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F. GAROFALO ELEC. CO. v. HARTFORD FIRE INS. CO.

July 7, 1992

F. GAROFALO ELECTRIC COMPANY, INC., Plaintiff, against HARTFORD FIRE INSURANCE COMPANY, Defendant.

Bartels


The opinion of the court was delivered by: JOHN R. BARTELS

MEMORANDUM-DECISION AND ORDER

 This motion and cross-motion for summary judgment brought pursuant to Fed.R.Civ.P. 56 arises from disputed interpretations of two electrical installation contracts. The plaintiff F. Garofalo Electric Company, Inc. ("Garofalo") moves for summary judgment on the first cause of action. The defendant Hartford Insurance Company ("Hartford") cross-moves for summary judgment on the first cause of action, and moves for summary judgment on the second, fourth, and fifth causes of action.

 Summary judgment is proper only when it appears plain from the record that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Trans-Orient Marine Corp. v. Star Trading & Marine, Inc., 925 F.2d 566, 571-73 (2d Cir. 1991). The function of a district court in a summary judgment motion is to determine whether there are any genuine issues for trial while resolving all ambiguities and doubtful inferences against the moving party. Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), cert. den. 480 U.S. 932, 94 L. Ed. 2d 762, 107 S. Ct. 1570 (1987).

 Facts

 On a date prior to December 12, 1984, English Electric Corporation ("English") entered into a construction contract with New York City Transportation Authority ("NYCTA") to do electrical work at various NYCTA subway stations. On December 12, 1984, English entered into a subcontract with Federal Chandros, Incorporated ("Federal") for electrical work at several NYCTA subway locations. The Federal subcontract lists the unit quantities and price of each electrical component item to be installed at the various locations. On February 25, 1985, Federal, acting under its duty as a NYCTA subcontractor, entered into a surety agreement with Hartford. Hartford gave performance and payment bonds to English as obligee.

 On or about August 22, 1986, Federal notified English that it defaulted on its subcontract and abandoned the job which, in turn, required Hartford to assume Federal's responsibilities. On December 12, 1986, Hartford entered into a contract with Garofalo ("Contract 241"). Contract 241 recites Garofalo's promise to complete the remaining work under the original Federal subcontract at prices set forth in an attachment called "Exhibit A." On the same day, the parties entered into a second contract ("Contract 259"). Garofalo filed suit, predicated on this Court's diversity subject matter jurisdiction, alleging non-payment of monies owed by Hartford under Contracts 241 and 259.

 Discussion

 The applicable New York law of contracts is not in dispute. "When parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms . . . ." by a court. W.W.W. Assoc., Inc. v. Giancontieri, 77 N.Y.2d 157, 565 N.Y.S.2d 440, 443, 566 N.E.2d 639 (1990). The contract must be "read as a whole to determine its purpose and intent." Id. The Court applies these well established principles of New York contract law to resolve the motion and cross-motions for summary judgment for each cause of action seritiam:

 1. First Cause of Action: Garofalo moves and Hartford cross-moves for summary judgment on the first cause of action, which is based on Paragraph 6 of Contract 241. Paragraph 6 sets forth the calculation of premium prices in the following manner:

 Upon receipt of the duly certified approval requisition, and within 30 days thereafter, Hartford will, for each separate item approved, compute adjusted compensation therefor by multiplying (1) the number of units of that item approved, by (2) a sum equal to the Garofalo price indicated in Exhibit A, minus Federal's price stated in the original subcontract. After totaling the results of all separate items covered in the requisition, Hartford will then pay Garofalo the total adjusted compensation for all items comprising the certified approved requisition, less retention in the same percentage provided in English's contract with the New York City Transit Authority. If the calculations indicate money owing from Garofalo to Hartford for an approved requisition, Hartford will be entitled to a credit for same against its subsequent obligations to Garofalo. PROVIDED, HOWEVER, that, once any given unit quantity exceeds, by more than 10%, the original Federal subcontract estimated units, Garofalo hereby agrees to accept, as full compensation, Federal's bid unit price, which sums are to be included and paid to Garofalo under its agreement with English, and no further sums will be due for said items from Hartford.

 Neither party contends that Paragraph 6 is ambiguous. *fn1" Garofalo argues that Paragraph 6 entitles it to premiums based on the quantities of an approved item in its requisitions to English up to a maximum of 110% of the quantity originally estimated by Federal. Hartford presses that such an interpretation of Paragraph 6 does not take into account the unit quantities of each item installed by Federal before it defaulted. Hartford argues that Contract 241 incorporates by reference a number of documents, including the original Federal subcontract, Exhibit A, Federal Estimate #13, dated July 21, 1986, and Federal Estimate #14, dated August 13, 1986, which in various places indicate the unit quantities of items left to be installed after the Federal default and the premium unit prices agreed to by the parties. Hartford has paid premiums based on 110% of the original estimated quantities less amounts already installed by Federal on this basis.

 Both parties point to Item 28A, No. 14 Single Conductor Wire, to illustrate the discrepancies in premium calculations under Paragraph 6. Federal's original estimated quantity for Item 28A was 29,200 units. Exhibit A states that Federal furnished 877.55 units of Item 28A before it defaulted. Under Garofalo's interpretation of Paragraph 6, it would be entitled to receive a premium price for up to 110% of 29,200 units, or 32,120 units. Under Hartford's interpretation of Paragraph 6, it would pay plaintiff a premium of up to 110% of 29,200 units less 877.55 units, or 31,242 units, in order to adjust for the amount previously installed by Federal.

 The dispute turns on the meaning of the phrase "any given unit quantity" found in the last sentence of Paragraph 6. The phrase does not explicitly call for subtraction of quantities already installed by Federal. It also does not explicitly reference the quantities already installed by Federal as they appear in Exhibit A and in the estimates attached to Contract 241. The only specific reference in Paragraph 6 to Exhibit A concerns the Garofalo premium price. The phrase "any given unit quantity" cannot be deemed to incorporate Federal-adjusted quantities as they appear in Exhibit A or in the attached estimates without a similarly specific reference or identification. See 4 Williston on Contracts § 628 (3rd. ed. 1961); 17A C.J.S. Contracts § 299 (1963); compare Lodges 743 and 1746, International Ass'n of Machinists & Aerospace Workers v. United Aircraft Corp., 534 F.2d 422, 441 (2d Cir. 1975), cert. den. International Ass'n of Machinists & Aerospace Workers v. NLRB, 429 U.S. 825, 50 L. Ed. 2d 87, 97 S. Ct. 79 (1976), quoting Guerini Stone Co. v. P.J. Carlin Constr. Co., 240 U.S. 264, 277, 60 L. Ed. 636, 36 S. Ct. 300 (1915) ("a reference by the contrasting parties to an extraneous writing for a particular purpose makes it a part of their agreement only for the purpose ...


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