IN RE: OWEN STEEL COMPANY (2025)

Order and judgment (one paper), Supreme Court, New York County (Shlomo S. Hagler, J.), entered January 13, 2023, which denied the petition to annul the June 4, 2021 determination of respondents City University of New York, City University Construction Fund, and Hector Batista in his Capacity as Vice Chancellor of the City University of New York (collectively, CUNY) to deny petitioner's request for payment of change orders, to compel CUNY to grant petitioner's appeals of two subcontract disputes, and to direct CUNY to reverse back charges issued in connection with one of the disputes, and dismissed this proceeding brought pursuant to CPLR article 78, unanimously affirmed, without costs.

The determination of the CUNY Vice Chancellor was not arbitrary and capricious or affected by an error of law (see CPLR 7803[3];  Matter of Pell v. Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 N.Y.2d 222, 231, 356 N.Y.S.2d 833, 313 N.E.2d 321 [1974]).  In the first dispute, petitioner sought the approval of proposed change orders seeking monetary compensation for all costs it incurred from delays in the performance of its subcontract, which were caused by CUNY's failure to have the site ready for petitioner to perform its work within the time specified.  CUNY had approved two change orders that covered petitioner's crane rental costs, and those orders noted that additional costs would be submitted under separate cover.

Petitioner did not argue before the CUNY Vice Chancellor that its claim sought a change order as to the method and manner of performance, instead of damages arising from delay.  Thus, this argument may not be raised for the first time before this Court (see Matter of Peckham v. Calogero, 12 N.Y.3d 424, 430, 883 N.Y.S.2d 751, 911 N.E.2d 813 [2009]).  In any event, rider B to the subcontract bars both damages for delay and escalations in labor and materials costs, and petitioner does not argue that any court-recognized exceptions to the no-damages-for-delay clause apply (see Corinno Civetta Constr. Corp. v. City of New York, 67 N.Y.2d 297, 309, 502 N.Y.S.2d 681, 493 N.E.2d 905 [1986];  WDF, Inc. v. Trustees of Columbia Univ. in the City of N.Y., 170 A.D.3d 518, 519, 96 N.Y.S.3d 42 [1st Dept. 2019]).

The Vice Chancellor rationally found that the two approved change orders harmonized the general bar to delay damages with the trade scope checklist provision of the subcontract's rider A, which allowed an “up charge for cranes” should respondents not provide written notice of the start date within the time allotted.  The Vice Chancellor also rationally found that this provision creates an exception to the no-damages-for-delay clause that does not encompass the remainder of petitioner's claimed additional costs.  There is no triable issue of fact as to whether the Vice Chancellor's interpretation of this provision was irrational (cf.  CPLR 7804[h]).

Moreover, the Vice Chancellor's finding that CUNY did not waive the no-damages-for-delay clause in the approved change orders, prepared by the nonparty construction manager, was not irrational.  The change orders did not explicitly state that there would be additional adjustments (cf.  Plato Gen. Constr. Corp./EMCO Tech Constr. Corp., JV, LLC v. Dormitory Auth. of State of N.Y., 89 A.D.3d 819, 825, 932 N.Y.S.2d 504 [2d Dept. 2011], lv denied 19 N.Y.3d 803, 2012 WL 1592167 [2012]).  Moreover, the note that petitioner's additional charges would be submitted under separate cover does not demonstrate a clear manifestation of intent to waive the bar on delay damages (see Gilbert Frank Corp. v. Federal Ins. Co., 70 N.Y.2d 966, 968, 525 N.Y.S.2d 793, 520 N.E.2d 512 [1988];  see also Fundamental Portfolio Advisors, Inc. v. Tocqueville Asset Mgt., L.P., 7 N.Y.3d 96, 104, 817 N.Y.S.2d 606, 850 N.E.2d 653 [2006]).

In the second dispute, petitioner sought approval of a proposed change order regarding the installation of permanent steel handrails on certain stairs.  In this proceeding, petitioner then sought reversal of back charges that CUNY imposed to cover the costs of hiring other subcontractors to perform the handrail work that petitioner declined to do.  The Vice Chancellor's interpretation of the relevant trade scope checklist provision was not irrational, as it does not clearly require petitioner to provide only temporary railings (see Matter of Peckham, 12 N.Y.3d at 431, 883 N.Y.S.2d 751, 911 N.E.2d 813;  Matter of Pell, 34 N.Y.2d at 231, 356 N.Y.S.2d 833, 313 N.E.2d 321).  Instead, it requires petitioner to furnish all railings as shown on the drawings, except that “[w]here stainless steel handrails or guardrails are shown” petitioner “is to provide TEMPORARY hand rails.”  The drawings at issue show that the railings in question were not supposed to be stainless steel;  therefore, it was rational to find that they were within petitioner's original scope of work (see Iberdrola Energy Projects v. Oaktree Capital Mgt. L.P., 231 A.D.3d 33, 40, 216 N.Y.S.3d 124 [1st Dept. 2024]).

We have considered petitioner's remaining contentions and find them unavailing.