NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS CONTRACT DISPUTE RESOLUTION BOARD
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1 Kreisler Borg Florman General Construction Co. on behalf of Minelli Construction Co., Inc. v. Dep t of Design & Construction OATH Index Nos. 1079/06, 1100/06, mem. dec. (June 1, 2006) Agency moved to dismiss subcontractor s challenge to eight credit change orders (deductions) as time barred. CDRB found some of the claims were time barred but others were not and it directed the City to file an answer with respect to the surviving claims. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS CONTRACT DISPUTE RESOLUTION BOARD In the Matter of KREISLER BORG FLORMAN GENERAL CONSTRUCTION COMPANY on behalf of MINELLI CONSTRUCTION CO., INC. Petitioner - against - DEPARTMENT OF DESIGN AND CONSTRUCTION Respondent MEMORANDUM DECISION ROBERTO VELEZ, Chief Administrative Law Judge / Chair KEN JOCKERS, Deputy Counsel, Mayor's Office of Contracts JOHN FRANKLIN UDOCHI, Independent Third Panelist Pending before the Contract Dispute Resolution Board is the motion of respondent, the New York City Department of Design and Construction ( Department ), to dismiss petitioner s appeal as time-barred. In its appeal, petitioner, Kreisler Borg Florman General Construction Company (KBF) on behalf of Minelli Construction Company, Inc. (Minelli) seeks reversal of determinations made by respondent, denying Minelli s challenge to eight credit change orders
2 -2- (deductions) 1, totaling $121,206, as time barred. For the reasons set forth below, this Board finds that some of petitioner s claims are untimely but others are not; therefore, the motion to dismiss is granted in part, denied in part, and respondent is directed to submit an answer pertaining to the surviving claims within thirty days of the date of this decision. BACKGROUND According to the facts alleged in the parties' submissions, in January 1999, the Department contracted with KFB to furnish preconstruction, construction and construction management services for a public improvement project known as the Administration for Children s Services New Children s Center. KFB thereafter entered a written subcontract with Minelli, whereby Minelli agreed to perform stone and masonry work on the building s exterior for $3,660,000. After Minelli s work on the project was completed, by letter dated February 5, 2003, Eric Platt, KBF s Project Executive, wrote Joe Spano, Minelli s Vice President: Attached please find a summary of your account and a Final Waiver and Release of Liens and Claims showing a total adjusted contract amount of $4,829, This amount includes change orders totaling $1,270, and credits totaling $100, for a total increase of $1,169, In the interest of expediting the closeout of this project we request that you withdraw your lien and have the attached waiver signed and notarized. Upon our receipt of the executed waiver and documentation verifying the lien withdrawal, we will arrange for the expedient processing of your final payment of $3, (Resp. Ex. B). Attached to the February 5, 2003 letter was a summary of eleven change orders and six credit change orders, MIN-015, MIN-016, MIN-017, MIN-018, MIN-019, MIN-020. In this proceeding, Minelli challenges five of those six credit change orders, i.e., deductions (MIN-015 through MIN-018, MIN-020). MIN-015: cleanup by KBF - $53,546 MIN-016: backcharge for temporary water - $5,759 MIN-017: premium time for scaffold removal - $14,371 1 In its first petition filed by KBF on its behalf, Minelli challenges to credit change orders MIN-016, MIN-017 and MIN-018 (referred to herein as petition 1). In the second petition, filed by KBF in its behalf, Minelli s challenges credit change orders MIN-015, MIN-020, MIN-021, MIN-022, and MIN-023 (referred to herein as petition 2).
