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March 21, 1991


The opinion of the court was delivered by: Bartels, District Judge.



In this Miller Act*fn1 case Falco Construction Corporation ("Falco"), the use plaintiff and subcontractor, seeks to recover monetary damages from Summit General Contracting Corporation ("Summit"), the general contractor, and Fireman's Fund Insurance Company, Summit's surety on its payment bond (jointly, the "defendants"). Falco commenced this action after Summit failed to pay $97,515.00, monies Falco alleged it was owed for services Falco rendered Summit pursuant to a written proposal (the "proposal" or "sub-contract") to drive test and production piles for a Naval Telecommunications Center ("NTCC") on Staten Island that Summit was constructing for the Department of the Navy (the "Navy"). Falco's demand for $97,515.00 included a claim for (a) $83,845.00 for eighty-nine (89) piles driven from March 8, 1989 through May 19, 1989; (b) $3,240.00 for costs associated with eleven (11) obstructed or broken piles; (c) $1,170.00 for costs associated with spudding*fn2 thirty-nine (39) piles; and (d) $9,080.00*fn3 for costs associated with driving additional piles on July 13, 1989. The defendants counterclaimed alleging they suffered $14,000.00 in damages on account of Falco's negligent, improper and delayed performance.

In December 1989, after finding that there were triable issues of fact regarding Falco's claim for obstructed piles, spudding and additional work performed on July 13, 1989, and defendants' counterclaim, the Court awarded Falco partial summary judgment in the amount of $69,045.00 plus interest, leaving in dispute a total of $28,470.00. See Memorandum and Order of this Court dated December 6, 1989. Thereafter, the defendants moved pursuant to Fed.R.Civ.P. 15(a) to amend their counterclaim alleging that as a result of Falco's delayed and improper performance they actually suffered $229,590.00*fn4 in damages. The Court granted defendants' motion.

This action was bifurcated and tried without a jury over an eight day period.


A. Falco's Claim

Falco maintains that (1) it is entitled to be reimbursed for spudding, admittedly extra work done without written authorization, notwithstanding the fact that the subcontract contains a contrary provision; (2) under the terms of the sub-contract Summit is responsible for extra costs associated with obstructed piles; and (3) the work performed on July 13, 1989 was pursuant to a separate oral agreement associated with the project that the parties entered into in June 1989.

B. Defendants' Counterclaim

In their counterclaim the defendants contend that Falco (1) provided non-conforming materials; to wit: production piles less than sixty (60) feet long; and (2) did not substantially perform its obligations under the sub-contract by April 17, 1989, thereby breaching the terms of the sub-contract. In essence, the defendants argue that Falco's failure to drive production piles that were a minimum of sixty (60) feet long set off a chain reaction that ultimately delayed construction of the NTCC by fifteen (15) weeks, from April 17, 1989 to August 2, 1989. At the heart of the defendants' counterclaim is an allegation, which Falco denies, that the piles which Falco maintains broke during the course of driving were in fact not broken and were only belatedly denoted as such simply to obscure the fact that the pile driving inspector rejected those piles because they were too short to satisfy the Navy's pile driving criteria.

After due deliberation and full consideration of all of the pleadings, testimony and other evidence the Court makes the following findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure.


1.   In September 1988, the Navy awarded Summit a contract to
construct the NTCC (the "prime contract"). Falco was not a
party to the prime contract and is not bound by its terms.
Thereafter, Summit solicited Falco's bid to drive test and
production piles for the NTCC and forwarded a copy of the
specifications, the pile foundation plan and results of
pertinent soil borings*fn5 to Falco.
2.   The specifications, which, parenthetically, are
extremely detailed, do not establish a specific length for
production piles nor does it indicate a time for performance.
Pile length is mentioned in only two contexts: First, with
respect to bidding on the project, the contractor is advised
that the bid length is sixty (60) feet; and second, test pile
length is set at sixty-five (65) feet.
3.   According to the specifications, the length of
production piles would be determined based upon pile driving
criteria which the Navy would establish after the

test piles had been driven and load tested.*fn6
4.   The specifications also provide (a) a mechanism for
adjusting the price of the prime contract in the event that
pile length differed from that specified as the basis for
bidding; (b) that spudding, a common pile driving practice, was
permitted provided the Navy's representative on the job site
approved; (c) the Navy could waive the pile driving criteria
under certain circumstances;*fn7 and (d) the costs associated
with spudded and redriven piles (piles driven to replace piles
that were damaged, mislocated or driven out of alignment) are
to be borne by the Contractor, in this case Summit, not the
5.   Based on the soil borings, the foundation plan and the
specifications Falco's engineer K.K. Ramamurthy ("KK") drafted
the proposal*fn8 which provided in pertinent part that: (a)
Falco would "furnish and install 81 creososted [sic] wood piles
driven to 30 ton design load in conformance with NYCB [New York
City Building] code" ("NYCBC"); (b) Summit would pay Falco an
additional sum if piles longer than sixty (60) feet were driven
and Falco would credit Summit if piles shorter than sixty (60)
feet were used; (c) "all costs due to redesign together with
associated costs for remedial work on account of pile
deviation, broken piles, etc." were excluded from the price;
and (d) any alteration or deviation from the basic proposal
which involved extra costs required a separate written
6.   The sub-contract, which embodied all the terms of the
parties' agreement, did not specify the time of performance,
nor did it contain a damage penalty clause. Furthermore, the
subcontract did not incorporate by reference the terms of the
prime contract.*fn9
7.   On December 1, 1988, George Vrettos ("Vrettos"),
Summit's project manager, orally accepted the proposal,
provided that the price was reduced from $87,500 to $85,000. KK
orally agreed to the modification, thereby amending the
8.   Summit estimated that the pile driving phase of the
operation, including test and production pile driving, should
have taken a ...

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