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Crane-Hogan Structural Systems, Inc v. State of New York

October 7, 2011

CRANE-HOGAN STRUCTURAL SYSTEMS, INC.,
CLAIMANT-RESPONDENT,
v.
STATE OF NEW YORK,
DEFENDANT-APPELLANT.



Appeal from a judgment of the Court of Claims (Philip J. Patti, J.), entered August 12, 2010.

Crane-hogan Structural Sys., Inc. v State of New York

Decided on October 7, 2011

Appellate Division, Fourth Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

PRESENT: CENTRA, J.P., PERADOTTO, CARNI, GREEN, AND GORSKI, JJ.

(CLAIM NO. 110250.)

The judgment awarded claimant money damages for breach of contract, after a trial.

It is hereby ORDERED that the judgment so appealed from is unanimously modified on the law by reducing the award of $1,399,589.87 to $489,992.24 and as modified the judgment is affirmed without costs.

Memorandum:

Claimant commenced this action seeking damages for defendant's breach of a construction contract. Defendant contracted with claimant to rehabilitate the Veterans Memorial Bridge in Rochester for the sum of $18,535,215.42. The project involved partial removal and repair of the bridge deck and supporting beams and was to be completed by September 30, 1999. While the work was underway, the parties discovered that the bridge was in greater disrepair than the plans had reflected, and defendant halted construction in approximately May 1998. Thereafter, defendant issued new plans calling for, inter alia, the complete removal and replacement of the bridge deck, shoring of the bridge deck and removal and replacement of bridge beams. The new plans required additional labor and equipment and extended the construction time frame from 2½ years to 4½ years.

While the parties negotiated claimant's compensation for the additional work, claimant agreed to proceed by "force account," i.e., on a time and materials basis, pursuant to the Standard Specifications of the Department of Transportation (Standard Specifications). The Standard Specifications provided that, "[w]here there are no applicable unit prices for extra work ordered and agreed prices cannot be readily established or substantiated, the [c]ontractor shall be paid the actual and reasonable cost" of necessary materials, labor, payroll taxes and insurance payments, sales tax, equipment, profit and overhead. The force account method required claimant to complete detailed forms listing labor, equipment and materials used on a daily, weekly and monthly basis. Claimant submitted proposed unit pricing to defendant in 1998 and 1999 but received no response, and claimant was ultimately advised that defendant had decided not to consider unit pricing for the additional work. As a result, the work proceeded entirely according to the force account method, with claimant reserving its right to seek additional compensation from defendant.

After claimant had completed the project and defendant had accepted the work on March 11, 2002, claimant sought additional compensation from defendant in the amount of $2,203,058.75, which included $693,314.56 in project or field overhead and $964,937.60 in corporate or home office overhead. According to claimant, 63.5% of those overhead costs were incurred completing work set forth in the original contract (hereafter, contract work), while 36.5% of those costs were incurred performing force account work, which is the subject of this action. In response to claimant's request, defendant issued a change order or "order on contract" in the amount of $612,400.58 for "time related dispute compensation," i.e., compensation for costs incurred beyond the expected contract completion date. That amount included $450,265 or 63.5% of the amount claimant sought for project overhead, representing the portion of the project overhead claim allocable to the contract work. Defendant refused to pay the remaining 36.5% of the claim attributable to force account work. Defendant also paid claimant $45,026.50 in corporate overhead, i.e., 10% of the amount that it awarded in project overhead, as well as $49,529.15 in profit, i.e., 10% of the amounts awarded for project and corporate overhead, based upon the Standard Specifications.

Claimant thereafter commenced this action seeking damages in the amount of $1,432,624.65, plus interest, for corporate overhead, project overhead, standby equipment and underutilized equipment. According to claimant, the project redesign "constitut[ed] a cardinal change to [its] contract" and, as a result, it "incurred significant additional costs for which it was not compensated, including additional labor, equipment and overhead[,] as well as lost profits." ...


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