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NORWEGIAN BUILDER & EXCAVATOR, LLC, Plaintiff, v. PRIMAX CONSTRUCTION, INC., Colonie DG, LLC, Bill Seymour, Marie Lucas and John Doe No. “1” Through John Doe No. “5”, Defendants.
Plaintiff Norwegian Builder & Excavator, LLC (“Norwegian”) commenced this commercial action on January 5, 2017, seeking to recover the principal sum of $ 242,283 pursuant to a construction subcontract with Primax Construction, Inc. (“Primax”). In its answer, Primax counterclaims for damages allegedly sustained by reason of Norwegian's breaches of the subcontract.
Following the completion of discovery and the filing of a note of issue, a trial was held before the undersigned on October 24 and 25, 2018. The Court heard the testimony of six witnesses and received 54 exhibits into evidence. Post-trial briefing was completed on January 14, 2019. Based on the credible testimony and evidence adduced at trial, the Court hereby makes the following findings of fact and conclusions of law.
A. The Project
By contract dated August 31, 2016, defendant Colonie DG, LLC (“Colonie DG”) retained Primax to build a new Dollar General store at 1935 Central Avenue in the Town of Colonie, New York (see Ex. 1 [“General Contract”] ). Primax, in turn, entered into a written subcontract with Norwegian on September 10, 2016 to perform the site preparation work (see Ex. A [“Subcontract”] ). The owner and operator of Norwegian, Olaf Haakenstad, is a builder who specializes in performing site work and excavation.
Pursuant to the Subcontract, Norwegian was responsible for site layout, grading and erosion control, the storm sewer system, water and sewer utilities, electric utilities and site lighting, paving, site concrete, the excavation and backfill of the building foundation and floor slab, and the construction of a dumpster enclosure. As to the layout of the site, the Subcontract called for Norwegian to “[p]rovide surveying and layout to include property line staking, driveway layout, site work layout, grade staking, building corners & offsets” (Subcontract, p. 1).
Norwegian's work under the Subcontract was to be completed in accordance with the contract drawings (see id., p. 2). In this regard, Norwegian was provided electronic copies of the drawings relevant to its scope of work, including copies of the foundation plan (see Ex. B [“Foundation Plan”]; see also Subcontract, p. 2).
Several other provisions of the Subcontract bear mention. The Subcontract did not fix a completion date, but it did oblige Norwegian to complete its work “in a prompt and timely fashion” (id., p. 4). With respect to changes to the scope of work, the Subcontract required a written change order signed by both parties and stated that no change orders would be accepted without the prior written authorization of Primax's project manager (see id., pp. 2-3).
Norwegian agreed to guarantee its workmanship and materials for one year from final acceptance of the work (see id., p. 3). Further, should Norwegian fail in the performance of the work, the Subcontract authorized Primax to either: (1) perform the work itself upon 48 hours written notice to Norwegian; or (2) terminate the Subcontract and retain a completion contractor (see id.). In either event, Norwegian would be liable for all costs and damages (see id.).
Norwegian, which does not have a surveyor on its staff, retained a licensed surveyor, Kevin Rounds, to perform the survey and layout work called for under the Subcontract. This was one of only two jobs for which Norwegian ever had contracted to provide survey and layout services to a customer (see Trial Tr., pp. 52-53).
Part of the survey work involved staking out “offsets” from each corner of the building. These offsets, which provided reference points for use in preparing the site and constructing the foundation, were to be placed 15 feet from each corner of the building. Norwegian's surveyor placed more than one dozen offset stakes. During his trial testimony, Haakenstad inserted push pins into an enlarged version of the Foundation Plan to show the approximate locations of these offset stakes (see Ex. B).
The approved site plan for the Project (see Ex. 6 [“Site Plan”] ) imposed strict setbacks on two sides of the building. Specifically, the building was to be set back 10 feet from Hiro's Japanese Restaurant (“Hiro's”) and 20 feet from Central Avenue, a major thoroughfare.
After Norwegian finished clearing the land and its surveyor completed the site layout and staking work, Primax's concrete subcontractor, Alpha Concrete, placed and poured the building foundation. At some point thereafter, the parties learned that the foundation was encroaching on both the Hiro's and Central Avenue setbacks by about 10 inches (see Ex. T). Subsequent examination showed that the foundation was less than 15 feet from the remaining offset stakes.
