Pavarini McGovern, LLC v. Dep t of Parks & Recreation OATH Index No. 1565/14, mem. dec. (June 20, 2014)

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1 Pavarini McGovern, LLC v. Dep t of Parks & Recreation OATH Index No. 1565/14, mem. dec. (June 20, 2014) CDRB determined that contractor waived its claim for interpretation of contract documents. Appeal denied. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS CONTRACT DISPUTE RESOLUTION BOARD In the Matter of PAVARINI McGOVERN, LLC Petitioner - against - CITY OF NEW YORK DEPARTMENT OF PARKS AND RECREATION Respondent MEMORANDUM DECISION ASTRID B. GLOADE, Administrative Law Judge/Chair LAURA RINGELHEIM, ESQ., Mayor s Office of Contract Services DENISE OUTRAM, ESQ., Prequalified Panel Member Pending before the Contract Dispute Resolution Board ( CDRB or Board ) is an appeal filed by petitioner, Pavarini McGovern, LLC ( Pavarini ), which arises out of a contract awarded to petitioner by the City of New York Department of Parks and Recreation ( DPR ) for general construction work at the Battery Park Sea Glass Carousel ( Contract ). Pavarini seeks a determination that under the Contract it is not responsible for the installation and wiring of the automatic temperature controls in the heating, ventilation, and air conditioning ( HVAC ) system. DPR argues that Pavarini waived its claim and that the appeal should be dismissed as a procedural matter. For the reasons set forth below, the Board finds that petitioner s claim must be dismissed as waived.

2 2 BACKGROUND In May 2010, DPR awarded Pavarini the Contract. The original contract amount was $8,931,797, and the start date was in August 2010, with a projected completion date in February Pavarini is the general contractor, and is responsible for furnishing all labor, materials, and equipment required for the construction of the Sea Glass Carousel in Battery Park. A separate contract covers the electrical work. On January 21, 2013, Pavarini submitted Request for Information # 091, seeking confirmation that in accordance with Mechanical Drawing M , and pursuant to a separate electrical contract, the electrical contractor was responsible for the installation and wiring of the HVAC controls (Pet. Ex. A). On January 31, WXY/Buro Happold ( WXY ), DPR s architect/engineer, responded that the materials and installation for HVAC control wiring shall be covered by the GC [general contractor] contract, and that it had redlined M to clarify that any wiring related to safety (such as fire alarm, etc) shall be by the EC [electrical contractor] and any wiring related to controls (not safety) shall be by the GC (Pet. Ex. A). Pavarini submitted its Notice of Dispute to DPR on February 12, 2013 (Pet. Ex. I). On April 1, 2013, Pavarini submitted a Partial Extension of Contract Time (With Claim) to DPR, requesting a partial extension of contract time due to a delay in receiving a required ride mechanism and fish models (Pet. Ex. D: Form 48 at 1-2). DPR granted the partial extension of time on April 23, 2013, with the understanding that any claims heretofore waived by the contractor shall not be revived by reason of this extension (Pet. Ex. D). Pavarini submitted its Notice of Claim to the Comptroller on May 17, 2013, stating that it had not received an official response to its Notice of Dispute from DPR (Pet. Ex. H). On September 20, 2013, DPR determined that Pavarini is responsible for furnishing and installing the HVAC control wiring (Pet. Ex. C). DPR also noted that if there was any ambiguity regarding the reference to the electrical contractor on the Mechanical Drawing, Pavarini was obligated to request clarification prior to submitting its bid or to perform the work in the most expensive manner (i.e.: control wiring is deemed included in PMG s [Pavarini s] bid price) (Pet. Ex. C at 3). On September 27, 2013, the Comptroller informed Pavarini that it had not preserved the dispute regarding the Mechanical Drawing in its request for a partial extension of time, and requested that Pavarini submit an explanation as to why it had not waived its claim under Article

