PAMELA K. CHEN, District Judge.
Plaintiff Acranom Masonry, Inc. ("Acranom"), a masonry restoration company, brought this action against Defendant Wenger Construction Company, Inc. ("WCC"), a general contractor and construction manager, alleging that WCC breached a contract between the parties by failing to pay Acranom for work that it performed for WCC as a subcontractor on a school construction project (the "Project") commissioned by the New York City School Construction Authority ("SCA"). (See generally Complaint, Dkt. 1; Amended Complaint, Dkt. 26.) In response, WCC asserted counterclaims for breach of contract, alleging that Acranom failed to pay various subcontractors and suppliers, perform work, and provide credits for deleted work as required by the parties' subcontract. (See Amended Answer, Dkt. 27, 6-8.) Based on a review of the testimony and evidence introduced at trial, as well as the parties' post-trial submissions, the Court renders the follow findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52. See Fed. R. Civ. P. 52(a)(1) ("In an action tried on the facts without a jury . . . the court must find the facts specially and state its conclusions of law separately.").
Acranom initiated this action against WCC on March 21, 2014. On March 28, 2014, Acranom filed a related action against Hanover Insurance Co. ("Hanover"), which served as the surety on a payment and performance bond executed by WCC, seeking to recover for unpaid work it performed for Wenger on the Project. (See Complaint, Dkt. 1.) In light of developments during discovery, Acranom filed an amended complaint in this action on July 15, 2016 (see Amended Complaint, Dkt. 26), and WCC filed an amended answer to assert counterclaims against Acranom (see Amended Answer, Dkt. 27). On November 21, 2016, WCC moved for partial summary judgment as to its claims for a $1,150,000 credit for the elimination of face brick removal work, a $23,769 credit for Acranom's failure to provide payment and performance bonds, a $596,125.86 credit for payments made to Acranom or third parties on behalf of Acranom, and as to Acranom's claims for extra work. (WCC's Motion for Partial Summary Judgment, Dkt. 32.) On September 9, 2017, the Court granted summary judgment to WCC as to its claims for payments to or on behalf of Acranom and as to Acranom's claims for extra work. See Acranom Masonry, Inc. v. Wenger Const. Co., No. 14-CV-1839 (PKC), 2017 WL 4358751 (E.D.N.Y. Sept. 29, 2017). Following an unsuccessful attempt at mediation (Feb. 1, 2018 Status Report, Dkt. 46), an initial pre-trial conference was held on August 13, 2018 (Aug. 13, 2018 Minute Entry). On September 21, 2018, this case was consolidated for trial with Acranom's case against Hanover, as Acranom's claims against Hanover are dependent on a finding of liability against WCC in this action. (Sept. 21, 2018 Order.) The Court held a bench trial from January 28 to January 30, 2019. (See Jan. 28-Jan. 30, 2019 Minute Entries.) On February 8, 2019, the parties submitted post-trial briefing and Proposed Findings of Fact and Conclusions of Law. (See WCC's Proposed Findings, Dkt. 66; WCC's Trial Brief (WCC Br."), Dkt. 67; Acranom's Proposed Findings, Dkt. 68.)
Acranom is a Connecticut-based masonry restoration company founded in 2002 by its current Vice President, Salvatore "Sal" Monarca ("Monarca").
Founded in 2000, WCC is a general contractor and construction manager based in Plainview, New York. (WCC-Acranom Subcontract, Def.'s Ex. I, at 1; Wenger Direct Examination ("Wenger Direct"), Tr., at 108.) Like Acranom, WCC performs public works projects. (Id.) Since its founding, WCC has performed work on three different school construction projects commissioned by the SCA (id.), which is the municipal authority responsible for building and renovating public schools in New York City (Stewart Direct, Tr., at 9-10). David Wenger ("Wenger") serves as the president of WCC, and at all times relevant to this litigation, WCC employed Alex Cardinale ("Cardinale") as a project manager. (Wenger Direct, Tr., at 119.)
On January 20, 2011, the SCA issued a solicitation of bids to perform construction work at PS 86, a public school located at 220 Irving Avenue, Brooklyn, New York. (SCA-Wenger Bid & Contract Agreement ("Prime Contract"), Plaintiff's Exhibit ("Pl's Ex.") 1, at 2.) The SCA's solicitation indicated that the Project would involve exterior masonry work, foundation work, gutter and cornice repair, window replacement, interior plaster and painting work, drainage work, and site grading, and it included plans and specifications for each item of work. (Wenger Direct, Tr., at 359.) The solicitation also indicated that all bids should include certain "provisions" as part of the bid amount. (Plan Drawing T003.00, Pl's Ex. 3, at 2.) By denoting that an item of work is a provision, the SCA indicates that it has not decided whether to commission the provision item of work, yet still requires a bidder to include the cost of the work as part of its bid price. (Stewart Direct, Tr., at 25.) Provisions, like all commissioned work, are subject to potential deletion from the scope and price of the prime contract at a later time. (Id.) Among the provisions outlined in the SCA's solicitation for bids on the Project was approximately 18,000 square feet of face brick replacement. (Plan Drawing T003.00, Pl's Ex. 3, at 2.)