After the encroachments were discovered, Primax directed Norwegian to tear out the foundation so that it could be rebuilt in the proper location. Norwegian was willing to perform the work, but only if it received a signed change order authorizing additional compensation. Primax disagreed with the issuance of a change order, asserting that Norwegian should remove the foundation at no cost because the encroachments were caused by its surveyor's failure to properly place the offset stakes (see Ex. 16). Norwegian refused, claiming that the misplaced foundation was due to the errors of Alpha Concrete (see id. & Ex. P).
By letter dated November 14, 2016, Primax advised Norwegian that “[a]n error has occurred in the layout of the building by [Norwegian], ․ [and] the current foundation must be remove[d] in its entirety” (Ex. O). In accordance with the terms of the Subcontract, Norwegian was given 48 hours “to mobilize and begin the removal of the current foundation ․ or [Primax] will be left with no alternative but to implement self help” (id.).
Norwegian adhered to its position that the foundation encroachments were attributable to errors on the part of Alpha Concrete and not due to any defects in the survey and layout work performed by Rounds. According to Haakenstad's trial testimony, Primax terminated the Subcontract at that point, and Norwegian was “told to leave” the Project (Trial Tr., p. 95).
Primax eventually retained a different contractor, Services Unlimitied, to perform the foundation removal at a cost of $ 22,200 (see Ex. 20). Services Unlimitied also completed Norwegian's unfinished work under the Subcontract (see Ex. X).
B. This Litigation
Norwegian's verified complaint originally asserted five claims: (1) breach of the Subcontract; (2) quantum meruit/unjust enrichment; (3) account stated; (4) trust fund violations; and (5) lien foreclosure (see NY St Cts Electronic Filing [“NYSCEF”] Doc No. 1).1 The first three causes of action were directed solely at Primax; the fourth cause of action was directed at Primax and two of its alleged officers, defendants Bill Seymour and Marie McLucas (sued herein as Marie Lucas); and the fifth cause of action was directed at Primax, the two alleged officers and defendant Colonie DG.
In a verified answer with counterclaims, defendants generally denied Norwegian's allegations and alleged four affirmative defenses (see NYSCEF Doc No. 7). In addition, defendants asserted a counterclaim seeking recovery of the damages they allegedly sustained by reason of Norwegian's breaches of the Subcontract.
In a Decision & Order dated September 4, 2018, the Court dismissed the quasi-contractual cause of action on the ground that the relationship between Norwegian and Primax is governed by the Subcontract (see NYSCEF Doc No. 60). The cause of action for trust fund violations also was dismissed based on uncontroverted evidence demonstrating that the amount paid by Primax to its subcontractors and suppliers on the Dollar General project exceeded the amount it was paid by Colonie DG under the General Contract (see id.).
RESPONSIBILITY FOR THE ENCROACHMENTS
The Court begins with the issue of responsibility for the foundation encroachments. Norwegian contends that its surveyor properly performed the layout work required by the Subcontract and placed offset stakes 15 feet from the building's corners. According to Norwegian, the misplacement of the foundation was due to errors on the part of Alpha Concrete, as well as Primax's project manager. Norwegian therefore contends that the removal of the encroaching foundation was extra-contractual work for which Primax was obliged to provide additional compensation.
Primax, on the other hand, argues that the incorrect placement of the offset stakes by Norwegian's surveyor caused the foundation to be constructed in the wrong location. According to Primax, Norwegian's surveyor incorrectly measured the offsets from the face of the exterior steel of the building and failed to take into account the 10 inches or so of exterior brick that surrounds the building, which also sits on the concrete foundation. Thus, Primax contends that removal of the misplaced foundation represented corrective work necessitated by the failure of Norwegian and its surveyor to properly perform the layout work required under the Subcontract.
On the basis of all of the credible evidence and testimony adduced at trial, the Court finds that Norwegian and its surveyor bear sole responsibility for the foundation encroachments. Specifically, the evidence at trial persuasively demonstrates that: (1) Norwegian's surveyor improperly placed the offset stakes from the face of the exterior steel, rather than from the face of the building exterior, which is contrary to the contract drawing and accepted professional and trade standards and practices; (2) the surveyor's misplacement of the offset stakes caused the foundation to encroach on the Hiro's and Central Avenue setbacks; and (3) the misplacement of the foundation was a natural, probable and foreseeable consequence of the surveyor's error, and neither Alpha Concrete, Primax nor anyone other than Norwegian and its surveyor bear legal responsibility for the encroachments.
