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RKI Construction, LLC v. WDF Inc.

United States District Court, E.D. New York

April 3, 2017

CITIZENS INSURANCE CO. OF AMERICA; LEROY KAY; and ALICE KAY Additional Defendants on the Third-Party Claims.


          Kiyo A. Matsumoto United States District Judge

         Plaintiff RKI Construction, LLC (“RKI”) commenced this breach of contract action against WDF, Inc. (“WDF”), [1] which filed a counterclaim against RKI and a third-party claim against Citizens Insurance Company of America (“Citizens”) for breach of contract.[2]

         RKI moves for partial summary judgment on (1) its breach of contract claim against WDF, and (2) on WDF's counterclaim for breach of contract. Citizens moves for summary judgment on WDF's third-party claim against it for breach of contract. For the foregoing reasons, the court DENIES RKI's two motions for partial summary judgment against WDF, and GRANTS Citizens' motion for summary judgment against WDF.


         I. Procedural History

         RKI commenced this action on March 20, 2014, and filed the operative amended complaint on March 11, 2015. (Dkt. 32, Amended Complaint (“Am. Compl.”).) WDF filed its answer to the Amended Complaint, counterclaim against RKI, and third-party claim against Citizens on March 25, 2015. (Dkt. 38, Answer to Am. Compl. (“Answer”).) The summary judgment motions were fully submitted on May 12, 2016. Oral argument was heard on December 22, 2016.

         II. Factual Background

         The following facts are undisputed between the parties or are not materially contested. The claims before the court arise out of a series of construction contracts and subcontracts to build an elementary school in Ridgewood, Queens. In December 2011, Andron Construction Corp. and the New York School Construction Authority (“SCA”) entered into an agreement to begin the construction of the 5-story school, known as PS 290, in Ridgewood, Queens. (Dkt. 103-1, RKI Statement of Material Facts (“RKI SOF”) ¶ 1; Dkt. 105-1, Local Rule 56.1 Counter-Statement of Undisputed Facts as to RKI (“WDF RKI CSOF”) ¶ 1.)

         In or around October 2012, Andron entered into an agreement with WDF, where WDF would perform as an HVAC subcontractor (“Andron-WDF agreement” or “HVAC subcontractor agreement”). (Dkt. 101-4, Declaration of Alice Kay in Support of Motion for Summary Judgment (“Alice Kay Decl.”) Ex. B, Revised Andron Subcontract dated Sept. 26, 2012.) The Andron-WDF agreement indicates that it was a revised version of an earlier, undated, agreement. Id. at Citizens 01044. Also, in or around October 2012, WDF and RKI executed an agreement, pursuant to which RKI would perform as an HVAC piping sub-subcontractor (“WDF-RKI agreement” or “sub-subcontractor agreement”). (Dkt. 103-2, Declaration of David Kay, Member of and Project Manager for RKI (“David Kay Decl.”), Ex. A, WDF Subcontract Agreement dated May 30, 2012 and executed in October 2012.) RKI agreed with WDF to perform HVAC piping work at the agreed price of $1, 252, 000.00. (Dkt. 103-1, RKI SOF ¶ 4; Dkt. 105-1, WDF RKI CSOF ¶ 4.) After a change order, the total value of the sub-subcontractor agreement came to $1, 283, 300.00. Id. ¶ 5. Pursuant to the WDF-RKI agreement, RKI retained Citizens, as surety, to issue a performance bond on behalf of RKI. Id. ¶ 6. RKI, Citizens, and WDF entered into the A312 Subcontractor Performance Bond (“performance bond”) on January 4, 2013. (Dkt. 101-5, Declaration of Bogda M. B. Clarke, attorney for Hanover Insurance Group, an affiliate of Citizens, in Support of Motion for Summary Judgment (“Clarke Decl.”) Ex. A, A312 Subcontractor Performance Bond.)

         a. Project Workflow as Directed by Andron

         As the general contractor, Andron was responsible for coordinating the work of all of the contractors on the job site, which included dictating the project schedule and workflow. (Dkt. 103-1, RKI SOF ¶ 7; Dkt. 105-1, WDF RKI CSOF ¶ 7.) Andron never provided a written project schedule or priority project schedule to RKI or WDF. Id. ¶ 8. Andron had a whiteboard on the worksite, which included various dates that related to the flow of work of many of the trades, including the mechanical, engineering and plumbing (“MEP”) work. (See Dkt. 103-3, Declaration of Michael S. Zicherman, attorney for RKI (“Zicherman Decl.”), Ex. C, emails from WDF Senior Project Manager Denis Limanov, and Ex. D, email between Andron Superintendent Brian VanKleeck and WDF acting Project Manager John Cutrone.) Andron sometimes referred to the whiteboard schedule as its “live schedule.” See Id. The significance and relevance of the whiteboard schedule to whether or not RKI was completing its work in accordance with project schedule is disputed by the parties. During the entirety of the project, Andron's work and the completion of the project as a whole was delayed. (Dkt. 103-1, RKI SOF ¶ 16; Dkt. 105-1, WDF RKI CSOF ¶ 16.)

         b. RKI's Performance

         Several issues regarding the adequacy and timeliness of RKI's performance remain disputed. However, it is undisputed that RKI began preliminary work for the project in May 2012, when it began preparing shop drawings and attending project meetings. (Dkt. 103-1, RKI SOF ¶ 12; Dkt. 105-1, WDF RKI CSOF ¶ 12.) The MEP rough-in work, RKI's performance of which is a point of contention, was not scheduled by Andron to commence prior to April 2013. Id. ¶ 14.