The Project was competitively bid, with the contract to be awarded to the lowest responsible bidder. (Wenger Direct, Tr., at 362.) The solicitation provided that only lump-sum bids would be considered. (Prime Contract, Pl.'s Ex. 1, at 7 (stating that "[b]idders shall submit a LUMP SUM BID AMOUNT").) On February 15, 2011, WCC submitted a bid to the SCA, proposing to complete the required work on the Project for a lump sum of $4,269,000. (Id.) Neither WCC's bid nor the resulting Prime Contract specified any unit prices. (See generally id.; see also Wenger Direct, Tr., at 366.) Prior to submitting its bid, WCC estimated the cost of performing the work involved in the Project and solicited bids from potential subcontractors for the performance of certain aspects of that work. (Wenger Direct, Tr., at 361.) WCC specifically solicited proposals for masonry work, because it considered the masonry "more of a specialty item" that it does not typically perform. (Id.) At trial, Wenger testified that WCC received multiple quotes for the face brick replacement provision and that those quotes were consistent with a price of $65 per square foot of face brick replacement. (Id. at 376.)
The SCA awarded the Project to WCC on April 18, 2011, finding that WCC's February 15, 2011 bid was the lowest responsible bid that it had received. (Prime Contract, Pl.'s Ex. 1, at 7.) Because the SCA's bid solicitation called for a lump-sum bid, the resulting Prime Contract was simply priced at $4,269,000; it did not included any stipulated or unit prices for particular items of work to be performed. (Id.) The Prime Contract called for substantial completion of the Project within 450 days from the date that the SCA gave notice of permission to proceed and final completion with 510 days. (Id. at 2.) If WCC failed to meet these completion deadlines, the Prime Contract provided for $1,500 in liquidated damages for each day of delay. (Id.) The Prime Contract also incorporated the SCA's General Conditions for Capital Improvement and Restructuring Programs (the "General Conditions") into its terms. (Id.; see also SCA General Conditions, Pl's Ex. 2, at 7 (defining the Prime Contract and Contract Documents to include the General Conditions).)
The SCA's General Conditions detail, among other things, the requirements for any subcontract entered into by the general contractor on an SCA project and the procedures by which the SCA may make changes to the scope of a construction project. The provisions of the General Conditions relevant to this case are as follows:
(General Conditions, Pl.'s Ex. 2, at 19 (emphasis added).)
(Id. at 22.)
(Id. at 24.)
(Id. at 26.)
In March 2011, after it had already submitted its bid to the SCA, WCC solicited a price quote from Acranom for the masonry work involved in the Project. (Wenger Direct, Tr., at 369-71.) On March 29, 2011, Stewart, acting on behalf of Acranom, provided a price quote of $798,732. (Initial Acranom Quote, Pl's Ex. 14, at 4.) Stewart prepared this price quote without any input from Monarca. (Monarca Cross, Tr. 273, 277 ("I mean, [Stewart] did all the negotiation. That's the honest truth.").) Stewart's March 29, 2011 quote accounted for masonry restoration, certain face brick replacement specified in Drawing A403, pointing, and brick replacement under a copper cornice. (Initial Acranom Quote, Pl's Ex. 14, at 4.) Stewart's quote also stated "No Provision Seen," meaning that the price quoted did not include a price for work on any provisions, and specified that "[a]ll additional quantities or [C]hange [O]rders are to be negotiated between [the] General Contractor and Acranom Masonry." (Id.) When WCC's estimator, John Sparagano, received this initial quote from Stewart, he asked that Stewart call him and pointed out that the Prime Contract included Provision work in Drawing T0003, i.e., the face brick replacement provision, and asked that Acranom include a price quote for those provisions. (Pre-Contract Communications, Pl.'s Ex. 14, at 3.)
Following this call, Stewart emailed Sparagano on March 30, 2011 with an updated price quote. (Id.) Stewart's email included the following statement: "Brick replacement [$]65 per ft 18000 × [$]65 equals[] [$]1,170,000. Please add this to my quote yesterday." (Id.) Monarca was unaware of this proposal and not involved in its calculation. (Id at 304 ("It's just a square foot number so, I mean, there's other costs that could be in there. I don't know, that $65, how [Stewart] has it, what he was thinking at the time or how he calculated it. That's all I'm trying to say.").) When $1,170,000 was added to Stewart's initial quote of $798,732, the addition of the brick replacement quote brought the final Acranom quote to $1,968,732. (See Monarca Cross, Tr., at 269.) Wenger and Sparagano subsequently met with Stewart in April 2011 to negotiate the price and terms of a potential subcontract. (Pre-Contract Communications, Pl.'s Ex. 14, at 1.) On April 18, 2011, the SCA officially awarded the Project to WCC based on its February 15, 2011 bid. (Prime Contract, Pl.'s Ex. 1, at 7.) Two days later, on April 20, 2011, Wenger sent a letter to Stewart stating that "[WCC] will proceed with drafting a contract for the work based upon your March 29, 2011 quote . . . and subsequent March 30, 2011 e-mail confirming the 18000 square foot brick removal/replacement provision unit cost of 65/sq.ft. The total contract cost will be $1,960,000.00." (Pre-Contract Communications, Pl.'s Ex. 14, at 1.)
On May 4, 2011, Stewart signed the subcontract (the "Subcontract") on behalf of Acranom. (WCC-Acranom Subcontract, Def.'s Ex. I, at 17; Stewart Cross, Tr., at 79.) The next day, Wenger signed the Subcontract on behalf of WCC. (WCC-Acranom Subcontract, Def.'s Ex. I, at 17.) The Subcontract, as agreed to, contains the following provisions relevant to this action.