In opining that Norwegian's surveyor failed to take into account the thickness of the brick exterior in placing the offset stakes, Primax's engineering expert, Scott Burlingame, P.E., explained that the contract drawings call for the construction of a steel structure on a concrete foundation, with the exterior of the building covered in brick. According to the Foundation Plan, the brick ledge that surrounds the steel is aligned with the outer edge of the foundation (see Ex. B). The brick ledge and its placement atop the concrete foundation clearly is shown in the Sections & Details drawing (see Ex. 28 [“S-2”] ), and this drawing itself refers to a more detailed architectural drawing showing a brick shelf with a depth of five inches.
According to Burlingame, Norwegian's surveyor erred in reading the Foundation Plan as describing an 85 foot by 85 foot building. He explains that the Foundation Plan shows an 85 foot by 85 foot steel structure, but the foundation also must be sized to accommodate the brick shelf, which adds another 10 inches. For this reason, the Site Plan shows the dimensions of the building as 85.8 feet. Thus, Burlingame is of the opinion that the surveyor mistakenly placed the offset stakes 15 feet from the face of the steel, rather than 15 feet from the exterior brick face.
To similar effect is the testimony of Timothy McAlonen, the surveying expert retained by Primax. McAlonen emphasized in his testimony that the Foundation Plan and S-2 drawing plainly show the exterior brick shelf sitting atop the foundation, and the Site Plan incorporates the depth of the brick shelf in the dimensions of the building, which is described as an 85.8 foot by 85.8 foot box.2 These measurements are confirmed by the CAD drawings for the foundation, which show the building exterior and foundation extending beyond the face of the steel (see Ex. 5). Thus, McAlonen opines that foundation encroachments resulted from the surveyor mistakenly staking out an 85 foot by 85 foot building based on plans showing an 85.8 foot by 85.8 foot building.
McAlonen further opined that Alpha Concrete properly could have started its foundation layout from any one of the offset points staked out by the surveyor, provided that the stakes were accurately placed. He also testified that the starting point and the direction in which the foundation forms were placed only would affect the location of any encroachment(s) resulting from misplaced stakes.3 In addition, Primax's surveying expert opined that Alpha Concrete did not do anything wrong in relying upon the offset stakes placed by Norwegian's surveyor. According to McAlonen, contractors on the job were entitled to rely upon the stakes placed by a professional land surveyor (see Trial Tr., p. 248).
The Court finds the opinion testimony given by Primax's engineering and surveying experts to be highly persuasive and worthy of belief. Indeed, the testimony of Norwegian's surveying expert, Rodney Carey, and the report he prepared on behalf of Keystone Associates (see Ex. Q), effectively confirm that Norwegian's surveyor mistakenly placed the stakes by reference to the face of the exterior steel.
Specifically, on cross-examination, Carey acknowledged that the Foundation Plan and S-2 drawing show a brick shelf supported by the foundation. Carey also conceded that the surveyor needed to take into account the depth of the brick shelf in placing offset stakes from the corners of the building/foundation. In addition, Carey opined that surveyors always should examine the CAD drawings, and he recognized that the CAD drawing here specifies a building spanning 85.8 feet (see Trial Tr., pp. 289-293). To be sure, Carey does state in his written report that the foundation was not placed in accordance with surveyor's offset stakes, but it is clear from his analysis that Carey mistakenly assumed the exterior dimension of the building to be 85 feet. Finally, the Court notes that Carey's testimony became evasive and appeared less than candid when Primax's counsel asked on cross-examination whether Norwegian's surveyor had made a mistake in placing the offset stakes.
