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Diversified Carting, Inc. v. City of New York

January 20, 2006


The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge:


On December 3, 2004, plaintiffs, Diversified Carting, Inc., Diversified Construction Corporation (collectively, "Diversified") and Troy Caruso ("Caruso"), filed the instant action against the above named defendants for, inter alia, breach of contract, unjust enrichment and quantum meruit. (Compl. ¶ 1).*fn1 Defendants Department of Homeland Security ("DHS" or the "federal defendant"), World Trade Center Properties L.L.C., Silverstein Properties, Inc., Silverstein W.T.C. Mgmt. Co. L.L.C., and 7 World Trade Company, L.P. (incorrectly sued as "7 World Trade Center, Co.") (collectively, the "Silverstein entities" or "Silverstein"), Turner Construction Company ("Turner") and the City of New York (the "City"), now move for summary judgment.*fn2 Oral argument was held on January 18, 2006. For the reasons set forth below, the defendants' motion is GRANTED in part and DENIED in part.


This action arises out of the clean up efforts at the World Trade Center ("WTC") site following the terrorist attacks of September 11, 2001. Diversified alleges that it was not fully paid for excavation, demolition and waste removal work it performed as well as equipment and trucking services it provided in the aftermath of the events of September 11th. Specifically, Diversified claims it is owed at least $452,498.97 for work performed between September 11, 2001 and January, 2002. (Compl. ¶¶ 34-35). In addition, Caruso, Diversified's principal, seeks $144,001.76 in unpaid wages from Turner and Seasons Contracting Corp. ("Seasons") for work he performed as a site manager at the WTC during this same period. (Compl. ¶¶ 34, 108).

Immediately after the terrorist attacks, the City took control of the debris removal operations at the WTC. Thereafter, on September 20, 2001, the Federal Emergency Management Agency ("FEMA") entered into an agreement with the State of New York (the "State") to reimburse the State for 100% of "eligible" costs incurred in the clean up. (See FEMA-State Agreement, Ex. 15 to the Declaration of Dina R. Jansenson, Esq., dated November 22, 2005 ("Jansenson Dec."); See also Deposition of Kathryn Humphrey, dated November 4, 2005 ("Humphrey Dep.") 108). The City was a subgrantee under this agreement. (Humphrey Dep. 108). During the clean up, the City would submit requests for reimbursement to FEMA, and FEMA would, upon approval of the expenses, issue funds to the State. (Id. at 109). The State would then pass these funds on to the City. (Id.)

Prior to September 11th, the Silverstein entities entered into long-term leases for buildings 1, 2 ,4, 5, and 7 at the WTC. (Affidavit of Michael Levy, dated November 22, 2005 ("Levy Aff.") ¶¶ 4-5). In the aftermath of the attacks, the City took control of the WTC site, and coordinated the recovery efforts. (Id. ¶¶ 7-8). The Silverstein entities had no control over the debris-removal activities, nor did they fund the clean up. (Id. ¶ 8). The Silverstein entities did not regain control of 7 WTC until on or about May 15, 2002, and did not gain access to the remainder of the site until approximately July 1, 2002. (Id. ¶ 10).

Shortly after September 11th, the City hired Turner as one of four prime contractors to oversee the clean up effort. (Deposition of George Pauliny, dated November 14, 2005 ("Pauliny Dep.") 18; Deposition of William Cote, dated November 1, 2005 ("Cote Dep.") 21). Turner was retained pursuant to an oral agreement that was never reduced to writing. (Cote Dep. 134). The City agreed to compensate Turner for its work pursuant to a "time and materials" arrangement. (Id.) Thus, Turner was required to provide documentation to the City for costs incurred in the clean-up, and if the costs were approved, Turner would be reimbursed for the costs plus a premium. (Id. at 134-36). Turner's profit margin consisted of a 2.75% mark-up on payments actually made by the City for work performed. (Pauliny Dep. 32-33).

