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Superior Site Work, Inc. v. NASDI, LLC

United States District Court, E.D. New York

August 3, 2018

NASDI, LLC, Defendant. NASDI, LLC, Third Party Plaintiff,

          Zabell & Associates, P.C. Attorneys for the Plaintiffs By: Saul D. Zabell, Esq., Of Counsel

          The Law Office of John E. Osborn, P.C. Attorneys for the Defendant and Third Party Plaintiff Daniel H. Crow, Esq., Of Counsel

          Peckar & Abrams on Attorneys for the Third Party Defendant Case Foundation Company Alan H. Winkler, Esq., Of Counsel

          New York City Law Department, Office of Corporation Counsel Corporation Counsel for Third Party Defendant the City of New York By: Amanda M. Papandrea, Assistant Corporation Counsel



         This action arises out of a contract dispute between the parties. The contract concerned work related to the Ocean Breeze Indoor Athletic Facility in Staten Island, New York ("Ocean Breeze" or the "Project"). The City of New York (the "City) and the New York City Department of Parks and Recreation (the "Parks Department") contracted with NASDI, LLC ("NASDI") to build Ocean Breeze. NASDI allegedly subcontracted with Superior Site Work, Inc. ("Superior"), Diversified Construction Corp. ("Diversified"), and Case Foundation Company ("Case"). NASDI allegedly leased office space from Harrison Avenue Properties LLC ("Harrison") (together with Superior and Diversified, the "Plaintiffs") during the Project.

         Presently before the Court is a motion by NASDI for summary judgment pursuant to Federal Rule of Civil Procedure ("Fed. R. Civ. P." or "Rule") 56 dismissing the Plaintiffs' claims against it. For the following reasons, NASDI's motion is granted in part, and denied in part.

         I. BACKGROUND

         A. The Relevant Facts

         The following facts are drawn from the parties' respective 56.1 Statements and the parties' evidence.

         Initially, the Court notes that both sides often cited to the unverified complaint as "evidence" in their 56.1 Statements. Complaints that are not verified are not evidence. Marquez v. City of New York, No. 14-CV-8185 (AJN), 2016 WL 4767577, at *1 n.l (S.D.N.Y.Sept. 12, 2016) ("On a motion for summary judgment, however, 'allegations in an unverified complaint cannot be considered as evidence.'" (quoting Continental Ins. Co. v. Atlantic Cas. Ins. Co., No. 07-cv-3635, 2009 WL 1564144, at *1 n.1 (S.D.N.Y. Jun. 4, 2009))); Tomasino v. Estee Lauder Cos., Inc., 13-CV-4692, 2015 WL 1470177, at *6 (E.D.N.Y. Mar. 31, 2015) ("The complaint is not admissible into evidence. Once the standard prescribed by Twombly and Iqbal has been satisfied, the function of the complaint is merely to provide notice."); Versace v. Versace, No. OICIV.9645(PKL)(THK), 2003 WL 22023946, at *1 n.2 (S.D.N.Y. Aug. 27, 2003) ("While a verified complaint may be treated as an affidavit for summary judgment purposes if it meets the requirements of Rule 56(e), an unverified complaint is not useful to the Court on such a motion." (citing, inter alia, Monahan v. New York City Dep't of Corr., 214 F.3d 275, 292 (2d Cir. 2000); Colon v. Coughlin, 58 F.3d 865, 872 (2d Cir. 1995) (further internal citations omitted))). In addition, despite the Court's request that the parties cite to the evidence as it is labeled in their submissions, they instead often cited to the documents as they were labeled in discovery or during depositions. In short, the Court often had to search the record to discern the evidence to which the parties were referring. That being said, the Court turns to the evidence.

         On October 8, 2009, NASDI submitted a bid to the City to complete the foundation, site utilities, and miscellaneous site work for the Project. On March 5, 2010, NASDI and the City executed the Prime Contract for NASDI's work on Ocean Breeze. Pursuant to the Prime Contract, the City had to pay NASDI based on unit prices for materials supplied and installed on the Project. NASDFs bid estimate for the total price was $17, 629, 421.37, and was the sum of the estimates for the various line items.

         1. The Harrison Lease

         On October 26, 2009, NASDI and Harrison entered into a lease agreement (the "Lease") in which Harrison agreed to lease a commercial space at 1600 Harrison Avenue, Bay Shore, New York to NASDI. Troy Caruso ("Caruso"), the President of Harrison, Superior, and Diversified, signed the Lease on Harrison's behalf.