In concluding that Norwegian's surveyor erred, the Court also credits certain of the testimony of Paul Valiquette, who was the project manager for Alpha Concrete. He testified, based on more than 50 years of construction experience, that “offsets are always to the outside of the concrete” — it's how it is done. It's like that everywhere” (Ex. GG, p. 50). The placement of offset stakes from the face of the building is the industry standard, and if a stake is intended to measure from a reference point other than the exterior face of the building, such as the face of the structural steel, the stake must be clearly marked as such (see id., pp. 65-66).4
In seeking to avoid liability for the incorrect layout work performed by its surveyor,5 Norwegian argues principally that encroachments are the responsibility of Alpha Concrete and Primax because they failed to check the survey work before placing and pouring the foundation. The Court rejects this contention. Norwegian offers no competent evidence of any professional or trade standard by which to find that a concrete subcontractor or a general contractor is obliged to check the accuracy of the survey work performed by a professional land surveyor.6 In fact, the very purpose of retaining a professional surveyor is to engender reliance by other contractors and the building trades (see Trial Tr., p. 248; Ex. GG, p. 20; cf. Trial Tr., p. 102).
And even if all contractors and subcontractors on the Dollar General project had a generalized duty to perform field verification of dimensions pursuant to the “General Notes” on the contract drawings, which are said to have been incorporated into the General Contract and then into the Subcontract (see Norwegian's Post-Trial Mem., p. 3), any such failure is not a superseding cause of the encroachments and does not relieve Norwegian of the natural, probable and highly foreseeable consequences of its surveyor's failure to properly place the “building corners & offsets” (Subcontract, p. 1). The dimensions shown on the contract drawings were correct, and the Court rejects Norwegian's reading of the field-verification requirement as calling for the building trades to inspect the professional work product of a licensed land surveyor.
The Court also rejects Norwegian's contention that the misplacement of the foundation resulted from an incorrect answer given by Primax's project supervisor, Mark Roszel, to a question posed by Alpha Concrete. Specifically, Norwegian cites to Valiquette's testimony that, prior to starting the foundation layout, he inquired of Roszel whether the survey stakes had been placed from the exterior brick of the building (see Ex. GG, pp. 25). Valiquette so asked because the stakes placed by Rounds did not explicitly state the reference point (see id.).
Even assuming that this portion of Valiquette's testimony is admissible,7 the testimony before the Court persuasively demonstrates that the relevant professional and trade standard is that “offsets are always to the outside of the concrete” — “it's how it is done. It's like that everywhere” (id., p. 50). The placement of offset stakes from the face of the building is the industry standard, and if a stake is intended to measure from the face of the steel, rather than the face of the building itself, the stake must be clearly marked as such (see id., pp. 65-66; see also Trial Tr., p. 248 [opinion of Primax's surveying expert that Alpha Concrete reasonably relied upon the points as having been properly staked out by Rounds] ). Thus, the Court finds that Alpha Concrete and Roszel were entitled to treat the unlabeled stakes as having been placed from the face of the brick, consistent with Contract drawings and applicable professional and trade standards.8
Further, there is no basis to conclude that Alpha Concrete erred in placing the foundation based upon a single starting point or by choosing the wrong starting point.9 The Court credits the testimony of Primax's surveying expert that Alpha Concrete could have started the foundation layout from any of the offset points marked by the surveyor, so long as the stakes were accurately placed. Moreover, while Norwegian's expert testified to the benefits of relying upon several points, he did not dispute that the foundation could be laid out correctly using one, accurately-marked starting point. And the fact that Alpha Concrete did not take precautions against incorrect surveying work by, for example, working away from potential encroachments or by starting at an offset point close to the potential encroachments is insufficient to absolve Norwegian and its surveyor of liability for the incorrect layout work.10
During his trial testimony, Haakenstad also raised the possibility that some of the offset stakes could have been lost or moved during the construction process, and he suggested that this could have been the cause of the misplaced foundation. However, this theory is entirely speculative and unsupported by any competent proof. In fact, Alpha Concrete's representative testified that he conducted his “usual inspection” of the stakes before using them as reference points (Ex. GG, p. 31). Further, the stakes that were found on the site after the encroachment had been discovered support the opinion expressed by Primax's engineering and surveying experts that the misplacement of the foundation was caused by the surveyor's misreading or misunderstanding of the building's exterior dimensions.
For all of the foregoing reasons, the Court finds that the evidence at trial convincingly demonstrates that Norwegian's surveyor improperly placed the offset stakes from the face of the steel, rather than from the face of the exterior brick, in contravention of the contract documents and relevant standards. The misplacement of the offset stakes caused the foundation to encroach on two prescribed setbacks, and these encroachments were a natural, probable and foreseeable consequence of the surveyor's failure to correctly place the offset stakes. Finally, there is no merit to Norwegian's contention that Alpha Concrete or Primax bear responsibility for the encroachments.
