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Industrial Window Corp. v. Federal Insurance Co.

April 7, 2009


The opinion of the court was delivered by: Jed S. Rakoff, U.S.D.J.


The instant action arises from a dispute over the scope of work included in a series of contracts for the construction of the Schomberg Center for Research in Black Culture ("the Center"), a national research facility in Harlem devoted to documenting the global African and African diasporan experience. On December 3, 2007, one of the contractors, plaintiff Industrial Window Corp. ("IWC") filed suit seeking recovery for extra-contractual work under a payment bond made by defendant Federal Insurance Company ("Federal") as surety and third-party defendant Beys General Construction Corp. ("Beys") as principal. On May 6, 2008, the Court denied Federal's pre-discovery motion for summary judgment, holding that IWC's action was not barred by the Alternative Dispute Resolution ("ADR") provisions contained in the prime contract, because those provisions were not clearly and unequivocally incorporated by reference into the contract between IWC and Beys. On June 10, 2008, upon notice of the Court's decision, Federal filed a Third-Party Complaint against Beys, and on June 11, 2008, Beys filed a Fourth-Party Complaint against Hill International, Inc. ("Hill"), a party to the prime contract.

Hill now moves, pursuant to Fed. R. Civ. P. 56, for summary judgment dismissing Beys' Fourth-Party Complaint as barred by the ADR provisions set forth in the prime contract, and Federal, Beys, and Hill each move for summary judgment dismissing certain claims relating to certain of IWC's pending "change orders."*fn1

The relevant facts, either undisputed or, where disputed, taken most favorably to the non-moving parties, are as follows.

On February 11, 2004, Hill entered into a contract with the City of New York Department of Design and Construction ("DDC") to manage the Center's construction. See Federal and Beys Rule 56.1 Statement ("Fed. 56.1") ¶ 1; Rule 56.1 Statement in Opposition to Federal's and Beys' Motion for Partial Judgment ("IWC 56.1") ¶ 1; Fourth-Party Defendant's Rule 56.1 Statement of Facts ("Hill 56.1") ¶¶ 11-12; Rule 56.1 Counter Statement of Facts by Federal and Beys ("Fed. Counter 56.1") ¶¶ 11-12. Hill, in turn, entered into a contract with Beys to act as general contractor of the project ("the Hill/Beys contract"). Fed. 56.1 ¶¶ 2-3; IWC 56.1 ¶¶ 2-3; Hill 56.1 ¶ 13. Beys posted a payment bond from Federal, which stated in part that a copy of the Hill/Beys contract was "annexed to and hereby made a part of this bond as though herein set forth in full." Affidavit of Anthony Hamilakis in Support of Motion for Partial Summary Judgment by Federal and Beys ("Hamilakis Aff.") Ex. B.

On September 27, 2005, Beys entered into a subcontract with IWC to install a curtain wall system at the Center ("the IWC subcontract" or "subcontract"). Hamilakis Aff. Ex. C. Article 1 of the IWC subcontract defined the contract to include the subcontract itself, certain enumerated specifications and drawings, and the prime contract between DDC and Hill. Id. Art. 1.1.1. Although IWC did not read the prime contract between DDC and Hill before executing the subcontract, it nevertheless understood that the prime contract was part of its subcontract with Beys. Fed. 56.1 ¶¶ 22-23; IWC 56.1 ¶¶ 22-23.

The prime contract between DDC and Hill provides that whenever a contractor or subcontractor performs "Extra Work" or "disputed Work," the contractor or subcontractor is required to provide daily contemporaneous records of such work. Hamilakis Aff. Ex. A Art. 30. It further provides that "[f]ailure to comply strictly with these requirements shall constitute a waiver of any claim for extra compensation or damages on account of the performance of such Work or compliance with such determination or order." Id. Notwithstanding this provision, IWC did not provide contemporaneous records to Beys, Hill, or DDC for any of the alleged "extra work" at issue here. Fed. 56.1 ¶ 40; IWC 56.1 ¶ 40; Hill 56.1 ¶¶ 77-78; Rule 56.1 Statement in Opposition to Hill's Motion for Summary Judgment ¶¶ 77-78.

As to proposed contract changes, the prime contract states that:

Changes may be made to this Contract only as duly authorized by the Agency Chief Contracting Officer or his or her designee. Contractors deviating from the requirements of an original purchase order or contract without a duly approved change order document, or written contract modification or amendment, do so at their own risk."

Hamilakis Aff. Ex. A Art. 26.1. Similarly, Article 8.1(c) of the IWC subcontract provides that

All change orders, and any subsequent modifications, changes, additions or deletions, must be in writing and signed by either George Kougentakis or Eleftherios Kougentakis. This Subcontract provision may not be modified orally. The Subcontractor understands that it is not entitled to rely upon the oral direction of any persons employed by the Contractor... Any work done without the written authorization of the named party shall be at the sole risk of the Subcontractor and without any further liability of the Contractor for any payment thereof.

Hamilakis Aff. Ex. C Art. 8.

Article 29 of the prime contract provides for Resolution of Disputes. See Hamilakis Aff. Ex. A. That provision states that

All disputes between the City and the Contractor of the kind delineated in this article that arise under, or by virtue of, this Contract shall be finally resolved in accordance with the provisions of this article and the PPB rules. The procedure for resolving all disputes of the kind delineated herein shall be the exclusive means of resolving any such disputes.

Id. § 29.1. The article goes on to provide for an elaborate dispute resolution process, including the presentation of disputes to the Commissioner, id. § 29.4, appeal to the Comptroller, id. § 29.5, appeal to the Contract Dispute Resolution Board, id. §§ 296 and 29.7, and ...

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