(Id. at 1.)
(Id.)
(Id.)
(Id. at 11.)
(Id. at 13.)
Acranom began its work as a subcontractor on the Project in April 2012.
Even before Acranom began to perform the masonry work called for by the Subcontract, difficulties arose with respect to the provision of payment and performance bonds. Pursuant to Article 27(b)(2) of the Subcontract, Acranom was required to supply payment and performance bonds to WCC.
In February 17, 2012, shortly before Acranom began its work on the Project in April 2012, the SCA issued Notice of Direction ("NOD") 00001 and Bulletin 1. (See Notice of Direction No. 1, Pl.'s Ex. 6, at 6; Bulletin No. 1, Pl.'s Ex. 6, at 4.) By doing so, the SCA indicated that it would add extra work and delete certain items of masonry work from the scope of the Project. (Id.) Following a June 4, 2012 negotiation meeting attended by three SCA representatives, Stewart (representing Acranom), and Cardinale (representing WCC), the SCA agreed to accept a credit of $431,378 against the price of the Prime Contract.
On July 18, 2012, the SCA issued NOD 4, which indicated that the SCA would delete 15,900 square feet of the face brick replacement provision work detailed in Drawing T003.00.
In accordance with its typical practice, WCC consulted with the subcontractor whose scope of work was affected by the deletion—in this case, Acranom—prior to submitting a proposal to the SCA for the credit amount. (Wenger Direct, Tr., at 117 ("We would then assimilate the information, . . . find the subcontractors that are relevant to that particular scope of work and that—all the deleted work, and we would submit that to the [SCA], once we got all the documentation and the quotes from the subcontractors.").) Based on its consultation with Acranom, WCC proposed on August 1, 2012 that a change order be issued for a $426,677.04 credit against the Prime Contract amount. (Proposed Change Order, Pl.'s Ex. 7, at 10.) Cardinale confirmed this proposed change order amount in an August 17, 2012 letter to Aronov. (Cardinale Letter, Pl.'s Ex. 7, at 16.) Cardinale's letter included the phrase "See Acranom proposal attached," a reference to a spreadsheet of cost estimates for the deleted provision that was prepared by Stewart. (Id.; Acranom Proposal Regarding NOD No. 4, Pl.'s Ex. 7, at 17.) On September 10, 2012, the SCA countered WCC and Acranom's proposed change order with a "Fair and Reasonable Estimate" ("FRE") of $720,515. (FRE, Pl.'s Ex. 7, at 11.) After receiving the SCA's FRE, WCC rejected the FRE amount, which triggered a meeting among representatives of the SCA, WCC, and Acranom. (Change Management Routing Form, Pl.'s Ex. 7, at 6.) At the change order meeting on October 5, 2012, the negotiators agreed to a Change Order in the amount of a $558,700 credit against the Prime Contract. (October 5, 2012 Meeting Attendance Sheet, Pl.'s Ex. 7, at 13.)
On October 8, 2012, Cardinale emailed Subcontractor Change Order ("SCO") 2, which proposed a credit of $540,000 against the value of the Subcontract. (Cardinale Email, Pl.'s Ex. 7, at 25.) This initial version of SCO 2 was signed by Monarca, and returned to WCC. (Initial SCO No. 2, Pl.'s Ex. 7, at 26.) When he received the signed copy of the initial version of SCO 2, Wenger became angry, believing that the credit amount was not what the parties had previously agreed to, and refused to sign it. (Wenger Direct, Tr., at 402.) Subsequently, an updated version of SCO 2 was sent to Acranom on November 30, 2012, this time proposing a credit in the amount of $715,500. (Final SCO No. 2, Pl.'s Ex. 7, at 27.) Acranom never signed this second proposal, insisting that the amount of the SCA's credit to WCC should form the basis of WCC's corresponding credit to Acranom.
At trial, Monarca testified that he met in person with Wenger to discuss the dispute regarding the appropriate amount of the credit due for SCO 2. (Monarca Direct, Tr., at 238-39.) Though Monarca did not recall the updated version of SCO 2 sent on November 30, 2012 or the specific date of his alleged meeting with Wenger, he stated that it was "maybe a month or two" later. (Monarca Cross, Tr., 317-21.) To support his account, Monarca produced Plaintiff's Exhibit 21, a worksheet detailing payments and credits against the Subcontract price through February 28, 2013. (PS 86 Acranom Recap, Pl.'s Ex. 21.) Wenger denied that this meeting ever occurred and denied that various handwritten figures on the document were made by him, though he did recognize the handwriting of WCC's bookkeeper, Claire Shanley. (Wenger Cross, Tr., at 460-63.)
On September 28, 2012, the SCA revised
On February 13, 2013, the SCA issued Bulletin 4R, which called for the completion of work in accordance with particular drawings. (WCC Change Order Proposal, Pl.'s Ex. 10, at 4.) Because some of this work would be performed by Acranom, it submitted a detailed payment breakdown proposing a change order of $255,576.77. (Id.) When the SCA rejected this amount and gave an FRE in the amount of $51,750 for the work to be performed by Acranom, Rely Manacay, a WCC employee, forwarded the SCA's proposal and asked whether Monarca would be available for a negotiation meeting, indicating that WCC planned to reject the FRE. (PCO 10W Email Exchanges, Pl.'s Ex. 10, at 2.) Tom Barry, Jr., an Acranom employee, stated that Acranom would not accept the FRE amount and therefore would be available for negotiation. (Id.) WCC ultimately issued a SCO 5, which added $140,000 to the price of the Subcontract. (SCO No. 5, Pl.'s Ex. 1, at 1.) The parties do not dispute the amount of this addition.