ANALYSIS OF THE PARTIES' CLAIMS
Having determined that Norwegian and its surveyor bear responsibility for the misplacement of the foundation, the Court now turns to the parties' claims. Each side contends that the other breached the Subcontract. The essential elements of a cause of action for breach of contract are the existence of a valid contract,11 the claimant's performance pursuant to the contract, the counter-party's breach of its obligations under the contract and resulting damages (see WFE Ventures, Inc. v. Mills, 139 AD3d 1157, 1160 [3d Dept 2016]; Clearmont Prop., LLC v. Eisner, 58 AD3d 1052, 1055 [3d Dept 2009]; see also PJI 4:1).
A. Norwegian's Claim
The Court concludes that Norwegian has failed to establish its claim of breach of contract by a preponderance of the credible evidence. Specifically, Norwegian has neither demonstrated its own performance pursuant to the Subcontract nor Primax's breach of the Subcontract. Accordingly, Norwegian's contractual claim must be dismissed.12
1. Primax Did Not Breach the Subcontract
Norwegian has failed to establish that Primax breached the Subcontract. Primax's direction to Norwegian to remove the encroaching foundation was a proper demand for corrective work necessitated by the errors of Norwegian's surveyor (see supra ). The removal of the encroaching foundation was not extra-contractual work for which Primax was obliged to issue a signed change order.
Further, the Court rejects Norwegian's contention that Primax wrongfully terminated the Subcontract. Primax did not terminate the Subcontract or direct Norwegian to leave the Project. Rather, the credible evidence adduced at trial shows that Norwegian terminated its performance under the mistaken belief that the misplaced foundation was caused by the work of Alpha Concrete and/or Primax's project manager and that Norwegian wrongfully was being directed to perform extra-contractual work without a change order.13
In this regard, the credible documentary evidence shows that on November 14, 2016, Primax issued a 48-hour demand for Norwegian to “mobilize and begin the removal of the current foundation, recover and maintain schedule” (Ex. O).14 In contrast, there is no documentation establishing that Primax terminated the Subcontract prior to Norwegian discontinuing its performance,15 and any allegation of an oral termination is unsupported and unconvincing. In this regard, a formal written notice of termination would be expected on a project such as this, where Primax appeared to operate with a reasonably high degree of formality and rigor.16
Finally, there is no merit to Norwegian's contention that Primax repudiated the Subcontract or committed an anticipatory breach. “A claim of anticipatory repudiation must be supported by evidence of an unqualified and clear refusal to perform ․” (Joseph P. Carrara & Sons, Inc. v. A.R. Mack Constr. Co., Inc., 89 AD3d 1190, 1191 [3d Dept 2011] ). Here, Primax's insistence that Norwegian remove the encroaching foundation without the issuance of a change order would be wrongful only if the work were extra-contractual. Having found, however, that the misplacement of the foundation was caused by the errors of Norwegian's surveyor, Primax's demand for corrective work fell within the scope of the Subcontract. Simply put, Primax was under no duty to sign a change order to compensate Norwegian for remedying its defective work.17
2. Norwegian Materially Breached the Subcontract
Norwegian also has failed to demonstrate its own performance under the Subcontract. In fact, the proof at trial shows that Norwegian materially breached the Subcontract in three, highly material respects.
First and foremost, Norwegian failed to properly perform the survey and layout work required by the Subcontract. These deficiencies in Norwegian's contractual performance caused the foundation to encroach on two setbacks. Inasmuch as Primax and its subcontractors depended on accurate survey work in order to ensure that the building was placed in accordance with the approved site plan, the surveyor's deficient performance was highly material.
In addition, Norwegian improperly refused Primax's demand to perform corrective work and, instead, wrongfully terminated its own performance under the Subcontract. Norwegian guaranteed its work (see Subcontract, p. 4), but failed to comply with Primax's reasonable directive to perform corrective work arising from the errors of its surveyor. Norwegian then compounded these breaches by walking off of the project under the mistaken belief that someone other than its surveyor was responsible for the misplaced foundation.
