4643/99

ACTION II

Defendant(s).

-against-

RELIANCE INSURANCE COMPANY,

INDEX No.:

& SONS, INC.

Plaintiff(s),

-against-

INTERNATIONAL FIDELITY INSURANCE COMPANY,

Third-Party Defendant(s),

NORBERTO

#lo,the last 10 names being fictitious andunknown to Plaintiff and intended to bepersons or entities, if any,claiming to have a lien uponimprovement described in thesubordinate or coordinate toof Plaintiff,

having orthe publiccomplaintthe lien

Defendant(s).

CLOVER CONSTRUCTION CONSULTANTS, INC.,

Third-Party Plaintiff(s),

#l through "JOHN DOE"

22919/98

ACTION ICOUNTY OF NASSAU DEPARTMENT OF PUBLIC WORKS,CLOVER CONSTRUCTION CONSULTANTS, INC.,"JOHN DOE"

-against-INDEX No.:

& SONS, INC.,

Plaintiff(s),

- STATE OF NEW YORKPresent:

HON. KENNETH A. DAVIS.Justice

TRIAL/IAS, PART 10NASSAU COUNTY

NORBERTO

TRIAL DECISIONSUPREME COURT

for" the inclusion of NORBERTO inCLOVER's bid with the COUNTY OF NASSAU, CLOVER would not have beenawarded the PRIME CONTRACT. It is NORBERTO's contention thatCLOVER, from the beginning, intended to utilize NORBERTO's goodwillwith the County to obtain the contract and thereafter substitute intheir place Clearwater Pools at a lesser cost. However, afterNORBERTO brought the misrepresentations in Clearwater's applicationto the attention of the County of Nassau, its prior approval forClearwater was revoked and NORBERTO was awarded the subcontract.NORBERTO also claims that prior to the execution of the

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#B4106501G-Z, hereinafterreferred to as the PRIME CONTRACT. In or about February 10, 1997,CLOVER subcontracted the project to NORBERTO. NORBERTO allegesthat it performed all the terms and conditions of the subcontractand CLOVER denies that NORBERTO complied and, in fact, breached theagreement, resulting in the termination of the SUBCONTRACT. CLOVERclaims to have been damaged as a result thereof.

NORBERTO claims that "but

Woodmere Park Rehabilitation of SwimmingPools, Town of Hempstead, New York,

$753,773.29 from thedefendant, CLOVER CONSTRUCTION CONSULTANTS, INC., hereinafterreferred to as "CLOVER", the balance alleged to be due for work,labor, services and materials furnished pursuant to an agreement,hereinafter referred to as "SUBCONTRACT", between NORBERTO andCLOVER. CLOVER has also commenced a third party action againstNORBERTO's bonding company, International Fidelity InsuranceCompany (hereinafter referred to as "INTERNATIONAL") which has beenconsolidated with NORBERTO's action against CLOVER's bondingcompany, RELIANCE INSURANCE COMPANY (hereinafter referred to as"RELIANCE").

DISCUSSION OF FACTS

In or about November, 1996, CLOVER was awarded a contract bythe NASSAU COUNTY DEPARTMENT OF PUBLIC WORKS for the projectreferred to as the North

& SONS, INC., hereinafter referred to as"NORBERTO", seeks to recover the sum of

TRAVELERS CASUALTY AND SURETY COMPANYOF AMERICA, as successor in interest andadministrator of RELIANCE INSURANCE COMPANY,

Third-Party Plaintiff(s),

CLOVER CONSTRUCTION CONSULTANTS, INC.,PAULETTE SCHAUM and PAUL MANNES,

Plaintiff, NORBERTO

NORBERTO's foreman atthe job site and was present during Phase I and II, punch list andrepairs to the pipe hangers which failed and caused the pipe tunnelto flood. He also testified that temporary repairs were made andafter NORBERTO was terminated, he returned to the site to makepermanent repairs. With regard to the problem with the copingstone, he acknowledged that CLOVER made the repairs. Kolinekstated that while he was on the job there were no complaints fromthe County concerning the work being done or the pace at which thework was proceeding.

Frank Norberto, President of NORBERTO, testified that therewere two (2) phases to the CONTRACT. Phase I involved theconstruction of a slide pool and was to be completed no "later thanMay 30, 1997" (see Rider and Page 6 Article 9.3). Phase IIconsisted of the renovation of the old pool and diving pool as wellas the construction of the kiddy/interaction pool. Phase II wasto be completed "no later than May 30, 1998" (see Rider and Page 6Article 9.3). NORBERTO alleges that construction was delayedbecause of demolition. NORBERTO also contends that they were notpromptly paid for the work they performed and were advised byCLOVER that it was because they were not being paid by the Countyof Nassau and the work was not approved. NORBERTO claims that

Page 3

$119,047.00.