3 3 13 of the Contract (Pet. Ex. D). On October 25, 2013, Pavarini responded to the Comptroller s inquiry, arguing that Article 13 has no bearing on this claim for the Interpretation of Mechanical Drawings, and that its Notice of Dispute and Notice of Claim were a clear indication that PMG is preserving the claim for the Interpretation of Mechanical Drawings (Pet. Ex. E). On December 19, 2013, after considering Pavarini s response, the Comptroller determined that Pavarini had waived its claim for an interpretation of the Mechanical Drawing by failing to reserve the claim in its application for a partial extension of time (Pet. Ex. F). Pavarini timely filed its petition with the CDRB on January 17, Oral argument was held before the CDRB on April 30, The parties submitted posthearing briefs on May 28, 2014, at which time the record closed. ANALYSIS The Board s authority to resolve contract disputes between the City of New York and a vendor is set forth in the Procurement Policy Board Rules ( PPB Rules ). The PPB Rules were incorporated into Article 27 of the Contract, and authorize the Board to resolve disputes about the scope of work delineated by the contract, the interpretation of contract documents, the amount to be paid for extra work or disputed work performed in connection with the contract, the conformity of the vendor s work to the contract, and the acceptability and quality of the vendor s work... 9 RCNY 4-09(a)(2) (Lexis 2013). The Board reviews the decision of the agency head, and the Board s decision must be consistent with the terms of the contract. 9 RCNY 4-09(g)(4) (Lexis 2013). Pavarini seeks a determination from the Board that as the general contractor it is not responsible for the wiring and installation of the HVAC controls under Mechanical Drawing M DPR asserts that Pavarini has waived its claim because it failed to reserve the claim in its application for a partial extension of time, as required by section (c) of the Contract. Section (c) provides that in an application for an extension of time the contractor shall set forth in detail [a] statement that the Contractor waives all claims except for those delineated in the application, and the particulars of any claims which the Contractor does not agree to waive (emphasis in original). New York courts have consistently enforced waiver of claims in connection with extensions of time. See Honeywell, Inc. v. J.P. Maguire Co., 1999 U.S. Dist. LEXIS 1872 at *27

4 4 (S.D.N.Y. Feb. 22, 1999) (similar waiver language held clear, valid, and enforceable: both federal and state courts in this Circuit have repeatedly found clauses conditioning extensions of time to complete performance of a construction contract on waivers of the contractor s claims to be valid and enforceable where the waiver is clear on its face ), modified in part, adhered to in relevant part, 2000 U.S. Dist. LEXIS 3699 (S.D.N.Y. Mar. 17, 2000); Mars Associates, Inc. v. City of New York, 53 N.Y.2d 627 (1981), aff g, 70 A.D.2d 839 (1st Dep t 1979); Herman H. Schwartz, Inc. v. City of New York, 100 A.D.2d 610 (2d Dep t 1984); Naclerio Contracting Co., Inc. v. Environmental Protection Admin., 86 A.D.2d 793 (1st Dep t 1982); E.M. Substructures, Inc. v. City of New York, 73 A.D.2d 608 (2d Dep t 1979); Teller Paving & Contracting Corp. v. City of New York, 73 A.D.2d 589 (1st Dep t 1979); see also Commodore Maintenance Corp. v. Dep t of Transportation, OATH Index No. 1118/14, mem. dec. at 7-9 (Apr. 3, 2014); Ferreira Construction Co., Inc. v. Dep t of Transportation, OATH Index No. 1619/12, mem. dec. at (Nov. 16, 2012). In its request for a Partial Extension of Contract Time (With Claim) dated April 1, 2013, Pavarini included the following: we hereby agree to waive and release any and all claims including, but not limited to damages for delay or any other cause whatsoever which we may have against the City of New York in connection with this contract except for the following: Additional and increased costs of construction, including increased costs of labor, supervision, engineering, equipment, material, field costs, subcontracting, general conditions, insurance, and overhead, caused by the City s acts or omissions to act including all matters set forth above. In addition to the foregoing, we reserve the right to payment of all contract monies now due or to become due under the contract, including monies for extra work, as well as the return of all securities deposited in lieu of retention. (Pet. Ex. D: Form 48 at 2) (emphasis in original). In response to DPR s assertion that Pavarini has waived its claim, Pavarini argues that if it is required to wire and install the HVAC controls, this is an increased cost of construction or extra work which it clearly carved out of the waiver (Tr. 11; Pet. at 2-3; Pet. Reply at 3-4). The Board recently rejected a contractor s assertion that its general language of exemption preserved claims under circumstances similar to those here, drawing its analysis from Mars Associates, Inc. v. City of New York, 53 N.Y.2d 627 (1981), aff g, 70 A.D.2d 839 (1st

5 5 Dep t 1979). In LAWS Construction Corp. v. Dep t of Parks & Recreation, OATH Index No. 1445/14, mem. dec. (May 28, 2014), a contractor claimed that it was entitled to extra compensation and, while its notice of claim was pending, submitted a request for partial extension of time. In its request for extension of time, the contractor waived all claims against the City, except for payment of additional and increased costs... resulting from... interferences with and construction changes in the work caused by the City of New York and [t]he payment of all contract monies... due... including all monies for extra and additional work.... LAWS Construction Corp., OATH 1445/14 at 8. The Board, noting that the petitioner was a sophisticated contractor, held the generally worded exemptions could cover a number of claims arising under Article 27 and thus lacked the particularity and clarity necessary to exempt the claims from the waiver provision. Id. at 10. The Board concluded that it was incumbent on [the contractor] to state its exemptions with clarity if it intended to have them cover the claim at bar. Id.; see also Mars, 53 N.Y.2d at 629 (in reserving a claim in a request for a time extension, it was incumbent upon contractor to state its intentions with clarity ). As in LAWS Construction Corp., Pavarini is a sophisticated contractor, having secured an $8.9 million dollar contract. Moreover, Pavarini s generally worded exemption language lacks the clarity necessary to preserve Pavarini s claim from waiver. Section (c) required Pavarini to set forth in detail a statement that it waives all claims except for those delineated in the application, and the particulars of any claims which it did not agree to waive. Nowhere in Pavarini s request for partial extension of contract time did it indicate that it sought an interpretation of whether it is responsible for the wiring and installation of the HVAC controls under the Mechanical Drawing. Nor did Pavarini even generally indicate that it reserved a claim for the interpretation of contract documents. Rather, Pavarini in essence sought to reserve any possible claim for extra work which it could have against DPR as a result of the Contract. Pavarini s generally worded exemption thus failed to comply with the requirements of section (c). See LAWS Construction Corp., OATH 1445/14 at 10; see also Mars, 53 N.Y.2d at 629. Moreover, Pavarini was well aware of the particulars of its claim, having submitted its Notice of Dispute regarding interpretation of the Mechanical Drawings to DPR on February 12, 2013, nearly two months before it submitted its request for a partial extension of time. Yet, Pavarini failed to set forth in detail and with specificity its reservation of that claim in the request