B. Primax's Counterclaim
Primax has established that Norwegian materially breached the Subcontract by failing to properly perform the survey and layout work required under the Subcontract, by refusing Primax's proper demand to perform corrective work, and by terminating its own performance under the Subcontract in response to Primax's demand. Primax has further demonstrated its own substantial performance under the Subcontract prior to Norwegian's material breaches. Accordingly, the Court must turn to the issue of damages.
“Damages [in a contract case] are intended to return the parties to the point at which the breach arose and to place the nonbreaching party in as good a position as it would have been had the contract been performed” (Brushton-Moira Cent. School Dist. v. Thomas Assoc., 91 NY2d 256, 261  ). “[T]he nonbreaching party may recover general damages which are the natural and probable consequence of the breach” (Kenford Co. v. County of Erie, 73 NY2d 312, 319  )
In addition, consequential damages may be recovered where the damages sought were within the reasonable contemplation of the contracting parties (see Bi-Economy Mkt., Inc. v. Harleysville Ins. Co. of NY, 10 NY3d 187, 192  ). “To determine whether consequential damages were reasonably contemplated by the parties, courts must look to the nature, purpose and particular circumstances of the contract known by the parties ․ as well as what liability the defendant fairly may be supposed to have assumed consciously, or to have warranted the plaintiff reasonably to suppose that it assumed, when the contract was made” (id. at 193 [internal quotation marks and citations omitted] ).
The Subcontract had a price of $ 289,343, and Primax approved two change orders that brought the total price to $ 302,883 (see Exs. G & H). From this, Norwegian was paid a total of $ 60,521.50 (see Exs. C & D), leaving $ 242,361.50 available to Primax to complete the work.
1. Remediation of Encroaching Foundation
Following Norwegian's refusal to comply with the 48-hour demand (see Ex. O), Primax retained Services Unlimitied to remove the encroaching foundation at a cost of $ 22,200 (see Ex. 20). The incorrectly-placed foundation was a natural, probable and foreseeable consequence of the failure of Norwegian and its surveyor to properly perform the “corners & offsets” layout. Accordingly, this item of damages is allowed in full.18
2. Completion Costs
Primax also retained Services Unlimitied to complete Norwegian's work under the Subcontract at a cost of $ 205,199.95,19 which is another natural and probable consequence of Norwegian's wrongful termination of its contractual performance.
In this connection, the Court recognizes that Haakenstad testified that it would have cost Norwegian no more than $ 100,000 to complete the subcontracted work.20 However, these estimates, which are highly conclusory, do not reflect the cost of engaging a different site contractor at arm's length to complete Norwegian's work or the increased costs associated with working through winter months. Under the circumstances, the Court chooses to assign far greater weight to the completion contract, which has not been shown to be anything other than an arm's length commercial agreement.
3. Cost of Repouring the Foundation
Primax seeks to recover $ 81,500, representing the additional compensation paid to Alpha Concrete for reconstructing the foundation in the correct location (see Ex. 23). For the reasons stated above, these costs are allowed in full.
4. Additional Testing and Engineering Costs
Primax seeks to recover $ 5,682.27 in additional testing costs and $ 3,842.96 in additional engineering costs necessitated by the defective surveying work and the resulting need to remove and rebuild the foundation. Primax has submitted proof of the foregoing payments (see Ex. 3), and the Court credits the testimony of Primax's operations manager, Robert Holland, that these testing and engineering costs were attendant to the removal and reconstruction of the foundation (see Trial Tr., p. 126). Therefore, these costs also are allowed.
5. Payment of Norwegian's Suppliers
Primax submits proof that it paid a total of $ 14,464.09 to Norwegian's suppliers (see Ex. 3), as it was entitled to do under the Subcontract. Accordingly, these costs are allowed.
6. Liquidated Damages For Delay
Defendants seek to recover $ 80,773.87, which is said to represent a negotiated settlement of a claim for liquidated delay damages against Colonie DG in the sum of $ 161,547.18.
By letter dated July 11, 2017, Dollar General Corp. issued a demand to Colonie DG for $ 161,547.75 in liquidated damages (see Ex. 26). The letter cites Section 2.3 of a lease dated July 15, 2015 (“Lease”) between Primax Properties, LLC (“Primax Properties”), as the landlord, and Dolgencorp of New York, Inc. (“Dolgencorp”), as the tenant. According to the letter, the referenced lease obliged Primax Properties to pay Dolgencorp damages equal to the daily minimum rent for the building for each day of delay following the anticipated delivery date of December 12, 2016. By written and acknowledged Assignment of Lease dated August 11, 2016 (“Assignment”), Primax Properties assigned the Lease to Colonie DG, which agreed to assume Primax Properties' obligations and duties thereunder (see Ex. 27).
