United States District Court, E.D. New York
SUPERIOR SITE WORK, INC., DIVERSIFIED CONSTRUCTION CORP., HARRISON AVENUE PROPERTIES LLC, Plaintiffs,
NASDI, LLC, Defendant. NASDI, LLC, Third Party Plaintiff,
FOUNDATION COMPANY, and THE CITY OF NEW YORK, Third Party Defendants.
& Associates, P.C. Attorneys for the Plaintiffs By: Saul
D. Zabell, Esq., Of Counsel
Law Office of John E. Osborn, P.C. Attorneys for the
Defendant and Third Party Plaintiff Daniel H. Crow, Esq., Of
& Abrams on Attorneys for the Third Party Defendant Case
Foundation Company Alan H. Winkler, Esq., Of Counsel
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
MEMORANDUM OF DECISION AND ORDER
D. SPATT, UNITED STATES DISTRICT JUDGE.
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.
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.
The Relevant Facts
following facts are drawn from the parties' respective
56.1 Statements and the parties' evidence.
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.
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.
The Harrison Lease
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.
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.
the change in the lease terms, Caruso testified:
Q: What was the purpose [of making the change to a five year
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?
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
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
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).
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
The Sub-Buyout Agreement
entered into subcontracts with various subcontractors to
complete certain aspects of NASDI's work on the Project.
Caruso testified that Superior helped NASDI obtain
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.
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
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
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
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).
NASDI's Subcontract with Superior
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.
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
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).
"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).
are additional handwritten clauses that append paragraphs 3.3
and 23.1 of the Superior Subcontract.
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).
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
(Id.). Battistioni stated that it was crossed out.
(Battistioni Aff. ¶ 21).
NASDI's Change Orders
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.
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 ...