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ERIE CTY. WATER AUTH. v. HEN-GAR CONSTR. CORP.

August 6, 1979

ERIE COUNTY WATER AUTHORITY to the Use and Benefit of PRICE BROTHERS COMPANY, DAYTON, OHIO, Plaintiff,
v.
HEN-GAR CONSTRUCTION CORPORATION and Aetna Casualty & Surety Company, Defendants



The opinion of the court was delivered by: CURTIN

The designated plaintiff, Price Brothers Company ("Price Brothers"), instituted this contract action on August 2, 1978. Plaintiff alleges in its complaint that it entered into a contract with the Hen-Gar Construction Corporation ("Hen-Gar") for the sale of pipe to Hen-Gar and that the defendant Hen-Gar has failed to pay $ 86,178.31 remaining on the purchase price of the pipe and $ 11,846.09 in accumulated service charges. Plaintiff also alleges in its complaint that defendant Aetna Casualty & Surety Company ("Aetna") was the surety on a payment bond entered into by Hen-Gar and that Price Brothers, as a supplier of materials to Hen-Gar, is a beneficiary under that bond. Price Brothers claims, therefore, that it is entitled to payment from Aetna for goods sold to Hen-Gar for which it has not received payment.

The defendants' answer alleges two affirmative defenses and two counterclaims. Hen-Gar's defenses are: (1) the goods delivered were defective; and (2) a contract modification was without consideration and coerced by the plaintiff, rendering the contract unenforceable. In the first counterclaim, the defendants claim that the pipe sold by Price Brothers to Hen-Gar was defective and that Hen-Gar was forced to spend $ 150,000 to render the pipe suitable for the intended purposes. Moreover, they claim that the delay caused by the defective material caused Hen-Gar to be assessed penalties of $ 1,000 per day and to miss the bidding on other jobs, with resulting claimed damages of an additional $ 300,000. The second counterclaim alleges that Price Brothers misdelivered six sections of pipe which caused Hen-Gar $ 1,010 in damages for transportation of the pipe to the proper jobsite.

Price Brothers has moved for summary judgment on its own claims and on the defendants' counterclaims. That motion is presently before the court.

 In order to understand the motion fully, a brief discussion of the factual background is necessary. During the early summer of 1977, Hen-Gar entered into a contract with the Erie County Water Authority, which was part of Erie County Water Authority Contract 30C. Hen-Gar agreed to construct a sewer system known as the 48-inch diameter transmission main, Section B, Van Der Water Plant to Ball Pump Station, Town of Tonawanda, Erie County, New York.

 In order to obtain the supply of the necessary pipe for the sewer system, Hen-Gar entered into a contract with Price Brothers. The parties' original agreement called for Price Brothers to furnish approximately 5,390 linear feet of 48-inch, pre-stressed concrete pipe, along with certain ancillary materials, at the price of $ 50.00 per linear foot. Plaintiff Price Brothers alleges that this contract was signed on behalf of Hen-Gar by its president, Henry J. Secord, on June 24, 1977.

 On or about August 1, 1977, for reasons which are among the facts in dispute, the original contract was modified in writing to provide, among other things, for a price increase from $ 50.00 to $ 50.75 per linear foot of pipe. This revision was agreed to by Hen-Gar, and again signed by Mr. Secord. The contract includes the following provisions:

 
4. WARRANTY AND LIMITATIONS Price products are warranted to be manufactured in accordance with specifications identified, modified where necessary to meet a reasonable interpretation, and to be free of defects in workmanship or material for a period of one year after date of delivery. Our responsibility under this warranty is limited as follows:
 
a. To the repair or to the furnishing by us above ground to the job site of a replacement for defective or non-conforming products, or to the allowance of a credit for such products, all at our option, strictly in accord with the procedure stated in Article 5 Claims and Back Charges.
 
e. We shall not be liable for consequential, indirect or incidental damages, including without limitation, any liquidated damages or penalties of any kind which you may incur. We assume no obligation for expenses of any kind, whether arising from delays during replacement of materials for cause, or otherwise.
 
5. (b) Backcharges
 
(1) Claims for shortages or defective materials or non-conformity to specifications, which would be revealed by prompt inspection, must be made in writing to (Price Brothers) immediately and in any event, within 5 days after you receive the materials so that any such claims can be investigated promptly.
 
(2) Claims of defective materials or non-conformity to specifications, not discernable by you from prompt inspection upon delivery, first discoverable by you upon installation of the products into the ground, or first discoverable upon failure of a portion of the pipeline to pass certain specified field tests, will be investigated promptly provided you give (Price Brothers) notice in writing within 5 days after completion of the installation or testing. If, upon such investigation satisfactory evidence is received establishing the defect or non-conformity and that any failure was the result of the quality of the product as delivered, your claim will be allowed in writing subject to the limitations of this agreement.
 
(3) No claim will be allowed except as provided above.

 See Copy of Contract between Price Brothers and Hen-Gar, attached to Plaintiff's Motion for ...


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