Edward Kolinek testified that he was

DiFrancia Electric) theamount claimed to be due and owing to NORBERTO was reduced by anadditional

NORBERTO's subcontractors (i.e. Townsend'sInternational Fiberglass Corporation, Holbrook Plastic Pipe Supply,Inc., J.H. Electric of New York, Inc. and

$863,723.39.By stipulation of the parties and in consideration of amounts paiddirectly to

$1,275,195.38 and a claimed "balance due" of

$2,138,918.77.There is also acknowledgment of "total payments received" in thesum of

& Greene, LLP dated July 13, 1998(Exhibit 5) Frank Norberto (President of NORBERTO) sets forth the"value of items of labor and materials", the "extras" and the"backcharges" for a "total contract balance" of

$2,100,000.00 to NORBERTO "for performance ofthe contract" (Article 10.1). It also provided inter alia that theparties were bound by the PRIME CONTRACT (see Article 1 and Article2). In a letter to Pollack

$100,000.00 was negotiated.While NORBERTO views this as important to its case, the courtconsidered it irrelevant as to the issue of whether there was abreach by either of the parties and the amount of damages, if any,that were sustained.

Howard Fuller, Vice President of NORBERTO, testified as tohaving had significant input into the bid and to the eventualawarding of the contract to NORBERTO. The contract called forpayment of the sum of

SUBCONTRACT, a price reduction of

NORBERTO's termination onNovember 6, 1998, they were permitted to continue with repairs to

Page 4

"B") all subcontractors and material menwere not paid.

John Kiernan, former Commissioner of Parks for the County ofNassau testified that notwithstanding

#"ll" required repairs to thecoping stones.

Throughout Phase II construction, NORBERTO claimed either thatpayment was not being made or not made in a timely fashion.CLOVER, on the other hand, claims that work delays were causedsolely by NORBERTO and they were not performing in accordance withthe terms and conditions of the contract. The correspondencebetween the two parties discloses significant animosity and lack ofcooperation. CLOVER also contends, that notwithstanding the"waiver of lien" (Exhibit

#"6" required NORBERTO toprovide life guard chairs and item

lo), the County ofNassau advised CLOVER of the remaining punch list items as ofNovember 6, 1998. Of the twenty-four (24) items, NORBERTO contendsthat only two were not complete. Item

NORBERTO's termination, therestill remained repairs to be performed on the pipe tunnel whichNORBERTO claims were made after being terminated by CLOVER.

By letter dated November 10, 1998 (Exhibit

although the work was almost completed, they were paid for onlyhalf the work and at one point, threatened to stop work. However,NORBERTO never followed through on their threat.

In a letter dated June 26, 1998 from the County of NassauDepartment of Public Works to CLOVER, the County, in accordancewith "paragraph 4 Article 25 of the Agreement" took "beneficialoccupancy of the diving, main, interactive, training and wadingpools, as well as the new filter building for the above referencedfacility as of 4:00 p.m. on June 25, 1998 (see Exhibit 6).

Frank Norberto testified that NORBERTO was never directed torepair or replace items with the exception of an actuator which wasmanufactured by Paddock Pools and failed two (2) times. Theactuator, however, did not prevent the operation of the pool.According to NORBERTO, punch list items were discussed with theconstruction manager and it was agreed that in September, after thepools were closed, they would be completed. On occasion during theSummer, NORBERTO was called by the County of Nassau to make repairsand in the Fall of 1998, NORBERTO completed the punch list with theexception of the corner copings of the wading pool.

On November 6, 1998, NORBERTO was terminated. NORBERTOprotested claiming that there was only one item left costing$500.00. However, at the time of

.

THE COURT: Okay when you say substantiallycomplete, does that mean withthe exception of punch listitems or does it mean more thanpunch list items?

THE WITNESS: I'm talking all inclusiveincluding any work that had tobe done. If I said the job was85 percent complete, let's say,and I said that was

Page 5

. .

NORBERTO's presence during the Summer. He alsotestified that although the County of Nassau took beneficialoccupancy, a significant amount of work remained to complete thejob. Subsequently a Certificate of Completion dated November 17,1999, referring to the completion date of May 11, 1999, was issued.

Regarding whether or not NORBERTO substantially completed thework the following colloquy took place between Cavanagh and thecourt:

THE COURT: What does substantiallycomplete mean to you? What doesthe word substantially completemean?