Shortly after September 11th, Turner hired Seasons as a subcontractor for the WTC site. (Id. at 129-30). According to plaintiffs, on September 12, 2001, Caruso was contacted by Sal Carucci ("Carucci"), a principal of Seasons, and asked to be a supervisor at the WTC site. (Deposition of Troy Caruso, dated October 27, 2005 ("T. Caruso Dep.") 7-8). Initially, Caruso was not asked to bring any equipment with him. (Id. at 163). When Caruso first arrived, on September 12th, the situation at the WTC was understandably chaotic. (Id. at 164). After arriving, Caruso remained on the job approximately 70 hours without a break. (Id. at 165). At some point after beginning work, Caruso was asked, by a "combination" of people from Seasons, Turner, and the City, to bring more trucks and equipment to the site. (Id. at 163-64). While Caruso testified that, at the time, he was acting as an employee and representative of Seasons,*fn3 he also testified that the various individuals requesting trucks and equipment "knew I wasn't just an employee of Seasons, they knew I had my own business and that I was helping Seasons out and my [equipment] says Diversified all over it. . ." (Id. at 168). Caruso also maintained that he "deal[t] with the City on a daily bas[is]" at the site and that representatives of the City signed "trucking . . . and equipment tickets" for him. (Id. at 108-09). Caruso testified that, when he began having problems securing payment for work performed from Seasons, he also submitted invoices to and attempted to contact representatives of Turner and the City. (Id. at 53, 170-71).*fn4 In addition, he attended meetings with representatives of Turner, the City and FEMA to discuss his claims for unpaid fees and wages. (Id. at 60-63, 129-30, 153, 173). However, Caruso did testify that all payments he received and all payments received by Diversified came from Seasons. (Id. at 152). Ultimately, in exchange for a negotiated payment, Seasons executed a general release with Turner and the City for all payments due it or its subcontractors for work performed at the WTC. (Pauliny Dep. 134-39).


The federal defendant argues that it is entitled to summary judgment because plaintiffs cannot demonstrate a valid waiver of sovereign immunity. In addition, the federal defendant maintains that, even if sovereign immunity has been waived, this Court lacks subject matter jurisdiction over plaintiffs' quasi-contract claims as well as any other claims for equitable relief. The Silverstein entities, Turner, and the City each argue that there are no material issues of fact as to plaintiffs' contract, quasi-contract, or other claims for equitable relief, and that they are therefore entitled to judgment as a matter of law. In addition, Turner argues that no material issues of fact exist as to plaintiffs' claim under the Miller Act, 40 U.S.C. § 3131, et seq., and that Turner is entitled to judgment as a matter of law as to Caruso's claim for unpaid wages under Article 6 of the New York Labor Law.

A. Summary Judgment Standard

A court will not grant a motion for summary judgment unless it determines that there is no genuine issue of material fact and the undisputed facts are sufficient to warrant judgment as a matter of law. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v. Liberty Lobby Inc., 477 U.S. 242, 250 (1986). The party opposing summary judgment "may not rest upon the mere allegations or denials of the adverse party's pleading, but . . . must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). In determining whether there is a genuine issue of material fact, the Court must resolve all ambiguities, and draw all inferences, against the moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam); Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987). It is not the court's role to resolve issues of fact; rather, the court may only determine whether there are issues of fact to be tried. Donohue, 834 F.2d at 58 (citations omitted). However, a disputed issue of material fact alone is insufficient to deny a motion for summary judgment, the disputed issue must be "material to the outcome of the litigation," Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), and must be backed by evidence that would allow "a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

B.Federal Defendant

1. Sovereign Immunity

In order for subject matter jurisdiction to exist over plaintiffs' claims against the federal defendant, plaintiffs must "demonstrate a specific statutory waiver of sovereign immunity." Lawson v. Fed. Emergency Mgmt. Agency, 03 Civ. 881, 2003 WL 2006600, * 2 (S.D.N.Y. April 30, 2003). The Tucker Act, 28 U.S.C. §§ 1346, 1491, waives sovereign immunity and provides subject matter jurisdiction for certain non-tort claims against the United States. See Diversified Carting, Inc. v. City of New York, 04 Civ. 9507, 2005 WL 1950135, * 3 (S.D.N.Y. August 15, 2005) (Baer, J.). However, the Tucker Act allows for suit in the District Courts only as to claims seeking less than $10,000.*fn5 See C.H. Sanders Co. v. BHAP Housing Dev. Fund Co., 903 F.2d 114, 119 (2d Cir. 1990). Since plaintiffs here seek considerably more, they must rely on an independent waiver of sovereign immunity. See Diversified, 2005 WL 1950135, *3.