6 6 for extension of time. Pavarini cannot now be heard to assert that it reserved its claim by filing its Notice of Dispute. See Commodore, OATH 1118/14 at 8 ( the failure to list a particular claim in the request for extension of time is not saved by filing suit or asserting a claim before executing the waiver ); Ferreira, OATH 1619/12 at (waiver where the contractor was aware there was a problem and did not include its claim in its application for an extension of time); ADC Contracting & Construction, Inc. v. Dep t of Parks & Recreation, OATH Index No. 1010/04, mem. dec. at 5 (June 24, 2004) (the Board found that petitioner s claim was not exempt from the blanket waiver even though it had been previously filed with the commissioner ). The Board also rejects Pavarini s contention that it was not required to include the issue regarding interpretation of the Mechanical Drawing as a claim in its request for a partial extension of time because it is a dispute rather than a claim. Pavarini contends that section (c) only requires a contractor to set forth the particulars of a claim which it does not agree to waive (Tr ; Pet. Br. at 2). According to Pavarini, while the Contract does not define a claim, the use of the term in the Contract is solely associated with a monetary amount, and from a contractor s perspective, a claim is a request for money (Tr. 13, 28-29; Pet. Br. at 2). Pavarini maintains that in seeking interpretation of Contract documents it is making a nonmonetary claim; therefore, its appeal to the Board is a dispute which it was not required to reserve in its request for an extension of time (Tr ; Pet. Br. at 2). In response, DPR contends that Pavarini s distinction between claim and dispute is meaningless because its appeal for an interpretation of the Mechanical Drawing in fact relates to a monetary claim (Tr. 18, 32-33; Resp. Br. at 1-2). Pavarini did not include the costs of wiring and installing the HVAC controls in its bid for the Contract because it believed that the work was the responsibility of the electrical contractor (Tr. 7-9). Pavarini indicated that if the Board were to find that it is responsible for the work this would be extra work outside of PMG s contract and there would need to be a price adjustment to PMG s contract (Pet. at 2) (emphasis in original), the work would be an increased cost of construction or extra-work (Pet. Reply at 4) (emphasis in original), and there would be a cost as a change order (Tr. 13). For purposes of section (c) of the Contract, Pavarini s assertion that a claim is different from a dispute draws a distinction without a difference. Indeed, Pavarini offered no authority in support of its contention. Moreover, in its own submissions to the Board Pavarini

7 7 makes it clear that it in fact seeks a determination as to whether it must incur the costs of wiring and installing the HVAC controls, which is, in essence, a monetary claim. That Pavarini did not assert an exact dollar amount as part of its claim does not negate that it was required to set forth the particulars of the claim in its request for an extension of time. This requirement is supported by public policy. See Almar Plumbing & Heating Corp. v. Dormitory Auth. of the State of New York, 21 Misc.3d 1119(A) at (Sup. Ct. Kings Co. 2008) (for public policy reasons [t]he requirement that contractors must specifically reserve claims or release them... is imperative for a public body for purposes of financial planning, budgeting for future public projects, [and] reporting accurately to... institutions for which it constructs projects.... ). Accordingly, the Board finds that Pavarini waived its claim for an interpretation of the Contract documents. It is therefore unnecessary for the Board to consider the merits of Pavarini s appeal. CONCLUSION For the foregoing reasons, petitioner s claim is denied. This constitutes the final decision of the Board. All panel members concur. June 20, 2014 Astrid B. Gloade Administrative Law Judge/Chair APPEARANCES: JOEL M. SCIASCIA, ESQ. Attorney for Petitioner ZACHARY W. CARTER, ESQ. NEW YORK CITY CORPORATION COUNSEL Attorney for Respondent BY: ERIC P. JEWELL, ESQ.