THOROBIRD GRAND LLC v. [And A Third-Party Action]. (2026)

Order, Supreme Court, Bronx County (Fidel E. Gomez, J.), entered on or about March 20, 2025, which, to the extent appealed from, granted defendant Federal Insurance Company's motion for partial summary judgment dismissing plaintiff's claim for liquidated damages with respect to the cause of action for joint and several liability (the fifth cause of action) to the extent of dismissing plaintiffs' claims for liquidated damages calculated on a per building basis, and dismissing plaintiffs' claim for consequential and actual delay damages with respect to the cause of action for breach of the parties' takeover agreement (the seventh cause of action);  and granted defendant M. Melnick & Co. Inc.'s (Melnick) motion for partial summary judgment dismissing plaintiffs' claim for liquidated damages with respect to the causes of action for breach of contract (first, second, and third causes of action) to the extent of dismissing plaintiffs' claims for liquidated damages calculated on a per building basis, unanimously affirmed, without costs.

Under the terms of a construction contract, plaintiffs hired Melnick as the general contractor for a project involving the construction of three buildings located at three separate addresses.  Federal Insurance, as Melnick's surety, executed a performance bond, under which Melnick and Federal Insurance “jointly and severally, b[ound] themselves ․ to [plaintiffs] for the performance of the Construction Contract.”  In 2019, plaintiffs declared Melnick to be in default, terminated the construction contract, and demanded that Federal Insurance perform under the performance bond.  On October 29, 2019 the parties executed a takeover agreement for Federal Insurance to complete Melnick's work on the project.  Plaintiffs then commenced this action, asserting breach of contract claims against Melnick alleging its failure to perform the work and against Federal Insurance arising from its bond and takeover agreement obligations.

Supreme Court properly granted Melnick's and Federal Insurance's motions, as the plain language of the parties' agreements restricts the type of damages available (see Vermont Teddy Bear v. 583 Madison Realty Co., 1 NY3d 470, 475 [2004] ).  As to plaintiff's breach of contract claims against Melnick, the construction contract expressly limited delay damages to the liquidated damages set forth in the contract.  Further, as to claims against Federal Insurance, the language of the performance bond specified that if Federal Insurance elected to proceed under paragraph 4.2 of the bond, which it did, its responsibilities would be no greater than Melnick's responsibilities under the construction contract (see Varlotta Constr.  Corp. v Sette–Juliano Constr.  Corp., 234 A.D.2d 183, 183 [1st Dept 1996];  see also OH 126th St. Hous. Dev. Fund Corp. v Berkley Ins. Co., 231 AD3d 676, 676 [1st Dept 2024] ).

Supreme Court also properly determined that the amount of daily liquidated damages stated in the construction contract applied to the project as a whole rather than “per building.”  The construction contract explicitly stated that the amount of liquidated damages applied per day for the time the “entire” work extended beyond the anticipated completion date.  Although certain sections of the construction contract stated that the buildings would be treated separately in some respects, those sections did not mention liquidated damages.  Even assuming there was any ambiguity in the construction contract, the parties' intent was clarified by a 2018 change order, which provided that liquidated damages would be assessed “on a project basis and not a per building basis so that there is no duplication of recovery.”

We have considered plaintiffs' remaining arguments and find them unavailing.