On May 21, 2013, the SCA issued Bulletin 7, which required the construction of a temporary water containment structure in the basement of PS 86. (NOD No. 17, Pl's Ex. 6, at 3.) Acranom provided a detailed payment breakdown, proposing a change order of $2,990. (May 24, 2013 Acranom Proposal, Pl's Ex. 9, at 4.) WCC subsequently requested an addition of $13,993.09 to the Prime Contract price, based on the additional Acranom work and the work of another subcontractor. (WCC Change Order Proposal, Pl's Ex. 9, at 2.) WCC ultimately issued a change order to Acranom adding $2,512.76 to the price of the Subcontract. (SCO No. 4, Pl.'s Ex. 9, at 1.) The parties do not dispute the amount of this addition.
Acranom ceased working on the Project in September 2013. (Monarca Cross, Tr., at 320.) On January 9, 2014, while the Project was still ongoing, the SCA's architect issued Bulletin 19. (Bulletin No. 19, Def.'s Ex. E.) The stated purpose of Bulletin 19 was "to clarify the scope of work and to provide a credit for the [SCA] for work in provisions not used and other work not performed." (Id.) Among the listed changes was an item stating "T003.00—Delete remaining (unused) provision for face brick replacement 1800sq ft." (Id.) At the time that the SCA issued a change order for this work, Acranom refused to participate in any negotiations over the amount of the credit because Monarca believed, incorrectly, that the entire face brick provision had been eliminated by Bulletin #1 and SCO 2. (Wenger Letter Regarding Provision Credit, Def.'s Ex. TT; Monarca Cross, Tr., at 311-12 ("I was just refusing to cooperate because of what was going on with the prior change order."); Wenger Direct, Tr, at 407.) Ultimately, the SCA issued Change Order 29R, which credited $63,252 against the value of the Prime Contract for the deletion of the remaining face brick replacement provision. (Wenger Direct, Tr., at 407; Negotiated Cost Breakdown, Pl.'s Ex. 11, at 2.)
Over the course of the Project, there were numerous instances in which Acranom failed to perform work specified in the Subcontract or acted in a manner that cause WCC to incur charges from other suppliers and subcontractors on the Project.
The scope of work detailed in Rider A of the Subcontract specified that Acranom would apply graffiti resistant paint coatings in accordance with the SCA's specifications. (WCC-Acranom Subcontract, Pl.'s Ex. 4, at 14.) It is undisputed that Acranom did not do so. (See Acranom's Proposed Findings of Fact and Conclusions of Law, Dkt. 68, ¶¶ 84-89.) On November 1, 2013, WCC requested a credit against the price of the Subcontract, valuing the unperformed work at $22,508.42. (November 1, 2013 Wenger Letter, Def.'s Ex. CC.) In an undated draft e-mail that appears to have never been sent, Monarca stated that a letter had been sent to WCC on November 15, 2013 whereby Acranom acknowledged its failure to perform and offered to return to the job to apply the anti-graffiti paint coating. (Undated Monarca Email, Def.'s Ex. DD.) According to this email, WCC never responded to this letter, so Monarca proposed a credit of $13,200. (Id.) On December 12, 2013, WCC formally asserted a credit back charge against the Subcontract price in the amount of $22,508.42. (Anti-Graffiti Coating Back Charge, Def.'s Ex. EE.)
The scope of work detailed in Rider A of the Subcontract also specified that Acranom would remove, store, protect, and reinstall window air conditioning units at PS 86. (WCC-Acranom Subcontract, Pl.'s Ex. 4, at 15.) It is undisputed that Acranom did not do so, as it believed the work was unnecessary. (See Acranom's Proposed Findings of Fact and Conclusions of Law, Dkt. 68, ¶ 87.) On November 1, 2013, WCC requested a credit against the price of the Subcontract, valuing the unperformed work at $12,959.10. (November 1, 2013 Wenger Letter, Def.'s Ex. FF.) Acranom did not respond to this request. (Wenger Direct, Tr., at 429; Monarca Cross, Tr., at 585.) On December 12, 2013, WCC formally asserted a credit back charge against the Subcontract price in the amount of $12,959.10. (Air Conditioning Unit Back Charge, Def.'s Ex. GG.)
Additionally, the Rider A of the Subcontract required Acranom to plasticize windows during the course of its work. (WCC-Acranom Subcontract, Pl.'s Ex. 4, at 15.) Acranom does not dispute that it failed to do so, as it believed the work was unnecessary. (See Acranom's Proposed Findings of Fact and Conclusions of Law, Dkt. 68, ¶ 88.) On November 1, 2013, WCC requested a credit against the price of the Subcontract, valuing the unperformed work at $23,396. (November 1, 2012 Wenger Letter, Def.'s Ex. HH.) On December 12, 2013, WCC formally asserted a credit back charge against the Subcontract price in the amount of $23,396. (Window Plasticizing Back Charge, Def.'s Ex. JJ.)
