DONALDSON INTERIORS INC v. SCIAME CONSTRUCTION CO INC (2020)

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract, the defendants F.J. Sciame Construction Co., Inc., and Sciame Construction, LLC, appeal from a judgment of the Supreme Court, Suffolk County (Jerry Garguilo, J.), entered April 11, 2018.  The judgment, upon a decision of the same court dated February 16, 2018, made after a hearing, is in favor of the plaintiff and against those defendants awarding the plaintiff statutory interest in the sum of $664,462.50.

ORDERED that the judgment is affirmed, with costs.

The plaintiff, Donaldson Interiors, Inc. (hereinafter Donaldson), commenced this action, inter alia, to recover damages for breach of contract against the defendants F.J. Sciame Construction Co., Inc., and Sciame Construction, LLC (hereinafter together Sciame), and another party.  Donaldson alleged, inter alia, that Sciame owed it an outstanding principal balance plus statutory interest for work that Donaldson performed pursuant to certain subcontracts related to two construction projects.

After the commencement of a trial on the issue of liability, Donaldson and Sciame stipulated in open court to a settlement agreement, whereby Sciame would pay Donaldson a settlement sum in a certain amount.  The parties further stipulated that the amount of statutory interest would be determined either through their further negotiations or, if such negotiations failed, through the Supreme Court's determination.  Sciame paid the settlement amount to Donaldson.  Since the parties were unable to reach an agreement as to what the proper statutory interest should be, the parties sought guidance from the court, and a hearing was held.

In a decision dated February 16, 2018, the Supreme Court determined that pursuant to the terms of the in-court stipulation, Donaldson was entitled to statutory interest.  Further, the court determined that the interest would be computed from the date of the filing of the summons and complaint through the date on which the settlement sum was paid.  In a judgment entered April 11, 2018, the court awarded Donaldson statutory interest in the sum of $664,462.50.  Sciame appeals.

“[A]n open-court stipulation is an independent contract between the parties ․ and will be enforced according to its terms unless there is proof of fraud, duress, overreaching, or unconscionability” (Lenge v. Eklecco Newco, LLC, 172 A.D.3d 843, 844–845, 100 N.Y.S.3d 300 [internal quotation marks omitted];  see CPLR 2104;  Chernow v. Chernow, 51 A.D.3d 705, 706, 857 N.Y.S.2d 721).  “Stipulations of settlement must be construed in accordance with contract interpretation principles” (Ochal v. Television Tech. Corp., 26 A.D.3d 575, 576, 809 N.Y.S.2d 604;  see McCoy v. Feinman, 99 N.Y.2d 295, 302, 755 N.Y.S.2d 693, 785 N.E.2d 714).  A covenant of good faith and fair dealing is implicit in every contract (see Gutierrez v. Government Empls. Ins. Co., 136 A.D.3d 975, 976, 25 N.Y.S.3d 625;  Ochal v. Television Tech. Corp., 26 A.D.3d at 576, 809 N.Y.S.2d 604).  “This covenant encompasses any promises which a reasonable person in the position of the promisee would be justified in understanding were included” (Ochal v. Television Tech. Corp., 26 A.D.3d at 576, 809 N.Y.S.2d 604 [internal quotation marks omitted];  see 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 153, 746 N.Y.S.2d 131, 773 N.E.2d 496;  Rowe v. Great Atl. & Pac. Tea Co., 46 N.Y.2d 62, 69, 412 N.Y.S.2d 827, 385 N.E.2d 566).

Applying these principles, we agree with the Supreme Court's determination that the terms of the stipulation of settlement placed on the record in open court obligated Sciame to pay statutory interest.  Further, under the circumstances, we agree with the court's determination that the statutory interest would apply from the filing of the summons and complaint (see CPLR 5001[b];  Delulio v. 320–57 Corp., 99 A.D.2d 253, 255, 472 N.Y.S.2d 379;  Temple Beth Sholom of Smithtown, N.Y. v. Fitzsimons & Assoc., 42 A.D.2d 739, 740, 345 N.Y.S.2d 680).

SCHEINKMAN, P.J., LEVENTHAL, MILLER and WOOTEN, JJ., concur.