Cross appeals from orders of the Supreme Court, New York County (Shirley Werner Kornreich, J.), entered May 10, 2011 and April 6, 2012, on reargument, which, to the extent appealed from, granted defendant's motion to dismiss the claims for damages for extra work allegedly resulting from changes in the scope of work and for damages arising out of defendant's alleged acceleration of plaintiff's work and plaintiff's insurance costs, and denied the motion to dismiss the claim for damages related to delay caused by alleged regulatory interference.
Sutherland Asbill & Brennan LLP, New York (Jennifer W. Fletcher and Lawrence A. Dany III of counsel), for appellant-respondent.
Winston & Strawn LLP, New York (Jeffrey L. Kessler, Adam J. Kaiser, Martin C. Geagan and Eric Laufgraben of counsel), for respondent-appellant.
Luis A. Gonzalez, P.J. Angela M. Mazzarelli Dianne T. Renwick Rosalyn H. Richter Judith J. Gische, JJ.
This dispute concerns the Deutsche Bank Building, which neighbored the World Trade Center and was severely damaged on September 11, 2001. Defendant, Lower Manhattan Development Corp. (LMDC), is a subsidiary of the Urban Development Corporation d/b/a the Empire State Development Corporation, a joint City-State corporation charged with redeveloping lower Manhattan. LMDC purchased the building from Deutsche Bank after the 9/11 attacks and discovered that contaminants such as asbestos and lead were likely present. Accordingly, on September 8, 2005, LMDC and other governmental authorities approved a "Deconstruction Plan, " to abate, clean, decontaminate, empty, deconstruct, and remove the building.
Plaintiff, Bovis Lend Lease (LMB), Inc., submitted the winning bid to carry out the Deconstruction Plan. It and LMDC executed a contract requiring Bovis to perform the abatement, decontamination, and deconstruction services in exchange for a lump sum of approximately $74.8 million. That amount was later increased to approximately $81 million. Bovis made several representations and warranties in the contract. For example, it acknowledged that it was accepting a lump sum and, except with LMDC's consent, was not entitled to additional compensation, "notwithstanding whatever obstacles or unforeseeable conditions may arise or be encountered." It "accept[ed] all conditions in the Building... and otherwise at the Site, whether or not such conditions were foreseeable, as they exist or may eventually be found to exist, and in whatever condition same may exist." Bovis also agreed to accept a variety of risks, "whether they arise from acts or omissions of [Bovis], of LMDC, or of third persons, or from any other cause, and whether such risks are within or beyond the control of [Bovis] and/or are known or unknown, and foreseeable or unforeseeable." One of the specific risks delineated in that section of the contract was "[t]he risk of all regulatory and other Governmental Authority delays." In addition, Bovis agreed
"to make no claim for damages for delay in the Work (or the performance thereof) of any kind whatsoever, whether foreseeable or unforeseeable, and agree[d] that any such claim shall be compensated for solely by an extension of time to complete performance of the Work when the provisions of Article 12 hereof allow same."
In the section describing the project's "Scope of Work, " the contract provided that
"[a]ny and all changes to the Deconstruction Plan... require LMDC's advance written permission and the approval of the applicable Governmental Authorities. No such changes may be requested without LMDC's advance consent and written approval. No such changes shall be deemed Extra Work."
Indeed, "Extra Work" was specifically defined in the contract, which made clear that anything not considered extra work was included in the work compensated for by the lump sum. As relevant here, extra work was defined as "Work required by a written change order issued by LMDC pursuant to Article 22 hereof which... adds substantial scope or program to the Scope of Work...." The contract further specified: "For the avoidance of doubt, Extra Work' does not include [among other things] (f) any Work required by reason of any change in Legal Requirement...; and/or (g) Work required by reason of any risk or obligation assumed by [Bovis] in any part of the Contract Documents." A "Legal Requirement" was itself defined, in relevant part, as "any statute, ordinance, code, law, rule, regulation, permit, agency notice or order, ... order, decision, determination, or other written requirement, standard or procedure enacted, adopted or applied by any Governmental Authority, or any administrative... interpretation thereof, together with all related... implementing regulations." The definition also made clear that "actions taken in order to comply with any Legal Requirement, ' or actions necessary to comply with any Legal Requirement' shall include actions taken in order to meet a Legal Requirement in the absence of a written order or other such directive mandating such actions."
Even if work qualified as Extra Work, the contract still specified that "[n]o Extra Work shall be performed except pursuant to a Change Order of LMDC expressly and unmistakably indicating LMDC's intention to treat the Work described therein as Extra Work, subject to the next paragraph. The "next paragraph" stated:
"If [Bovis] is of the opinion that any Work ordered to be done as Work pursuant to the Contract Documents is instead Extra Work (Disputed Work'), [Bovis] shall nevertheless comply with such order, but shall within 72 hours give written notice thereof to LMDC, stating why [Bovis] deems it to be Extra Work, and shall moreover ...