         Paragraph 3 of the Lease originally stated that "[t]he term of the Lease shall be Monthly commencing November 1, 2009." (Def's Ex. D at 001205). However, the word "Monthly" was crossed out. Above the crossed out word, the term "5 yrs" was written, and Caruso apparently initialed the change and dated it February 1, 2010. No one representing NASDI initialed the change. (Battistoni Aff ¶ 11). The rent was three thousand dollars a month.

         As to the change in the lease terms, Caruso testified:

Q: What was the purpose [of making the change to a five year lease term]?
A. Because I think the lease was originally by the month . . . when NASDI was first renting, and then when we landed this job, then it became more of a permanent thing. ... [It was five years] [b]ecause we were doing some projects together. I don't know. That's what they wanted. . . .
Q: So then Mike Wewiora is the one whose idea it was to make this a five-year term?
A: No. It was my idea, and Mike's, yeah. They didn't want to move all their stuff there and get thrown out in a month's notice. Yeah, it was a mutually agreed thing.
Q: If there's someone from NASDI who agreed to the five year term, it would be Mike Wewiora?
A: Yes.
Q: And did anyone from NASDI sign off on the change from monthly to five years?
A: It looks like George Lemelman [then President of NASDI] signed his name on the - printed his name on the bottom, but I can't tell. This is years ago.
Q: Did you send a copy of the amended lease to NASDI to execute?
A: I'm sure we must have, yeah.
Q: Did NASDI ever send back a copy of the lease to Superior showing they had signed off on the change from monthly to five years?
A: I'm assuming that this bottom signature is that.
Q: But did anyone from NASDI initial the change on page one?
A: I don't see an initial. ... I don't see anything on page one.

(Def's Ex. Cat289-92).

         Pursuant to the terms of the Lease, NASDI paid $2, 000 to Harrison each month until February 2012, when NASDI notified Harrison that it was terminating the Lease by letter. (See Def's Ex. E). NASDI quit the leased premises at the end of February 2012.

         2. The Sub-Buyout Agreement

         NASDI entered into subcontracts with various subcontractors to complete certain aspects of NASDI's work on the Project. Caruso testified that Superior helped NASDI obtain subcontractor bids.

         Between February and April of 2010, NASDI executives discussed with Caruso the possibility of having Superior secure subcontractors to complete work that NASDI had agreed to do, and splitting any savings realized by NASDI from the hiring of the subcontractors. NASDI's savings would have been the difference between the line item in NASDI's bid and the subcontractor's price for that same work.

         The Plaintiffs claim that the Sub-Buyout Agreement was confirmed in writing through: an email from Tim Higgins ("Higgins"), who was the President of NASDI at the time, to Caruso on February 17, 2010 memorializing a discussion they purportedly had the week earlier regarding the sub-buyout agreement; an email from Higgins to Caruso on March 2, 2010 again discussing the agreement; an unsigned Memorandum of Understanding dated March 21, 2010 which was written on Superior letterhead detailing the purported agreement; an October 27, 2011 letter from Caruso to NASDI stating that there had been a change in the original agreement between NASDI and Superior in the form of the profit sharing realized from subcontractor buyouts; a March 8, 2012 email from Caruso to Martin Battistoni of NASDI stating that the contract needed to be changed to reflect, inter alia, the 50% profit sharing of subcontractor buyouts; and a two-page spreadsheet apparently compiled by Robert D'Arpa, Superior's Project Manager, which details NASDI's savings that resulted from subcontractor buyouts.

         In the February 17, 2010, email from Higgins to Caruso, Higgins said that "[t]his email is to memorialize the agreements we made last week during our dinner discussions." (Def's Ex. F at 001197). Higgins then proceeded to outline five points central to the agreement. Relevant here, Higgins said that:

The project was bid based upon performing $12, 000, 000.00 of the project with in house crews. NASDI is guaranteed a profit margin of 7.5% on this dollar amount and if the profit margin is higher than anticipated, NASDI and Diversified will split the monies evenly. The remaining $5, 000, 000.00 is work that is to be subcontracted and at the time of the bid there was a markup of 3% on this subcontracted work. NASDI and Diversified will split the markup and split any additional cost savings recognized during the buyout of the subcontractors. ... If a subcontractor is found to perform work originally anticipated to be performed in house, the cost savings will be split evenly between NASDI and Diversified.


