not presently seek attorneys' fees incurred in litigating this case in this Court. Pl.'s Br. in Opp'n at 20-21. Aniero does, however, intend to put forward evidence relating to costs and fees that it incurred in litigation and arbitration with one of the subcontractors that it employed on the Morris High School Project [hereinafter "Project"]. Id. at 19-20. Thus, this Court need only address the narrow issue of whether litigation and arbitration costs incurred by a contractor as a result of a dispute with one if its subcontractors are project-related costs that are properly included the computation of damages in a claim in quantum meruit.

No case expressly considering the issues presented by these motions has been cited by the parties or revealed by this Court's independent research. The Court finds it instructive, however, that the "customary method of calculating damages on a quantum meruit basis in construction contract cases both on completed contracts and contracts terminated before completion is actual job costs plus an allowance for overhead and profit minus amounts paid." Najjar Ind., Inc., et al. v. City of New York, 451 N.Y.S.2d 410, 413 (N.Y.App.Div. 1982) (emphasis added).

Payment and performance bonds are regularly purchased as part of the normal course of business in the construction industry. Aniero's premium payments to secure such a bond are, therefore, Project-related and part of the normal cost of carrying out a construction contract. That practical reality is not altered by this Court's subsequent decision nullifying the construction contract and the bond. Aniero had to incur the expense of bond premiums to obtain consideration as the contractor on the Project. Aetna's motion seeking to exclude evidence relating to Aniero's bond premium payments is denied.

The question of whether attorneys' fees and arbitration fees relating to a dispute between Aniero and one of its subcontractors on the Project fall within the scope of Aniero's quantum meruit claim presents a closer question. However, it is important to note that this Court need not decide whether the fees are actually part of the reasonable value of the work completed by Aniero. This Court need only decide whether, as a matter of law, a jury or any trier of fact is precluded from concluding that such fees are part of the reasonable value of work performed by Aniero. In Najjar Ind., Inc., 451 N.Y.S.2nd at 414, the Appellate Division held that while disputed claims by subcontractors are not evidence of the reasonable value of a contractor's work in a quantum meruit claim, the actual amount of an arbitration award and other amounts paid to a subcontractor should be counted in tabulating damages. Id. ("Whatever the rationale of the [arbitration] award . . . the amount of that award plus other amounts paid to . . . [the subcontractor] would seem to constitute the total amount paid or owed to . . . [the subcontractor]."). The Najjar appellate court criticized the trial court's failure to allow into evidence the amount of an arbitration award between the contractor, who was seeking to establish the reasonable value of its work, and one of its subcontractors. Id. Thus, although the holding in Najjar does not speak directly to the issue of whether lawyers' and arbitration fees in a dispute with a subcontractor are compensable in quantum meruit, it does indicate that admission into evidence of specific information about actual costs incurred by a contractor is encouraged.

Secondary sources likewise appear to encourage a permissive approach toward admitting evidence that a trier of fact may consider in ascertaining damages in quantum meruit. One source advises that "any competent evidence which reasonable tends to establish such value is . . . admissible," 66 Am. Jur. 2nd Restitution and Implied Contracts § 104 (2002), and notes further:

What is reasonable compensation for services rendered without an express contract for payment does not depend solely on the time expended or the actual labor bestowed. The peculiar situation of property on which work was done, the attendant risk, and other circumstances may be taken into consideration. The law allows a reasonable compensation, and permits the jury to take into consideration all the facts.

66 Am. Jur. 2nd Restitution and Implied Contracts § 40 (2002).

In light of the dearth of direct legal authority on this issue, the Court declines to rule that, as a matter of law, such costs are not compensable and that the jury is barred from hearing evidence on this question. Accordingly, Aetna's motion to exclude evidence relating to attorneys' fees, to the extent specified in this Opinion, and arbitration expenses is denied.


Summaries of

Aniero Concrete Co., Inc. v. the Aetna Cas. Surety Co.

United States District Court, S.D. New York
Oct 24, 2002
94 Civ. 9111 (CSH) (S.D.N.Y. Oct. 24, 2002)

stating that the Najjar court had held that amounts paid to a subcontractor should be counted in tabulating damages and quoting from the case that "the amount of [an arbitration] award plus other amounts paid to [the subcontractor] would seem to constitute the total amount paid or owed to [the subcontractor]"

Summary of this case from Fluor Daniel Caribbean, Inc. v. Humphreys (Cayman) Limited
Case details for

Aniero Concrete Co., Inc. v. the Aetna Cas. Surety Co.

Case Details

Full title:ANIERO CONCRETE COMPANY, INC., Plaintiff v. THE AETNA CASUALTY AND SURETY…

Court:United States District Court, S.D. New York

Date published: Oct 24, 2002

Citations

94 Civ. 9111 (CSH) (S.D.N.Y. Oct. 24, 2002)

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