While the Project was ongoing, WCC asserted 12 back charges for work that Acranom allegedly performed improperly. (Def.'s Exs. K-V.) Acranom's last day on the Project was in September 2013. (Monarca Cross, Tr., at 320.) Between November 5, 2013 and May 29, 2014, however, WCC asserted the 6 additional back charges against Acranom for improperly performed work. (Def.'s Exs. W-BB.) The total value of the 18 back charges asserted by WCC was $74,613.31. (Def. Ex. VV.)
Of these back charges, Acranom only disputes the back charges related to scaffolding. (See Acranom's Proposed Findings of Fact and Conclusions of Law, Dkt. 68, ¶ 86.) Acranom contends that it was necessary to move the scaffolds, meaning that Wenger would have incurred the moving costs in any case. (Id.)
Of these back charges, Acranom only disputes the back charges related to regular cleaning of scaffolds after work shifts, arguing that the records collected in Defendant's Exhibit X are insufficiently reliable. (See Acranom's Proposed Findings of Fact and Conclusions of Law, Dkt. 68, ¶ 89.)
In bringing this action, Acranom asserted five claims against WCC: (1) breach of contract for failing to pay the remaining balance of the Subcontract price; (2) breach of contract for failing to pay for extra work performed on the Project; (3) violation of the New York Prompt Payment act for failing to pay the balance of the Subcontract price after Acranom demanded payment on or about November 27, 2013; (4) breach of the covenant of good faith and fair dealing by acting in bad faith and failing to pay all amounts due and owing to Acranom; and (5) unjust enrichment by failing to pay for work performed by Acranom. (See generally Amended Complaint, Dkt. 26.) WCC also asserted counterclaims against Acranom, arguing that it is entitled to a credit against the Subcontract price due to: (1) Acranom's failure to perform required work and to pay its subcontractors and suppliers; (2) Acranom's failure to perform in a timely manner, which subjected WCC to delay damages and liquidated damages from the SCA
In its summary judgment order, the Court dismissed Acranom's claims for extra work. See Acranom Masonry, Inc. v. Wenger Const. Co., No. 14-CV-1839 (PKC), 2017 WL 4358751, at *15-18 (E.D.N.Y. Sept. 29, 2017). The Court also granted WCC's motion for a $596,124.20 credit against the Subcontract price based on payments WCC made to Acranom and on Acranom's behalf. Id. The Court now considers the parties' remaining claims and counterclaims in light of the evidence and testimony produced at trial.
The elements of a claim for breach of contract under New York law are "(1) the existence of an agreement between the parties, (2) adequate performance of the contract by the plaintiff, (3) breach of contract by the defendant, and (4) damages." Artists Rights Enforcement Corp. v. Estate of King, 370 F.Supp.3d 371, 380 (S.D.N.Y. 2019).
The parties do not dispute the existence of an agreement between the parties or, at least for the purpose of analyzing Acranom's breach of contract claim, the adequacy of Acranom's performance. The thrust of Acranom's breach of contract claim is that WCC breached the contract by failing to fully compensate it for the value of work it performed under the Subcontract once Acranom completed its final day on the job.
New York law holds that "a fundamental objective of contract interpretation is to give effect to the expressed intention of the parties." In re MPM Silicones, 874 F.3d 787, 795 (2d Cir. 2017). Thus, the "initial inquiry is whether the contractual language, without reference to sources outside the text of the contract, is ambiguous." Id. "Contract language is ambiguous if it is `capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.'" Am. Home Assurance Co. v. Hapag Lloyd Container Linie, GmbH, 446 F.3d 313, 316 (2d Cir. 2006) (quoting Lightfoot v. Union Carbide Corp., 110 F.3d 898, 906 (2d Cir. 1997)). "When the district court as factfinder is confronted with a contract provision that is not unambiguous, it may properly consider evidence extrinsic to the contract, including testimony offered by the parties." Diesel Props S.R.L. v. Greystone Bus. Credit II LLC, 631 F.3d 42, 51 (2d Cir. 2011) (citing 67 Wall St. Co. v. Franklin Nat'l Bank, 333 N.E.2d 184, 186 (N.Y. 1975) ("[T]he court can look to the surrounding facts and circumstances to determine the intent of the parties."). When interpreting an ambiguous contract provision, the fact finder may consider "evidence of conversations, negotiations and agreements made prior to or contemporaneous with the execution of" a contract. 67 Wall St. Co., 333 N.E.2d at 186-87; see also Mooney v. AXA Advisors, L.L.C., 19 F.Supp.3d 486, 506 (S.D.N.Y. 2014) ("Evidence to explain an ambiguity . . . places the [C]ourt in the position of the parties when they made the contract, and enables it to appreciate the force of the words they used in reducing it to writing." (quoting Murdock v. Gould, 86 N.E. 12, 14 (1908))).
In its summary judgment order, the Court determined that the Subcontract was ambiguous as to the proper way to calculate a potential credit for the value of the face brick replacement provision work under the Subcontract. Acranom Masonry, Inc. v. Wenger Const. Co., No. 14-CV-1839 (PKC), 2017 WL 4358751, at *10-12 (E.D.N.Y. Sept. 29, 2017). Specifically, the Court found Article 4's reference to "the prices stipulated" to be ambiguous. Id. *14. Having found supra that this phrase refers to the unit prices stipulated between WCC and Acranom in pre-contract communications among Stewart, Sparagano, and Wenger, the Court finds that as a matter of law, Acranom cannot establish that WCC breached the Subcontract by insisting on a credit greater than $540,000 for the deletion of the face brick provision work from the Subcontract.