         The memorandum of understanding was prepared by Paul Huffer ("Huffer"), who worked for both Superior and NASDI from May 2010 through November 2010. He worked for NASDI from November 2010 through November of 2011, and for Superior for two and a half years before that. Huffer testified that he prepared the memorandum of understanding "on behalf of Superior to NASDI to try and get this agreement finally written and in place. This was after some back and forth negotiations between them." (Def's Ex. H at 20). Relevant here, while the emails from Caruso said that the agreement was between NASDI and Diversified, the memorandum of understanding said that the agreement was between NASDI and Superior.

         Caruso testified that a formal contract exists signed by both parties that fully memorialized the Sub-Buyout Agreement, but that only NASDI possesses the contract, and has refused to give it to him. (Def's Ex. C at 54-56).

         3. NASDI's Subcontract with Superior

         On or about December 16, 2010, Superior entered into a subcontract with NASDI, in which Superior agreed to install structural concrete for the Project's foundation (the "Superior Subcontract"). Caruso signed the Superior Subcontract on Superior's behalf, and George Lemelman ("Lemelman"), who was president of NASDI at the time, signed on its behalf. Caruso and Lemelman initialed each page of the subcontract except for the signature page, which was only initialed by Caruso.

         The Superior Subcontract provided, in relevant part:

