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Creative Waste Management, Inc. v. Capitol Environmental Services

July 11, 2007

CREATIVE WASTE MANAGEMENT, INC., PLAINTIFF,
v.
CAPITOL ENVIRONMENTAL SERVICES, INC., CODE ENVIRONMENTAL SERVICES, INC. AND CITY OF NEW ROCHELLE, NEW YORK, DEFENDANTS.
CITY OF NEW ROCHELLE PLAINTIFF,
v.
FIDELITY AND GUARANTY INSURANCE COMPANY AND UNITED STATES FIDELITY AND GUARANTY COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Conner, Senior D.J.

OPINION AND ORDER

Creative Waste Management, Inc. ("Creative") brought this action against Capitol Environmental Services, Inc. ("Capitol"), Code Environmental Services, Inc. ("Code") and the City of New Rochelle (the "City") in connection with the 2003 dredging project of the New Rochelle Municipal Marina (the "Marina"). The City commenced a related action for breach of contract against Fidelity and Guaranty Insurance Company and United States Fidelity and Guaranty Company (collectively, the "Surety"), which was consolidated before this Court. Prior to trial, all claims by and against Capitol were settled, and we granted summary judgment in favor of Code and against Creative in the amount of $21,024.64 pursuant to an Opinion and Order dated November 2, 2006. See Creative Waste Mgmt., Inc. v. Capitol Envtl. Serv., Inc., 458 F. Supp. 2d 178 (S.D.N.Y. 2006). The remaining claims were tried to a jury. After a two-week trial, the jury found that the City was liable to Creative for negligent misrepresentation in the amount of $61,279.40, and that Creative and the Surety were jointly and severally liable to the City for breach of contract in the amount of $348,802.00. Creative and the Surety now move for a new trial pursuant to FED. R. CIV. P. 59(a) or, in the alternative, to amend the judgment pursuant to FED. R. CIV. P. 59(e). In addition, the City moves to amend the judgment pursuant to FED. R. CIV. P. 59(e) and for a directed verdict pursuant to FED. R. CIV. P. 50(b). For the following reasons, the parties' motions are denied.

BACKGROUND

The facts of this case are set forth extensively in our previous opinions, familiarity with which is presumed. See Creative Waste Mgmt., Inc. v. Capitol Envtl. Serv., Inc., 429 F. Supp. 2d 582, supplemented by 458 F. Supp. 2d 178 (S.D.N.Y. 2006). Accordingly, we recite only the facts relevant to our resolution of the present issues.

Creative entered into a municipal marina dredging project (the "project") with the City as general contractor on August 28, 2003 and agreed to dredge sediment from the floor of the Long Island Sound in the area in and around the Marina. It alleged that the City failed to disclose the existence of a bubbler system on and below the surface of the Marina that was designed to prevent ice from forming in the Marina during the winter months. The bubbler system was installed in the late 1960s, but had not been operational for more than twenty-five years. Creative asserted that the bubbler system prevented it from completing the dredging on time, because it clogged the auger head and pumping system that it used to dredge the Marina.

At trial, Creative attempted to prove three claims against the City. Specifically, it attempted to show that: (1) the City fraudulently induced it to enter into the contract to dredge the Marina and to transport and dispose of the dredged material by deliberately concealing the existence of the bubbler system, which made the project much more expensive and caused Creative to suffer substantial economic loss in attempting to complete the project; (2) even if the City did not deliberately conceal the existence of the bubbler system, it was negligent in failing to inform Creative of its existence and this negligence was a proximate cause of its economic loss; and (3) the City breached the implied covenant of good faith and fair dealing of the dredging contract (the "contract") by failing to modify the contract's terms when Creative experienced delays and faced extra costs occasioned by the presence of the bubbler system.

The City contended that Creative itself was at least partially, if not fully, responsible for its economic loss because it was negligent in failing to properly inspect the Marina before making its bid on the project, as a reasonable inspection of the site would have revealed the bubbler system.

The City also asserted a counterclaim against Creative for breach of contract, claiming that Creative failed to fulfill its contractual obligation to complete the project by removing and disposing of 17,000 cubic yards of sediment by January 31, 2004. It sought to recover liquidated damages pursuant to § 1.8 of the contract, which provided that Creative would pay $5.00 per cubic yard for the portion of the 17,000 cubic yards not removed and disposed of by that date. Creative contended, however, that it was excused from its obligations to complete the contract because the City either deliberately or negligently failed to inform it of the existence of the bubbler system, which made it impracticable, if not impossible, to complete the project within the allotted time.

The City also asserted a claim against the Surety for damages based on its alleged default on the performance bond that they issued to the City on behalf of Creative, guaranteeing completion of the project. The City sought to recover from the Surety the reasonable cost of completing the project. In its defense, the Surety contends that the City's deliberate or negligent failure to inform Creative of the existence of the bubbler system made it impracticable, if not impossible, to complete the project within the allotted time and rendered the contract and the bond unenforceable.

At the conclusion of the trial, the Court instructed the jury at length and provided each juror a questionnaire with eleven questions. The jury found that the City negligently failed to disclose to Creative the existence of the bubbler system and that Creative consequently suffered a total economic loss of $468,596, only fifteen percent of which was proximately caused by the City. The jury further offset its award by $9,010 for damage to the pilings of the Marina caused by Creative during its dredging, resulting in a net verdict of $61,279.40 in favor of Creative. Additionally, the jury found that the City's failure to disclose the existence of the bubbler system was not a direct and proximate cause of Creative's failure to complete the contract and thus awarded the City damages for Creative's failure to finish the project. Specifically, the jury found the Surety and Creative to be jointly and severally liable for $48,802 in liquidated damages pursuant to § 1.8 of the contract, as well as $300,000 representing the reasonable cost of completing the project, for a total award of $348,802. We entered judgment in accordance with the jury's verdict, and the parties subsequently filed the present motions.

DISCUSSION

I. Creative and the Surety's Motion for a New Trial

A. Legal Standard

We will first address Creative and the Surety's motion for a new trial pursuant to FED. R. CIV. P. 59(a). A motion for a new trial may be granted only if the district court "determines that, in its independent judgment, 'the jury has reached a seriously erroneous result or [its] verdict is a miscarriage of justice.'" Nimely v. City of New York, 414 F.3d 381, 392 (2d Cir. 2005) (quoting Munafo v. Metro. Transp. Auth., 381 F.3d 99, 105 (2d Cir. 2004) (internal quotation marks omitted)) (citing Manley v. Ambase Corp., 337 F.3d 237, 244-45 (2d Cir. 2003)) (alterations in original); PRL USA Holdings, Inc. v. U.S. Polo Ass'n, Inc., No. 99 CV 10199, 2006 WL 1881744, at *4 (S.D.N.Y. July 7, 2006). Creative offers three grounds in support of its request for a new trial: it contends that:

(1) the Court erred by instructing the jury that it could allocate responsibility for Creative's losses to Code, which we absolved of liability on summary judgment; (2) the Court erred by allowing Vincent Love, the City's expert, to testify regarding Creative's specific economic loss in connection with the project; and (3) the ...


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