Even if Acranom could establish that WCC breached the Subcontract, its breach of contract would founder because Acranom has not introduced sufficiently reliable evidence to establish damages.
Failure to provide proof of damages "is fatal to a cause of action for breach of contract." Kelly v. Bensen, 58 N.Y.S.3d 169, 173 (3d Dep't 2017). A non-breaching party "is entitled, as a matter of law, to recover market value damages to the extent that they can be proven with reasonable certainty." Schonfeld v. Hilliard, 218 F.3d 164, 182 (2d Cir. 2000). Damages "may not be merely speculative, possible or imaginary, but must be reasonably certain and directly traceable to the breach, not remote or the result of other intervening causes." Kenford Co. v. Erie Cty., 493 N.E.2d 234, 235 (1986). The non-breaching party need only prove "the fact of damages by a preponderance of the evidence"; at that point, "the burden of uncertainty as to the amount of damage" lies with the breaching party. Process Am. Inc. v. Cynergy Holdings, LLC, 839 F.3d 125, 141 (2d Cir. 2016).
At trial, Acranom failed to produce sufficiently reliable evidence to prove that it suffered a loss from WCC's refusal to pay further amounts on the Subcontract price in light of the deletion of the face brick replacement provision. Monarca initially testified that "[t]he overall costs for the project was about $1 million," but he later reduced this estimate to $930,000 in order to account for the SCA's payment of $70,000 for workmen's compensation insurance. (Monarca Direct, Tr., at 230-33.) No documentary foundation was provided for this amount, nor could it have been because Acranom failed to produce certified payrolls, material invoices, equipment cost records, and job cost records during discovery.
New York's Prompt Payment Act mandates particular procedures for the submission and payment of construction contractor invoices. Under the Prompt Payment Act, a contractor may submit a final invoice for payment once it has performed all of its obligations under the contract. N.Y. Gen. Bus. Law § 756-a(2)(a). When the person or entity receiving contractor services receives such an invoice, the invoice must be "approve[d] or disapprove[d]." N.Y. Gen. Bus. Law § 756-a(2)(a)(i). Grounds for disapproval include "[u]nsatisfactory or disputed job progress," "[d]efective construction work or material not remedied," and "[f]ailure to comply with other material provisions of the construction contract." N.Y.G.B.L. §§ 756-a(2)(a)(i)(1)-(2), (4). An owner cannot "unreasonably withh[o]ld" approval or "in bad faith disapprove all or a portion of an invoice," and is required to "prepare and issue a written statement" justifying any refusal. N.Y.G.B.L. § 756-a(2)(a)(i). Payment must be made within 30 days of approval of the invoice, and the owner may withhold "only an amount that is sufficient to pay the costs and expenses the owner reasonably expects to incur in order to cure the defect" that prompted the disapproval. N.Y.G.B.L. §§ 756-a(3)(a)(ii), (iv).
Acranom claims that WCC's refusal to pay the remaining balance due on the original Subcontract price after Acranom completed its work "was unreasonable and in bad faith." Because the Court has determined supra that WCC had no duty to pay any amount of the Subcontract Price attributable to the face brick replacement provision once the provision was deleted from the Project scope, Acranom's claim for prompt payment of an amount it was not owed fails.
New York law implies in every contract a covenant of good faith and fair dealing "pursuant to which neither party to a contract shall do anything which has the effect of destroying or injuring the right of the other party to receive the fruits of the contract." Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d 400, 407 (2d Cir. 2006) (quoting M/A-COM Security Corp. v. Galesi, 904 F.2d 134, 136 (2d Cir. 1990)). Because a breach of this duty is "merely a breach of the underlying contract," New York law "does not recognize a separate cause of action for breach of the implied covenant of good faith and fair dealing when a breach of contract claim, based upon the same facts, is also pled." Cruz v. FXDirectDealer, LLC, 720 F.3d 115, 125 (2d Cir. 2013). A breaching party's "bad faith in connection with a breach of contract . . . does not provide an independent basis for recovery." Symquest Grp., Inc. v. Canon U.S.A., Inc., 186 F.Supp.3d 257, 266 (E.D.N.Y. 2016) (citing Avazpour Networking Servs. v. Falconstor Software, Inc., 937 F.Supp.2d 355, 365 (E.D.NY. 2013) and Quail Ridge Assoc. v. Chemical Bank, 558 N.Y.S.2d 655, 657 (3d Dep't 1990)).
Because Acranom's claim against WCC for breaching the implied covenant of good faith and fair dealing is based on WCC's failure "to pay Acranom all amounts due and owing . . . in bad faith, vexatiously, wantonly and/or for oppressive reasons" (Amended Complaint, Dkt. 26, ¶¶ 35-36), it must be dismissed as redundant. Cf. L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 434 n.17 (2d Cir. 2011) (stating that "[b]ecause [the plaintiff's] claim for breach of the implied covenant of good faith and fair dealing . . . [was] based on the same facts as its claim for breach of contract, it should have been dismissed as redundant").