The Court finds that defendants have failed to demonstrate their entitlement to recovery of the liquidated damages-for-delay paid to Dolgencorp. Under the Subcontract with Primax, Norwegian agreed to perform its work in a “prompt and timely fashion” (Ex. A., p. 4), but there is no fixed completion date, no provision for liquidated damages and no provision making time of the essence. Under the circumstances, it was not within the reasonable contemplation of the parties to the Subcontract that Norwegian would bear liability for the payment of liquidated damages for delay on the basis of a Lease to which neither Primax nor Colonie DG were signatories, particularly in the absence of evidence that Norwegian had any knowledge of the Lease or Assignment at pertinent times. Accordingly, this item of damages is rejected.
7. Attorney's Fees
Finally, Primax seeks to recover the attorney's fees incurred in this action pursuant to an indemnification clause of the Subcontract (see Ex. A, Contract Conditions, p. 1). Specifically, Primax invokes a provision thereof obliging Norwegian to indemnify Primax for any damages, costs and expenses, including counsel fees, arising out of the subcontracted work (see id.)
“[T]he long-standing American rule precludes the prevailing party from recouping legal fees from the losing party except where authorized by statute, agreement or court rule” (Gotham Partners, L.P. v. High Riv Ltd. Partnership, 76 AD3d 203, 204 [1st Dept 2010] [internal quotation marks and citation omitted], lv denied 17 NY3d 713  ).
It is by now well settled that a contractual indemnity provision of the type relied upon by Primax “does not demonstrate unmistakably that the parties intended for the loser in litigation between them to indemnify the winner for legal fees” (Julien Entertainment. Com, Inc. v. Live Auctioneers, LLC, 145 AD3d 623, 623 [1st Dept 2016] ). Accordingly, Primax's claim for attorney's fees is rejected (see id.; Episcopal Health Servs., Inc. v. POM Recoveries, Inc., 138 AD3d 917, 919 [2d Dept 2015]; Gotham Partners, 76 AD3d at 206-209; see also Hooper Assoc. v. AGS Computers, 74 NY2d 487, 491-492  ).
Based on the foregoing, it is
ORDERED that Norwegian's complaint is dismissed; and it is further
ORDERED that Colonie DG's bond is hereby released; and it is further
ORDERED that Primax is granted judgment on its counterclaim in accordance with the foregoing; and it is further
ORDERED that defendants shall settle an appropriate judgment on notice; and finally it is
ORDERED that the parties shall retrieve their original exhibits from the Supreme Court Clerk within twenty (20) days from the date of this Decision & Order or they will be discarded.
This constitutes the Decision & Order of the Court. The original Decision & Order is being transmitted to the Albany County Clerk for electronic filing and entry. Upon such entry, defendants' counsel shall promptly serve notice of entry on all other parties to this action (see Uniform Rules for Trial Cts [22 NYCRR] § 202.5-b [h] ,  ).
1. Colonie DG substituted a bond for the alleged mechanic's lien on February 9, 2017.
2. There also is a “bump out” in the front of the building for a 7.3 foot entrance, which results in a total dimension of 93.1 feet on one axis (Trial Tr., pp. 230-231).
3. Alpha Concrete began the foundation from the corner furthest from Hiro's and Central Avenue, which led the extra 10 inches or so of foundation to encroach on the Hiro's and Central Avenue setbacks.
4. Valiquette testified that in his five decades of building foundations, he had never seen a layout stake measured from the face of the steel (see id., p. 66).
5. Norwegian failed to call its surveyor, Kevin Rounds, as a trial witness in this action. Both sides had identified Rounds as a witness, and he was present in the Courthouse for two days while Norwegian presented its case. However, following some discussion with Norwegian's counsel, Rounds left the Courthouse after the presentation of Norwegian's case, and he was not in Court when Primax attempted to call him as a witness. Primax vigorously objected and sought to introduce Rounds's deposition testimony, citing a prior email from Norwegian's counsel stating that Rounds would be present at trial and that his deposition transcript was available for impeachment. Nonetheless, Norwegian objected to the receipt of Rounds's deposition testimony, and the Court was constrained to sustain the objection under CPLR 3117. In light of the overwhelming evidence that the foundation encroachments were caused by Rounds's error in placing in the offset stakes from the face of the steel, the Court need not decide defendants' request for an adverse inference against Norwegian or otherwise delve into this issue any further, other than to note its concerns with the conduct of Norwegian's counsel relative to this issue.