A Substantially complete means the majorityof the work had been completed to thepoint the county could take over andoperate the facility.

THE COURT: Does it have a percentage, 80percent, 90 percent, 95percent?

A I would say probably at least in the 80percentile for us to occupy and run thefacility.

the pipe tunnel. CLOVER, however, was never advised that NORBERTOreturned to complete the job.

Adrian Cavanagh, a licensed engineer, employed by the Countyof Nassau testified on behalf of CLOVER. According to Cavanagh, henever saw NORBERTO on the job after June 26, 1998, the date onwhich he took over supervision of the job. However, defendant'sdaily logs indicate

.

THE COURT: Again, you said that beneficialoccupancy would mean it wouldbe substantially complete?

A Yes.

THE COURT: Which is approximately 85percent? Is that what yousaid?

A That is a rough number that I had thrownout based on the punch list. Withoutanalyzing the punch list or crunchingnumbers, that is the approximate.

THE COURT: There is no definition ofsubstantially complete, as faras you know?

A Well, substantially complete would meanusing agency can occupy and run afacility.

THE COURT:

A Yeah.

THE COURT:

Substantially complete meanssatisfactory, substantiallycomplete?

I would say that, yes.

Sir, in June of 1998, when youissued the letter of beneficialoccupancy, was there furtherwork performed between June

Page 6

. .

.

THE COURT: In June of 1998, a letter wasissued taking beneficialoccupancy of the job correct?

A Yes. Correct.

. .

substantially complete, thatwould mean that the punch listwould comprise of the remainderof the work.

NORBERTO'sresponsibility as well as correct their defective work. As a

Page 7

1998?

A Yes.

THE COURT: What further percentage wascompleted by November of 1998when the default occurred?

A I would say probably, at that point, andI'm comparing my punch list I generatedwith the original punch list, I'd say 95percent.

THE COURT: So there was only 5 percentleft to be completed of thecontract, again, just involvingthe renovation and restorationof the pools?

A As a rough guess, yes.

Cavanagh testified that as of November/December 1998 he wasnot satisfied with the work on the pipe tunnel. A sufficientamount of cross-bracing had yet to be installed. According toCavanagh, the tunnel work represented 2 to 3 percent of the workthat had to be completed.

Paul Mannes, CLOVER's chief engineer and estimator, testifiedthat he oversaw the superintendents and project manager on the job.Although not previously involved in swimming pool renovation andconstruction, he considered his experience in waste waterconstruction projects to be very similar. Mannes testified that itwas necessary for CLOVER to complete work that was

(2 What further percentage of the work I'mreferring to just the pool restorationwhat further percentage of that wascomplete?

A Oh a significant portion, I would say.

THE COURT: You told me 80 to 85 percentwas completed by June of

again June of 1998, and thetime that Norberto wasdefaulted?

A Yes there was.

-

THE WITNESS: Paul Mannes.

Q Was it ever suggested to you from thetime when the job started until the last

Page 8

-

THE COURT: Excuse me. When you say Paul

$2,150.00 has been altered to reflect a much higheramount ostensibly to cover work performed at CLOVER's office inCollege Point. The allegation of alteration was borne out by acomparison of the original invoice with the copy forwarded toNORBERTO.

Kenneth Gass, the superintendent at the site for CLOVERtestified regarding the responsibility for demolition, excavationand concrete work.

Q Prior to beginning the job, did you haveconversations with respect to who wasgoing to perform the concrete work atthis project?

A Yeah. We were. I -- meaning Clover.

Q Who told you that Clover was?

A Paul.

Was it ever suggested

NORBERTO's failed work.

One of the items for which CLOVER sought reimbursement inconnection with repairs to the pipe tunnel was a bill fromStephanou Electric, Inc. received by CLOVER and forwarded toNORBERTO. John Stephanou testified that the invoice in theoriginal sum of

Marines''testimony details damages incurred by CLOVER and consists ofpayments to subcontractors of NORBERTO, credits, deletions from thecontract, work performed by CLOVER which was allegedly theresponsibility of NORBERTO, and repairs by CLOVER which werenecessitated by

result additional costs for labor, materials and equipment wereincurred. According to Mannes, discussions were held with FrankNorberto regarding demolition, excavation, backfill and concrete.Each of the parties claimed that the other had responsibility forthose items. Notwithstanding the purported discussions and demandsby CLOVER regarding demolition, excavation, backfill and concretework, CLOVER never sought to recover for this work or backchargefor it during the course of the construction. No documentation wasoffered by CLOVER to support its claim. The balance of

& Sons?