         Throughout the project, WDF repeatedly insisted and communicated to RKI that RKI was behind schedule and required additional manpower to complete the job. Id. ¶ 25; (see also Dkt. 105-2, Declaration of WDF Vice President of Operations Liam McLaughlin (“McLaughlin RKI Decl.”), Ex. B, emails from John Cutrone). RKI did not have workers onsite for a full five day work week until July 2013. (Dkt. 105-1, WDF RKI CSOF ¶ 7; Dkt. 104-1, Response to WDF Local Rule 56.1 Statement of Material Facts (“RKI SOF Response”) ¶ 7.) On August 15, 2013, WDF issued a field directive to RKI requiring RKI immediately to staff the project with 14 men, which RKI disagreed with at the time. (Dkt. 103-1, RKI SOF ¶¶ 26-28; Dkt. 105-1, WDF RKI CSOF ¶¶ 26-28.) On August 22, 2013, John Cutrone, WDF's acting project manager, sent an email to RKI complaining that RKI was behind schedule, and setting various milestones for completion. (Dkt. 103-2, David Kay Decl. Ex. C, email from Cutrone). The email required that RKI incorporate the changes required in Bulletin No. 7, discussed below, and specified additional deadlines. Id. RKI responded to Mr. Cutrone's email on August 22, 2013, contesting the deadlines. (Dkt. 103-2, David Kay Decl. Ex. D, email from David Kay).

         c. SCA Issues Bulletin No. 7

         On April 28, 2013 the SCA issued Bulletin No. 7, making certain changes to the project. (Dkt. 103-3, Zicherman Decl. Ex. F, Schedule update at SCA-01456.) Bulletin No. 7 impacted the HVAC work, including RKI's piping work because it required that the pipes be rerouted. (Dkt. 103-1, RKI SOF ¶ 22; Dkt. 105-1, WDF RKI CSOF ¶ 22.) WDF did not issue a written change order to RKI with respect to Bulletin No. 7, but disputes that one was required. Id. ¶ 24. The SCA issued a change order for Bulletin No. 7, although it is not clear from the record whether that change order was issued to Andron or WDF. (Dkt. 101-2, Joint Deposition Transcript Appendix (“JDTA”) Ex. C, Gentile Dep. at 88:22-89:09 (explaining the SCA generated a change order in the sum of $139, 440, but not stating to whom the change order was issued.)

         d. WDF's Nonpayment of RKI

         RKI was required to submit invoices to WDF for which WDF could seek reimbursement from Andron and the SCA. RKI contends that it was not paid for all of the work it performed from January through June 2013. (See Dkt. 103-2, David Kay Decl. ¶¶ 21-38; Dkt. 101-6, Declaration of Marc R. Lepelstat, attorney for Citizens, in Support of Citizens' Motion for Summary Judgment (“Lepelstat Decl.”), Ex. U, checks paid from WDF to RKI prior to June 2013.) WDF concedes that it did not pay all of the money that RKI requested; rather, it states that it paid all of the money that it believed RKI was entitled to. (Dkt. 105-2, McLaughlin RKI Decl. ¶¶ 29-33.) WDF claims that it made significant reductions to RKI's payment applications because the applications were inflated and requested money for assignments that RKI had not completed, which RKI disputes. Id. The parties also dispute whether RKI was aware that WDF, Andron, and/or the SCA were modifying the invoiced percentages of the RKI work completed. Id. ¶ 34.

         WDF has also withheld money from RKI based on RKI's work on the project from June through September 2013. WDF states that it received $134, 274.07 from Andron for work performed by RKI between June and September 2013. Id. ¶ 40. WDF asserts that $134, 274.07 was credited to RKI as an offset to money owed to WDF by RKI because WDF completed RKI's work under the sub-subcontractor agreement after RKI's purported breach. Id. RKI claims that it has not been paid $299, 310.84, the amount due for all work by RKI through September 16, 2013. (Dkt. 103-2, David Kay Decl. ¶ 39.)

         RKI further claims that it never received a payment of approximately $8, 000, that had been approved by WDF, for work performed in June 2013. Id.

         e. WDF Issues Notice of Default

         On August 28, 2013, Liam McLaughlin, Vice President of Operations at WDF, sent RKI and Citizens a “48-Hour Notice” advising RKI that WDF was considering declaring a default because RKI was not providing the appropriate amount of manpower necessary to complete the project on time. (Dkt. 103-1, RKI SOF ¶ 35; Dkt. 105-1, WDF RKI CSOF ¶ 35; Dkt. 103-2, David Kay Decl. Ex. E, letter from Liam McLaughlin.) In the letter, WDF demanded that RKI complete various tasks within 48 hours. Id. Also in the letter, WDF stated that the letter served as a demand against the performance bond issued by Citizens. Id. The letter demanded a meeting between the three parties, WDF, RKI, and Citizens. Id. On August 29, 2013, RKI responded to the letter, disagreeing with WDF's statement that RKI was not providing the proper amount of manpower to maintain the project schedule, and stating that RKI had been diligently working towards the milestones provided by ...

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