1.1 The Subcontractor agrees to furnish all labor, equipment, materials, supplies, tools and supervision to diligently and expeditiously perform all the work as described in the Schedule (hereinafter referred to as the 'Work") required for Installation of Structural Concrete for Foundation (hereinafter referred to as the "Project") located in Staten Island, NY for New York City Department of Parks and Recreation, (hereinafter referred to as- the "Owner"), in accordance with all of the plans, drawings, specifications, general conditions, special conditions, and pre-contract addenda of the Prime contract and this Subcontract.
1.5 Subcontractor, by signing this Agreement, acknowledges that it has full knowledge of the provisions of the Prime Contract, and confirms and agrees that the entire aforesaid Prime Contract including but not limited to all of the plans, drawings, specifications, general conditions, special conditions and pre-contract addenda, which are part of the Prime contract between the Owner and NASDI, shall be considered and are hereby made a part of this Subcontract by this reference thereto, and the Subcontractor represents that he is familiar with all the terms, conditions, covenants, and provisions thereof. Subcontractor agrees to be bound to NASDI by all of the terms of the Prime Contract and to assume toward NASDI all of the obligations and the responsibilities that NASDI by those instruments assumes toward Owner. Subcontractor further agrees that NASDI shall have the same rights and remedies against Subcontractor that Owner has against NASDI under the Prime Contract as though the terms of those instruments were set forth in full in this Subcontract.
3.1 The Subcontractor shall schedule his operations and proceed with the Work, and shall complete the Work or portions, thereof, on or before such final completion and any interim or milestone completion dates for any phase, portion or sequence of the Work as set by either NASDI or the Owner. The Subcontractor agrees to coordinate his Work with any other work to be done on the project by NASDI, the Owner, and any contractors or subcontractors whose work may overlap or conflict with the scope of the Work under this Subcontract.
5.9 Final Payment shall be the unpaid balance of the Subcontract Amount, and shall become due when the Work described in this Subcontract is fully completed and performed in accordance with this Subcontract and the Prime Contract, and is satisfactory to and approved by Owner, Architect and NASDI. Payment of retention, reserved amounts and final payments shall be made to the Subcontractor only upon NASDI's receipt of the corresponding payment from the Owner.
5.10 In addition to any other requirements at this Subcontract and the Prime Contract, Final Payment shall not become due unless and until the following conditions precedent to Final Payment have been satisfied (a) approval and acceptance of Subcontractors Work by Owner, Architect/Engineer and NASDI, (b) delivery to NASDI of all manuals, "as-built" drawings, guarantees, and warranties for material and equipment furnished by Subcontractor, and any other documents required by the Prime Contract, c) receipt of Final Payment for Subcontractors Work by NASDI from Owner, (d) furnishing to NASDI of satisfactory evidence by Subcontractor that all labor, applicable taxes, fees and fringe benefits, and material accounts incurred by Subcontractor in connection with the Work have been paid in full, (e) furnishing to NASDI a completed Affidavit Release of Lien and Waiver of Claim by Subcontractor and any Sub-subcontractors in a form satisfactory to NASDI (f) an agreement holding NASDI and the Owner free and harmless from any and all claims arising out of or in connection with this Subcontract and in compliance with any other requirement of the Prime Contract.
6.2 No alterations, increases or decreases shall be made in the Work as shown or described by the Prime Contract except on the prior written order of NASDI, and when so made, the value of the Work or materials added or omitted shall be computed and determined by Subcontractor, subject to the written approval and acceptance by NASDI, and the amount so determined shall be added to or deducted from the Subcontract Amount. Subcontractor shall have no claim for additional work or changed work unless such work has been done in pursuance of a written order from NASDI. Any extra work performed without such written order will be at Subcontractor's cost and expense.
6.3 For changes in the Prime Contract that have been initiated by Owner, for acts or omissions of the Owner and for defects in the Prime Contract, Subcontractor shall submit any claims it may have, including notice thereof, for adjustment in the price, schedule or other provisions of the Subcontract to NASDI in writing in sufficient time and form to allow NASDI to process such claims within the time and in the manner provided for and in accordance with the applicable provisions of the Prime Contract. Subcontractor agrees that it will accept such adjustment, if any received by NASDI from Owner as full satisfaction and discharge of such claim. Payment for this extra work shall not be made to the Subcontractor until issuance of a written change order and payment to NASDI by the Owner. 6.4 For changes directed by NASDI, which NASDI agrees that the extra work is compensated Subcontractor shall be entitled to an adjustment in the Subcontract price, provided Subcontractor gives NASDI written notice within five (5) days and shall submit the actual Change Order Request within ten (10) days after receipt of the proposed instruction, and prior to performing such changed Work. Failure to provide such notice shall be deemed to prejudice NASDI's rights and to constitute a waiver of such claims by Subcontractor.
6.6 If Subcontractor believes the occurrence of some act or event, other than changes ordered by NASDI, justifies a change in the Subcontract Amount or the time for performance of the Work, Subcontractor shall notify NASDI in writing within three (3) days of the occurrence of such act or event and the scope of the change to allow NASDI to forward the notice to Owner. Failure to provide such notice shall be deemed to prejudice NASDI's rights and to constitute a waiver of such claims by Subcontractor.
6.7 The Change Order Request shall consist of the detailed cost estimate outlining the changes in the work and detailed documentation justifying proposed changes in time. This estimate shall be computed in accordance with accepted estimating procedures and in accordance with the terms of the Prime Contract, and the costs for labor and materials shall be at prevailing rates in the Project area. Subcontractor shall be allowed the percentage markup for Subcontractors overhead and profit specified in the schedule unless a lesser percentage is allowed to NASDI's subcontractors in the Agreement between Owner and NASDI.
10.2 Subject to Subcontractor's giving notice and other information, NASDI shall take all reasonable steps to secure from the Owner, such contractual benefits that may be claimable on behalf of the Subcontractor. The Subcontractor shall in sufficient time afford NASDI all information and assistance that may be required to enable NASDI to claim such Contractual benefits. On receiving such Contractual benefits from the Owner, NASDI shall pass on to the Subcontractor such proportion thereof, it being understood that in the case of any claim of the Subcontractor for any additional payment, NASDF s receipt of payment from the Owner shall be a condition precedent to NASDF s liability to the Subcontractor in respect of such claim.
10.5 NASDI shall represent the Subcontractor in its claims only to the extent of passing the claim on to the Owner and shall not be required to actively support such claims and the Subcontractor shall retain responsibility for the proofs and processing of the claims. The Subcontractor shall reimburse NASDI all costs incurred including attorneys' fees, in passing such claim on to Owner; the Subcontractor shall not advance any frivolous or unsupported claims. NASDI is liable to Subcontractor with respect to claims only to the extent that the Owner is determined, by litigation or settlement, to be liable to NASDI.
12.2 Any decision or determination by Owner or Architect relating to NASDI's performance or compensation under the Agreement between NASDI and Owner that is binding upon NASDI shall also be binding upon Subcontractor insofar as it relates to or involves Subcontractor's performance under, or the terms of this Subcontract. Any decision or determination resulting from arbitration or litigation between NASDI and Owner which relates to Subcontractors performance under, or the terms of, this Subcontract shall be binding upon Subcontractor, provided that Subcontractor has been given reasonable notice of and the opportunity to participate and present evidence in the arbitration or litigation. Insofar as a decision of Owner or Architect relating to Subcontractor's performance of the Work under the terms of this Subcontract is a condition precedent to NASDI's right to proceed to arbitration or litigation under the Prime Contract, such decision is also a condition precedent to Subcontractor's right to proceed to arbitration under this Subcontract.
23.1 It is understood and agreed that the Work provided for in this Subcontract constitutes only a part of the work being performed for Owner by NASDI and other Subcontractors. Subcontractor, therefore, agrees to perform the Work in such a manner that it will not injure, damage or delay any other Work performed by NASDI or any other subcontractor or supplier, and further agrees to pay or reimburse NASDI for any additional costs, damage or delay that may be caused to such other work of NASDI subcontractors or its agents or employees. 24.6 This instrument and the documents specially incorporated herein by reference represent the entire agreement between NASDI and the Subcontractor and may not be amended without their written consent. All negotiations and agreements prior to the date of this Subcontract not included herein are hereby voided. In the event NASDI and Subcontractor enter into another subcontract on another project, wherever located, a default under said subcontract shall be a default hereunder and vice versa.