Plaintiff's final claim seeks recovery under a theory of unjust enrichment. (Amended Complaint, Dkt 26, ¶¶ 39-48.) In New York, the elements of an unjust enrichment claim are that "(1) [the] defendant was enriched (2) at [the] plaintiff's expense, and (3) that it is against equity and good conscience to permit defendant to retain what is sought to be recovered." Clark v. Daby, 751 N.Y.S.2d 622, 623 (3d Dep't 2002). "The theory of unjust enrichment lies as a quasi-contract claim," and as such is "an obligation the law creates in the absence of any agreement." Goldman v. Metro. Life Ins. Co., 841 N.E.2d 742, 747 (N.Y. 2005). Accordingly, as even Acranom acknowledges (Acranom's Proposed Findings, Dkt. 68, ¶ 17), a finding of unjust enrichment is generally barred by the existence of a valid and enforceable written agreement. See In re First Cent. Fin. Corp., 377 F.3d 209, 213 (2d Cir. 2004) (citing Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 516 N.E.2d 190, 193 (N.Y. 1987) ("The existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter.")).
Because the parties had a valid and enforceable contract that governed their relationship and WCC's payment obligations, Acranom's claim for unjust enrichment also fails.
If a defendant shows, "by a preponderance of the credible evidence, that the plaintiff breached its contract with the defendant," then the defendant may recover damages for "the cost of completing the work that was the subject of the contract and correcting the defects in the plaintiff's work." Metro. Switch Bd. Mfg. Co. v. B& G Elec. Contractors, 946 N.Y.S.2d 178, 179 (2d Dep't 2012). For its counterclaims, WCC seeks credits
Article 4 of the Subcontract required Acranom to supply payment and performance bonds to WCC. (WCC-Acranom Subcontract, Def.'s Ex. I, at 15.) Acranom does not dispute that it did not do so, as it was unable to obtain a bond. (Acranom Proposed Findings, Dkt. 68, ¶ 85.) Based on this failure, the parties agreed that WCC would hold 25% of all payments due to Acranom as retainage until completion of the Project. (July 30, 2011 Letter Regarding Retainage, Def.'s Ex. QQ.)
Without addressing whether the parties' retainage agreement waived WCC's right to insist on provision of the payment and performance bonds, the Court finds, as it did on summary judgment, that WCC has failed to prove that it sustained any damages as a result of Acranom's failure to provide the required bonds.
Article 10(b) of the Subcontract provides that "[i]n the event that . . . [Acranom] shall cause by any actions or omissions the stoppage, delay or interference [of] any work of [WCC] or of any other subcontractors, . . . [WCC may] complete the work . . . or may employ others to complete the work to be done . . . and charge the cost thereof to [Acranom]." (WCC-Acranom Subcontract, Def.'s Ex. I, at 5.) At trial, Wenger testified that, at an unspecified time, the SCA shut down the Project temporarily due to the fact that Acranom's employees were disassembling scaffolding and removing planks without replacing them, as required by certain safety requirements. (Wenger Direct, Tr., at 442.) This forced WCC to pay its scaffolding contractor, Colgate Scaffold ("Colgate"), to correct these violations on two occasions. (See Def.'s Ex. M; Def.'s Ex. U.) WCC has provided documentation of these payments. (Id.) In total, WCC paid Colgate $31,147.06. (Id.)
Acranom does not dispute that its employees moved the scaffolding planks; rather, Monarca stated that they were moved by his men, at the direction of an SCA officer, because the scaffold erector was not available for use. (Monarca Direct, Tr., at 575-78.) Nevertheless, this does not absolve Acranom of its omission to return the planks to their original location. Because WCC has documented the costs it incurred to replace the planks, it may recover on its claim for $31,147.06 due to Acranom's movement of scaffolding equipment.
Rider A of the Subcontract required Acranom to "[r]emove, store . . . and protect existing A/C window units." (WCC-Acranom Subcontract, Def.'s Ex. I, at 15.) Acranom does not dispute that it did not do so, but it asserts the work was unnecessary. (Acranom's Proposed Findings, Dkt. 68, ¶ 87.) WCC claims $12,959.10 in damages for this breach. (Def.'s Ex. VV.)
While Acranom's refusal to perform this work constitutes a breach of the Subcontract, WCC has not submitted sufficient evidence to prove its damages. Rather, it has submitted only a letter applying a credit back charge that was sent to Acranom on December 12, 2013 with an estimate of the cost of the work. (See Ex. GG.) This single document is insufficient to establish that the work was actually performed and, thus, that WCC incurred costs or damages associated with Acranom's breach. Accordingly, WCC's claim for a credit of $12,959.10 fails.
Rider A of the Subcontract requires that "[a]ll windows shall be plasticized prior to commencing each work shift and shall be returned to operable condition at the end of each shift." (WCC-Acranom Subcontract, Def.'s Ex. I, at 15.) Acranom does not dispute that it did not do so, but it asserts that the work was unnecessary. (Acranom's Proposed Findings, Dkt. 68, ¶ 88.) WCC claims $32,396 in damages for this breach. (Def.'s Ex. VV.)