No.

CLOVER contends that discussions involving the responsibilityfor demolition, excavation and concrete occurred prior to NORBERTOcoming on the job, that is, while Clearwater Pools was thesubcontractor. However, the subcontract between CLOVER andClearwater was not offered which may have shown a difference in theresponsibility of the two subcontractors nor was there anytestimony that Gass was to treat NORBERTO any differently than theprior subcontractor insofar as the demolition, excavation andconcrete work.

Page 9

& Sons supposed to do anyconcrete work as opposed to gunite workor shotcrete work in the pool?

No. That would be our responsibilityonly. The pool structure itself would beNorberto's responsibility. Anything elsebesides that would be ours.

Was Norberto supposed to do anyexcavating work?

No.

Who had responsibility for installing theconcrete caps and the grade beams?

We were responsible for the pile caps.

When you say we were --

We meaning Clover Construction. I wasemployed by them at the time.

Were you ever instructed by Mr. Mannes orMs. Schaum at any point in time that thegrade beam work and the pier caps werethe responsibility of Norberto

& Sons were supposed to do any demolitionwork?

No.

Was Norberto

A

Q

A

Q

A

Q

A

Q

A

Q

A

day you did punch list work that Norberto

Gass' position with CLOVER and with no apparent"axe to grind" the court views his testimony as credible.

Page 10

why they werethrown off the job at thatpoint?

THE WITNESS: Well, not exactly. I mean, youhear stuff in the office, hewasn't performing, he didn't doeverything in his contract.

THE COURT: What was your opinion as towhether or not he performedaccording to the contract, sir?

THE WITNESS: Well, as far as I'm concerned,he pretty much did his jobbecause the pools opened andclosed on time. If we had aproblem, he came back and tookcare of it.

In view of

You know

NORBERTO's default and its job performance prior tobeing placed into default, Gass testified as follows:

Q THE COURT: Were you involved in anydiscussions regardingplacing Norberto indefault?

THE WITNESS: No. I would go to the officeand they would say, all right,we've thrown Norberto off thejob.

THE COURT: Do

$98,000.00. CLOVER claims thatsince this item was included in the plans which were part of thesubcontract, it was entitled to a credit when the County exercisedits option not to have the second pump. Notwithstanding CLOVER'scontention, Article 1 of the SUBCONTRACT provides that thesubcontract consists of the "PRIME CONTRACT" which allows for thesecond pump as an addition to the contract and therefore anadditional charge.

Regarding

One of the more significant items in dispute, other than thedemolition, excavation and concrete was the additional pump which,according to the PRIME CONTRACT with the County, was to befurnished at an additional cost of

(3rd Dep't 1987).

The court rejects CLOVER's contention that the standard shouldbe "totally complete" as set forth in the rider to the contract.The rider refers back to page 6, Article 9.3 which provides for"substantial completion". The intent of the drafter, (Clover), ofthe subcontract is therefore unclear and ambiguous and itsinterpretation must be decided in favor of NORBERTO.

Furthermore, NORBERTO was terminated at a time when the poolswere closed for the Winter and there was no urgency to completepunch list items. Although CLOVER may have followed the procedureset forth in the contract to terminate NORBERTO and NORBERTO didnot return to the job site when demanded to do so by CLOVER, thecourt finds there was no justifiable basis for terminating NORBERTOat this time.

3. It is undisputed that pipe hangars in the tunnel failedcausing damage and necessitating repairs. Both NORBERTO and CLOVERclaim to have performed permanent repairs, although NORBERTOtestified that the repairs were made after they were terminated.The court finds that NORBERTO failed to establish that it madesatisfactory permanent repairs to the tunnel. However, the court,in reliance upon the testimony of Adrian Cavanagh, that the repairsrepresented 2 percent to 3 percent of the contract, finds thatCLOVER was entitled to a credit representing the dollar equivalent.

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A.D.2d 953 Jobco-Kellv Associates,

128 Paintins v.

(3rdDep't 1991); Wilson Roofing and

A.D.2d 956

N.Y.S.2d909 (1984). The ambiguous language contained in the agreementregarding the responsibility for demolition, excavation andbackfill and concrete coupled with the testimony of CLOVER'ssuperintendent, Gass, requires that this court find in favor ofNORBERTO on this issue. The court therefore finds that CLOVER wasresponsible for the demolition, excavation and backfill andconcrete.

2. According to CLOVER's own witness, Adrian Cavanagh, thejob was 95% complete at the time NORBERTO was defaulted by CLOVERon November 6, 1998. At the time, NORBERTO had already performedsubstantially all of its obligations under the contract. (See,Carefree Building Products, Inc. v. Belina, 169

N.Y.2d 732, 472 (1914), 151 West

Associates v. Printsiples Fabric Corp., 61

1. CLOVER acknowledges having drafted the contract betweenthe parties. As such, any ambiguity or inconsistency should beconstrued against the party who prepared the document. (Moran v.Standard Oil Company of NY, 211 N.Y. 187

8,123.70

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$119,047.00

$

2,340.OO3,950.oo2,807.OO

$109,950.00

DiFrancia

B. Owner credits1. Starter platforms

& H Electric4.

#l on page 35 of the memorandum seeks credit for removalof concrete steps and refers to Exhibit CT. However, Exhibit CTrefers to SB 63: rerouting of water service line and SB 68:additional floor preparation for resilient flooring in fitnesstraining room). The court finds that NORBERTO was entitled toreceive credit for the following items.

A. Payment to subcontractors1. Townsend2. Holbrook3. J

$3,250.00).

5. Many of the items claimed by CLOVER as credits are deniedfor various reasons including a failure to establish that there wasa relationship between the credit sought and the work required tobe performed by NORBERTO under terms and conditions of the contract(e.g. item

$31,000.00 less ($2,100,000.00 plus$2,127,750.00

17,492.51

Furthermore, the court finds that Section 5.3 of Article 5(changes in the work) of the contract is controlling and NORBERTOfailed to comply and therefore forfeited its right to recover forthe extras. Allowing for a credit with respect to the bond, thetotal amount to which plaintiff is entitled, without adjustment fordefendant's credits, is

14,353.OlDive Pool renovation

5,493.15Coping in lieu of tile

1,961.38Skid Resistant Paint Interactive

4,ooo.ooSkid Resistant Paint Wade Pool

3,479.43Backwash By 762.45Main Pool Main Drain Leak

1,316.61Slide Modification

1,098.65Main Pool Surge Trench

& Dive Pool

6,024.OORepair Main Pool 655.06Inspect Main

5,595.04Pressure Test Main Pool 815.35Repair Dive Pool

$ 847.00Pressure Test Dive Pool

\\extrasN, to wit,

Adjust Dive Pool Overflow

4. The court finds that NORBERTO failed to prove those itemsit refers to as

$590,590.51.

7. The court finds that CLOVER shall not be entitled to

Page 13

($2,127,750.00), there is a balance due NORBERTO of ($1,275,195.38) from the total amount of the contract

($261,964.11) and payments received byNORBERTO

$1,275,195.38. Therefore, afterdeducting CLOVER's credits

$261,964.11

6. The court finds that payments were made in accordance withthe contract in the sum of

54,465.OO

Total credits to CLOVER:

48,750.OO$

l/2 percent of contractPursuant to testimony ofAdrian Cavanagh less AC RamDesign and lighting repairsWhich were cost of repairspaid directly to subcontractorsin connection with the tunnel)

2,150.OO4. Amount representing approximate

cost to repair tunnels(2

1,965.OO3. Cost of lighting repairs

(tunnel)

1,600.OO2. Commercial Clearwater

NORBERTO's work1. AC Ram Design and inspection

Of pipe tunnels $

25,974.56

E. Completion of

21,967.OO$

1,466.254. Resetting of coping stone

And winterization

1,226.OO3. Use of Clover's containers

$2,336.00$1,226.00 not

1,315.312. Corrosion products and

Equipment (invoice [ExhibitCG] indicates

35,698.OO

D. Norberto work performed by Clover1. All Island testing $

8,868.OO3. Handrails 200.00

$

26,630.OO2. Life guard chairs

26,779.55

C. Deletions from the contract1. Steel reinforcement $

2,787.15$

15,868.703. SB 67 (miscellaneous extras)2. Main pool winter cover

C0mpan.y of Americanas successor in interest and administrator of Reliance InsuranceCompany (Travelers) on the payment bond. Furthermore, judgmentshall also be entered simultaneously in favor of Travelers againstCLOVER and the individual indemnitors, Paulette Schaum and PaulMannes together with costs, disbursements and interest.

This decision constitutes the judgment of the court.

Settle judgment on notice.

Dated:

J.S.C.

Page 14

$590,590.51 together with costs, disbursements and interestfrom November 6, 1998 as against Clover Construction Consultants,Inc. as well as Travelers Casualty and Surety

recover liquidated damages since the court finds that CLOVERimproperly terminated the contract on November 6, 1998.

CONCLUSION

Plaintiff, Norberto and Sons, Inc. is entitled to recover thesum of