6. To the extent that Norwegian's surveying expert attempted to offer such proof, the Court finds that the testimony lacks an adequate foundation and, in any event, is unconvincing.
7. As Primax observes, Valiquette's testimony about what he allegedly was told by Roszel is offered for the truth of the matter asserted, and Norwegian has not identified a pertinent exception to the rule against hearsay.
8. Even if Roszel had made inquiry of Norwegian, it is apparent from Haakenstad's trial testimony that he mistakenly believed that the building was 85 feet by 85 feet (see Trial Tr., p. 61-62, 89). Moreover, while Norwegian's consistent refrain at trial was “measure twice, cut once,” Haakenstad did testify as to checking the placement of the offset stakes prior to digging the foundation (see id., p. 20), but he failed to discover his surveyor's error.
9. While Norwegian argues that Alpha Concrete placed the foundation using only one point, the testimony of its project manager seems to indicate that two stakes were used (see e.g. Ex. GG, pp. 20, 23).
10. These precautions would not have changed the fact that the building was misplaced on the site, but could have avoided encroaching on the two setbacks.
11. There is no dispute that the Subcontract is a valid and enforceable agreement.
12. Given the absence of any contractual liability to Norwegian on the part of Primax, Norwegian's cause of action seeking recovery against the bond that Colonie DG substituted for the mechanic's lien must also be dismissed (see Electric City Concrete Co. v. Phillips, 100 AD2d 1, 4 [3d Dept 1984] ).
13. In any event, Primax would have been justified in terminating the Subcontract on the basis of Norwegian's material breaches (see infra ).
14. While certain language in the final paragraph of the 48-hour demand letter was potentially confusing insofar as it referenced “the scope of work listed in the [Subcontract]” (id.), the letter should be read together with the language of the Subcontract that made “forty-eight hours” written notice to Norwegian a condition precedent to self-help (Ex. A., p. 4), as well as Primax's earlier, less formal requests for Norwegian to remove the misplaced foundation (see e.g. Ex. N). Moreover, there was no evidence that Norwegian considered the 48-hour demand letter to be a notice of termination.
15. Haakenstad testified on direct examination that Primax terminated “[Norwegian's] contract and told [him] to please leave” (Trial Tr., p. 48), but he testified on cross-examination that the termination took the form of an email (see id., p. 95). However, Norwegian did not produce this alleged email.
16. In addressing Norwegian's contention that it was terminated from the project, the Court notes, but need not rely upon, Norwegian's pretrial submissions representing that “Norwegian lawfully chose to terminate the contract” after Primax demanded that it remove the misplaced foundation without a change order (Pre-Trial Mem., pp. 2-3).
17. It is of no moment that Norwegian was mistaken in regarding Primax's demand as an anticipatory repudiation and terminating its own performance on that basis. As the Court of Appeals has observed, a contracting party “who senses an approaching storm cloud, affecting the contractual performance, is presented with a dilemma, and must weigh hard choices and serious consequences” (Norcon Power Partners v. Niagara Mohawk Power Corp., 92 NY2d 458, 463  ).
18. Norwegian did not offer any proof demonstrating that Primax's decision to tear out and rebuild the foundation was commercially unreasonable under the circumstances.
19. The foregoing sum encompasses the original contract between Primax and Services Unlimitied in the sum of $ 202,100 (see Ex. X), together with an approved change order in the amount of $ 3,099.95 for the winter conditions encountered by Services Unlimitied in performing the work in the first two weeks of February 2017 (see Ex. 21).
20. According to Haakenstad's testimony, it would have cost Norwegian $ 66,000 to complete all of the subcontracted work, except for the site concrete, and the Subcontract assigned a value of $ 39,297 to the latter work.
Richard M. Platkin, J.
Response sent, thank you
Docket No: 900091-17
Decided: February 21, 2019
Court: Supreme Court, Albany County, New York.
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