Plaintiffs assert that the Stafford Act, 42 U.S.C. § 5121, et seq., provides that independent waiver of sovereign immunity. The Stafford Act was enacted to provide federal assistance to states in times of disaster. See Diversified, 2005 WL 1950135, *3. However, the Stafford Act also provides that FEMA is immune from any suit arising out of FEMA's performance of a "discretionary function." See 42 U.S.C. § 5148; Dureiko v. United States, 209 F.3d 1345, 1351 (Fed. Cir. 2000). In denying the federal defendant's motion to dismiss, I found that plaintiffs' claims as alleged fell outside of the discretionary function exemption. See Diversified, 2005 WL 1950135, *4-5. Specifically, I found that, because the President had obligated FEMA to pay 100% of eligible costs relating to the WTC clean up, FEMA's behavior did not "'involve an element of judgment or choice.'" Id. at 5 (quoting Dureiko, 209 F.3d at 1351). The federal defendant now argues that the evidence adduced during discovery shows that FEMA did retain discretion to determine which costs were "eligible" and subject to reimbursement. Therefore, the federal defendant argues that FEMA is immune from liability pursuant to the discretionary function exemption of the Stafford Act. However, I need not determine whether the discretionary function exemption applies because, even if there was a valid waiver of sovereign immunity, the federal defendant has demonstrated that it is entitled to judgment as a matter of law.

2.Breach of Contract

For a contract to exist, there must be: "1) mutuality of intent to contract; 2) consideration; and 3) lack of ambiguity in offer and acceptance." City of El Centro v. United States, 922 F.2d 816, 820 (Fed. Cir. 1990). In addition, when the United States is a party, "the [g]overnment representative whose conduct is relied upon must have actual authority to bind the government in contract." Id. (internal quotation omitted). "The requirements of express and implied-in-fact contracts are identical; only the manner of proof differs." Henke v. United States, 43 Fed. Cl. 15, 25 (Fed. Cl. 1999). "'An agreement implied-in-fact is founded upon a meeting of minds, which, although not embodied in an express contract, is inferred, as a fact, from conduct of the parties showing, in the light of the surrounding circumstances, their tacit understanding.'" Id. (quoting Hercules, Inc. v. United States, 516 U.S. 417, 423-24 (1996)).

Plaintiffs present two theories in support of their contract claim. First, plaintiffs argue that the President's Executive Orders in the days following September 11th created a binding "unilateral contract."*fn6 Plaintiffs further argue that an implied in fact contract was created based on the federal defendant's conduct. In particular, plaintiffs assert that, by participating in negotiations involving the approval of clean-up costs, (see Humphrey Dep. 132-34), and by providing monitors at the WTC site, (see Humphrey Dep. 24), FEMA "created the overall impression that . . . subcontractors . . . could look to FEMA for payment." (Pl.'s Mem. 30).

Both arguments are unavailing. The President's Order directing FEMA to reimburse 100% of recovery and clean up costs did not manifest an intent to contract with an unidentified subcontractor. See City of El Centro, 922 F.2d at 820. Furthermore, any "offer" evidenced by the proclamation was rife with ambiguity. Id. It would defy logic (and commonsense) to construe these declarations as binding offers to contract with anyone who later performed services at the WTC site.

In addition, FEMA's conduct in the aftermath of the disaster cannot be construed to create a binding agreement. Participation in post-hoc negotiations involving reimbursement rates and policies does not equate with an offer to compensate for services rendered. Plaintiffs do not provide any evidence of a request or communication from FEMA that sought services from Caruso or Diversified. Thus, plaintiffs have not ...

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