As it concedes, Acranom breached the Subcontract by refusing to plasticize windows before each work shift. Nevertheless, WCC has not submitted sufficient evidence to prove its damages. Rather, it has submitted only a letter applying a credit back charge that was sent to Acranom on December 12, 2013 with an "estimate" of the cost of the work. (See Ex. JJ.) This fails to establish that the work was actually performed and that WCC incurred costs or damages associated with Acranom's breach. Accordingly, WCC's claim for a credit of $32,396 fails.
Rider A of the Subcontract specifies that "[t]he area affected by the work shall be maintained daily in clean, debris and dust free condition, at all times and must be cleaned in preparation and readied for the school[`]s daily activities, pupils, staff and operations." (WCC-Acranom Subcontract, Def.'s Ex. I, at 14.) Rider A further specifies that "[a]ny and all damages caused by water, dust or debris intrusion shall be corrected/repaired by [Acranom]." WCC claims that Acranom failed to adequately clean its work area on 24 days
In support of its claim for a back charge of $19,323, WCC has submitted certified payroll reports for the employee reports and daily progress reports describing the cleaning done each day. Notwithstanding Acranom's objection that these records were only provided to it after it completed its work on the Project, these records are sufficiently reliable to establish by a preponderance of the evidence that WCC suffered damages due to Acranom's failure to clean in accordance with the Subcontract. Accordingly, WCC is entitled to $19,323 on this counterclaim.
In a diversity action, state law governs the award of pre-judgment interest. Schipani v. McLoed, 541 F.3d 158, 164-65 (2d Cir. 2008). New York law provides that a prevailing claimant may recover pre-judgment interest "upon a sum awarded because of breach of performance of a contract." N.Y. C.P.L.R. § 50001(a); see also HTV Indus., Inc. v. Agarwal, 317 F.Supp.3d 707, 717 (S.D.N.Y. 2018), as amended (June 18, 2018). If pre-judgment interest is awarded, it must be calculated at the statutory rate of nine percent (9%). See N.Y. C.P.L.R. § 5004. Pre-judgment interest is calculated from the "earliest ascertainable date the cause of action existed." N.Y. C.P.L.R. § 5001(b). New York law grants "wide discretion in determining a reasonable date from which to award pre[-]judgment interest." Conway v. Icahn & Co., Inc., 16 F.3d 504, 512 (2d Cir. 1994).
In its post-trial briefing, WCC asserts that the Court should calculate pre-judgment interest from the last day of Acranom's work on the Project. (WCC Trial Brief, Dkt. 67, at 27.) At trial, Monarca testified that Acranom completed its work on the Project in September 2013. (Monarca Cross, Tr., at 320.) Though no particular date of completion was specified at trial or in the documentary evidence, this admission means that the latest WCC's cause of action for breach of contract would have accrued is October 1, 2013. Accordingly, pre-judgment interest shall be calculated from that date.
In light of the Court's determinations of liability supra, WCC is entitled to the following amount in damages:
Based upon the foregoing findings of fact and conclusions of law, the Court grants judgment in favor of WCC as to all claims and counterclaims and awards damages to WCC in the amount of $263,665.01. The Clerk of Court is respectfully directed to enter judgment and close this case accordingly.
SO ORDERED.
At trial, WCC produced further extrinsic evidence of the parties' contract negotiations. Crucially, WCC introduced the initial March 29, 2011 quote from Stewart, which offered to perform the Subcontract work for $798,732. (Initial Acranom Quote, Pl's Ex. 14, at 4.) This quote stated "No Provision Seen," which Stewart acknowledged meant that it did not include any price for provision work. (Id.) Stewart's follow-up email on March 30, 2011 stated: "Brick replacement [$]65 per ft 18000 × [$]65 equals[] [$]1,170,000. Please add this to my quote yesterday." (Pre-Contract Communications, Pl.'s Ex. 14, at 3.) When this amount is added to the initial quote, Acranom's final quote for the contract became $1,968,732. This amount is only $8,732 less than the final Subcontract price. (WCC-Acranom Subcontract, Def.'s Ex. I, at 17.) Further, Wenger testified that the Prime Contract between WCC and the SCA had no stipulated or unit prices, and that the Prime Contract was based entirely on a lump-sum bid. (See Wenger Direct, Tr., at 366.) This testimony is confirmed by a review of the text of the Prime Contract. (See Prime Contract, Pl.'s Ex. 1.) According to Wenger's testimony, the purpose of stipulating to a price for the face brick replacement provision was to mitigate the risk inherent in the SCA change order negotiation process. (See id. ("If you don't have a firm understanding with your subcontractor that you're getting numbers from with regard to these unit prices for 18,000 square foot, the dollar is so large—the SCA has so many different estimators; some of them know their stuff, some of them are just . . . they will not listen to you and just tell you what you're going to get. . . . I know that the results of not having a unit price between me and my subcontractor opens me up to a huge risk.").) This testimony and evidence is supported by corresponding language in Article 5.09(B) of the SCA General Conditions, which states that "[e]ach subcontract shall contain the same terms and conditions as to method of payment for Work and as to retained percentages as are set forth in this [Prime] Contract; and Contractor shall pay each Subcontractor in accordance with the terms of the applicable subcontract for Work performed by such Subcontractor." (General Conditions, Pl.'s Ex. 2, at 19 (emphasis added).)
In light of this evidence and testimony, the Court finds that the phrase "at the prices stipulated" refers to the unit values, i.e., the $65 per square foot of face brick replacement work, stipulated between WCC and Acranom during their pre-contract negotiation process.