3 -3- MIN-018: reinstallation of scaffold at NW corner - $2,287 MIN-020: erection of cantilevered scaffold due to late delivery of entrablature components - $21,271. On February 21, 2003, KBF sent Minelli a followup letter notifying Minelli that this letter shall serve as official notice that all Notices of Dispute for the ACSBELL project, in accordance with Article 29 of the contract, must be presented for a Commissioner s Determination by March 1, 2003 (Resp. Ex. J). Minelli is also challenging MIN-021: completion of punchlist - $412. Minelli received notice of credit change order MIN-021 on September 3, 2003 (Resp. Ex. C). The September 3, 2003 letter to Minelli stated attached please find Credit Change Order No. MIN-21/PCO-879 for your review and signature. Following authorization, please return one (1) original document to Eric Platt for processing (Resp. Ex. C). Minelli is also challenging credit change orders, MIN-022 and MIN-023: MIN-022: scaffolding cleaning by York Scaffold - $1,960 MIN-023: erecting and dismantling scaffold at SE corner of Loggia - $21,600. It received notice of those credit change orders on February 6, 2004 (Resp. Ex. D). The February 6, 2004 letter to Minelli stated attached please find Credit Change Order No. MIN- 022/PCO-725 and MIN-023/PCO-720 for your review and signature. Following authorization, please return one (1) original document to Eric Platt s attention for processing (Resp. Ex. C). Instead of utilizing the ADR provision to challenge the credit change orders, Minelli sued KBF (Pet. 1 Ex. D; Pet. 2 Ex. 1E; Resp. Ex. K: a memorandum decision, from Justice Joan A. Madden, dated June 14, 2004, New York State Supreme Court, New York County). In the suit Minelli appeared to challenge MIN-015, MIN-016, MIN-017, MIN-018 and MIN-020. Minelli alleged that: KBF and the DDC approved all of plaintiff s work in July 2001, including the $103, sought in this action. However, after approving the full sum owed, KBF allegedly engaged in a scheme to deprive Minelli of the balance due under the Subcontract, by falsely representing to DDC that approximately $100, in credits were to be charged against Minelli s balance due. Minelli alleges that KBF concocted this plan after its own requests for reimbursement for claims and charges were initially rejected by DDC. KBF then repackaged its claims, revising the causes to now blame Minelli for all of these costs. Using these newlyfabricated claims, KBF refused to issue the balance of $103, due Minelli. Instead, KBF created a document entitled Final Waiver and Release of Claims
4 -4- in February 2003, in which KBF demands that Minelli acknowledge back charges totaling $100,189.00, and accept a balance of only $3, (Resp. Ex. K, at 3). Justice Madden dismissed Minelli s suit for its failure to resort to the subcontract s dispute resolution provision prior to bringing a civil suit against KBF (Ex. K at 7-8). Justice Madden found that after receiving the February 5, 2003 letter from KBF Minelli failed to take any of the steps required by the contract s dispute resolution clause: first, timely present the dispute in writing to the agency head; then if the claim was denied, present the dispute to the Comptroller; and finally, if the Comptroller does not settle or adjust the dispute, timely present it to the CDRB. She rejected Minelli s claim that the ADR provision did not apply to its claims, given the breadth of the dispute resolution provisions which required Minelli, upon receipt of the allegedly fabricated back charges, to initiate the dispute resolution process (mem. dec. at 8). On October 20, 2004, KBF again notified Minelli in writing regarding credit change orders MIN-016, MIN-017 and MIN-018 (Pet. 1: Ex. 1A). On November 1, 2004, KBF again notified Minelli in writing regarding credit change orders MIN-015, MIN-020, MIN-021, MIN-022, and MIN-023 and informed Minelli Should you dispute any of the referenced credit change orders, in accordance with Article 29 of your contract, you may request that KBF forward your claim to the Commissioner for his determination (Pet. 2 Ex. 1A). On November 5, 2004, Minelli requested in writing that KBF challenge MIN-016, MIN- 017, and MIN-018 with the agency head on its behalf (Pet. 1 Ex. 1B). On November 8, 2004, KBF filed a Notice of Dispute with the DDC Commissioner on Minelli s behalf, challenging MIN-016, MIN-017 and MIN-018 (Resp. Ex. F). On November 10, 2004, Minelli requested in writing that KBF challenge MIN-015, MIN- 020, MIN-021, MIN-022, and MIN-023 with the agency head on its behalf (Pet. 2 Ex. 1B). On November 19, 2004, KBF submitted a Notice of Dispute with the DDC Commissioner on Minelli s behalf, challenging MIN-015, MIN-020, MIN-021, MIN-022, and MIN-023, in accord with Article 28 of the contract (Pet. 1 Ex. 3; Pet. 2 Ex. 3). In letters dated February 28, 2005, DDC Assistant Commissioner Mark A. Canu denied all of the challenges as time barred (Pet. 2 Ex. 2; Pet. 1 Ex. 2). On behalf of Minelli, KBF filed
5 -5- the claims with the Comptroller on March 17, 2005 (Pet. 1 Ex. 6; Pet. 2 Ex. 9); the Comptroller denied all of the challenges as time barred in separate decisions dated December 8, 2005 (Pet. 1 Ex. 5; Pet. 2, Ex. 8). On December 28, 2005, KBF filed two separate petitions with the CDRB, on behalf of Minelli, challenging all of the Commissioner s determinations. On February 28, 2006, in lieu of filing an answer, respondent filed a motion to dismiss the petitions as time-barred. Minelli sumitted papers in opposition on March 21, 2006, and on April 12, 2006 respondent submitted its reply. For reasons that set forth below, the motion is granted in part and denied in part. ANALYSIS In two separate petitions, Minelli challenges these credit change orders (deductions): MIN-015: cleanup by KBF - $53,546 MIN-016: backcharge for temporary water - $5,759 MIN-017: premium time for scaffold removal - $14,371 MIN-018: reinstallation of scaffold at NW corner - $2,287 MIN-020: erection of cantilevered scaffold due to late delivery of entrablature components - $21,271. MIN-021: completion of punchlist - $412. MIN-022: scaffolding cleaning by York Scaffold - $1,960 MIN-023: erecting and dismantling scaffold at SE corner of Loggia - $21,600. Respondent moves to dismiss both petitions on the ground that KBF/Minelli failed to present its dispute to the DDC Commissioner within the time frame set forth in the relevant contract provision and Procurement Policy Board (PPB) rule. Minelli counters that the dispute was timely presented. