| Peter Scalamandre & Sons, Inc. v State of New York |
| 2009 NY Slip Op 06209 [65 AD3d 774] |
| August 13, 2009 |
| Appellate Division, Third Department |
| Peter Scalamandre & Sons, Inc., Appellant, v State of New York,Respondent. |
—[*1] Andrew M. Cuomo, Attorney General, Albany (Paul Groenwegen of counsel), forrespondent.
Spain, J. Appeal from an order of the Court of Claims (Hard, J.), entered July 15, 2008,which, among other things, denied claimant's motion for summary judgment.
In April 2000, claimant successfully bid on a bridge rehabilitation project located in SuffolkCounty and began construction work the following June. As set forth in defendant's projectdesign specifications, claimant's successful bid included, among other things, a detailed weldingproposal setting forth the manner in which certain welding work was to be performed. Whileclaimant's submission complied with the design specifications, upon subsequent review,defendant discovered that the type of welds called for—both in its own designspecifications and claimant's proposal—were not in conformity with the New York StateSteel Construction Manual (hereinafter the manual), as contractually required. In April 2001,after notifying claimant of the error, defendant revised the relevant welding specifications toconform with the manual and asked claimant to submit a welding proposal using those revisedprocedures. The following month, claimant submitted a revised proposal that incorporatedsimilar improper welding procedures as before, which defendant rejected. Thereafter, in July2001, claimant submitted a manual-compliant welding proposal reflecting that the extra workwould cost defendant an additional $415,000.[*2]
After reviewing claimant's proposal, defendant decidedthat the welding work would be "too time-consuming and too late in the construction season" topermit completing the project by the November 2001 construction deadline. As a result, inSeptember 2001, defendant decided to utilize an alternate nonwelding procedure and invitedclaimant to submit a proposal. In January 2002, after claimant declined to participate in thenonwelding alternative, defendant omitted the relevant welding work from the project and putthe nonwelding specifications out for rebid. Claimant declined to rebid, asserting that theomission of the welding work from the project had caused it financial harm. After unsuccessfulattempts to negotiate a settlement, claimant commenced the instant action for breach of contractseeking recovery for its alleged lost profits. Following joinder of issue and discovery, claimantmoved for summary judgment. Defendant opposed the motion and cross-moved for summaryjudgment dismissing the claim. The Court of Claims denied both motions. Claimant now appealsand we affirm.
Claimant's main contention is that defendant could not delete substantial work from thecontract without compensating it for lost profits because it was defendant's own design error thatnecessitated the deletion. However, article 5 of the parties' contract contains an "alterations andomissions" clause which provides that "[defendant] reserves the right, at any time during theprogress of the work, to alter the plans or omit any portion of the work as it may deemreasonably necessary for the public interest . . . without constituting grounds forany claim by [claimant] for allowance for damages or for loss of anticipated profits" (emphasisadded). This specific contract provision put claimant on notice that defendant reserved the rightto make "reasonably necessary" changes in the plans and specifications of the work and thatthere would be no right to collect resulting lost profits (compare Del Balso Constr. Corp. vCity of New York, 278 NY 154, 159 [1938]; Kinser Constr. Co. v State of NewYork, 204 NY 381, 394 [1912]).
Indeed, the project's original design plans mistakenly contained incorrect weldingspecifications. Claimant, however, was not without fault. It had the opportunity to review theproject's welding specifications prior to its original bid on the project and, despite being requiredto submit a bid in conformance with the welding standards set forth in the manual, failed to takenotice of this error. As a result, claimant's original and subsequent welding proposals weredisapproved because they incorporated this error and claimant did not respond with a costestimate for the revised welding specifications until July 2001. It was only after these ongoingdelays that defendant adopted the alternate procedure. In light of these considerations, claimanthas failed to establish a prima facie case which would entitle it to judgment for its lost profits asa matter of law (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985];Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; Repeti v McDonald's Corp., 49 AD3d1089, 1090 [2008]).
Defendant, which did not file a cross appeal, now asks this Court to search the record andgrant summary judgment in its favor and dismiss the complaint. It is well settled that this Courtmay, despite the lack of a cross appeal, search the record and grant summary judgment in favorof a nonappealing party (see CPLR 3212 [b]; Merritt Hill Vineyards v Windy Hgts.Vineyard, 61 NY2d 106, 110-111 [1984]; Bender v Peerless Ins. Co., 36 AD3d 1120, 1121 [2007]).However, defendant did not establish its entitlement to summary judgment dismissing the claim.Initially, general omission clauses, such as contained in the parties' contract, have been construedto permit deletions in contracts so long as they do " 'not alter the essential identity of the mainpurpose of the contract' " (Camarco Contrs. v State of New York, 33 AD2d 717, 719[1969], mod on other grounds 28 NY2d 948 [1971], quoting Del Balso Constr. Corp.v City of New York, 278 NY at 160). Here, the main purpose of the parties' contract was torehabilitate [*3]and repair the subject bridge, and altering thedesign plan to omit certain welding work did not negate that purpose.
Enforcement of an omission clause, however, also requires a finding that defendant's actionsin omitting portions of the contract were not arbitrary or capricious (see Del Balso Constr.Corp. v City of New York, 278 NY at 162; Kinser Constr. Co. v State of New York,204 NY at 390-391; cf. Trimpoli v State of New York, 20 AD2d 933, 934 [1964]).Defendant's stated reason at the time the welding work was omitted from the contract was that,as specified, the work could not be completed prior to the November 2001 deadline. While thenew construction procedure called for application of a spray-on membrane that made the weldingwork unnecessary, the record establishes that the bridge rehabilitation work was not actuallyfinished until June 2002. Therefore, the rationale upon which defendant claimed that it was"reasonably necessary for the public interest," to omit welding work from its contract, isarguably undermined. Given defendant's failure to tender any other proof establishing that theomission of welding was "reasonably necessary for the public interest," a question of factremains as to whether its decision was arbitrary and capricious and, in turn, whether article 5applies in the instant dispute.
Finally, given our conclusion that the Court of Claims properly denied the parties' motionsfor summary judgment, we cannot consider claimant's contention regarding its entitlement todamages.
Peters, J.P., Lahtinen, Kavanagh and McCarthy, JJ., concur. Ordered that the order isaffirmed, without costs.