(Def's Ex. I).

         In a "schedule" addendum, the Superior Subcontract also states "Subcontractor's percentage markup for overheads and profit (Clause 6.7) In accordance with Prime Contract General Conditions Section C Article Extra Work Performed as Outlined in Chapter VI Article 25, 26, 27 and 28 Of the Agreement." (Id. at 13913).

         There are additional handwritten clauses that append paragraphs 3.3 and 23.1 of the Superior Subcontract.

         Under 3.3, it states that "Superior Sitework is to be compensated for any acceleration in schedule due to any delays by others. Superior is to be compensated weekly as per contract documents. This can be done on a T basis or lump sum change order." The handwritten change is only initialed by Caruso. Battistioni stated that "NASDI never assented in writing to his unilateral, hand-written change." (Battistioni Aff. ¶ 49).

         The handwritten clause after 23.1 states, "[a]s per our original agreement, a second contract will follow which splits the subcontractor buyouts 50/50, NASDI Superior Site. This is approx. $1, 500, 000 at this point." (Id.). Caruso wrote his initials next to this addendum. No one from NASDI appears to have initialed this statement. NASDI claims that this statement was crossed out. While the Plaintiffs did not dispute this point in their 56.1 Statement, it appears just as likely that Caruso attempted to write this statement on three lines, but was unable to keep his handwriting on the line. Thus, the beginning of each line appears above the handmade line, while the second half of each line appears crossed out. It appears as follows:

As per our original agreement, a second contract will follow which splits the subcontractor buyouts 50/50, NASDI Superior Site. This is approx.. $1, 500, 000 at this point.-TC

(Id.). Battistioni stated that it was crossed out. (Battistioni Aff. ¶ 21).

         4. NASDI's Change Orders

         During the course of the Project, NASDI submitted eight written change orders to Superior: change order no. 1 for ($1, 042, 650.77) dated April 4, 2012; change order no. 2 for $724, 929.75 dated April 4, 2012; change order no. 3 for $1, 247, 111.91 dated April 4, 2012; change order no. 4 for $95, 271.83 dated April 14, 2012; change order no. 5Rev for ($520, 888.36) dated July 6, 2012; change order no. 6 for $82, 104.48 dated October 5, 2012; change order no. 7 for $167, 578.23 dated October 5, 2012; and change order no. 9 for $18, 500.00 dated March 26, 2013.

         5. Superior's Releases

         Superior signed two releases-one on May 2, 2012 (the May 2012 Release"), and another on October 16, 2012 ("the October 2012 Release"). The October 2012 Release provides, in relevant part:

I. Certifications, Affirmations and Warranties
The undersigned, to support its entitlement to the requested payment, and for and in consideration of payment made by NASDI, LLC ("Contractor") to the undersigned or to a subcontractor, materialman, or supplier of the undersigned, and contingent upon the receipt of such payment, for work performed in the construction of the above-referenced Project pursuant to the above-referenced Subcontract or Purchase Order, hereby affirms, certifies and warrants as follows:
1. Upon receipt of the sum of $755, 567.95, as payment for Change Orders 5, 6, and 7 on the above-referenced Subcontract, the undersigned will have received final payment, minus retainage, under the terms of the Subcontract or Purchase Order (and all authorized changes from [change orders] 1-7 thereto) between Contractor and Subcontractor Superior Site Work ("Subcontractor") relating to the Project, including (1) all labor expended in the construction of the Project, (2) all fixtures and equipment delivered to the site and either incorporated or to be incorporated into the Project, (3) all materials, fixtures and equipment for the Project stored offsite to the extent authorized by Contractor and for which payment therefor is permitted by Contractor's contract with the Owner and all requirements of said contract with respect to materials stored offsite have been fulfilled, (4) all services performed in the construction of the Project, and ...

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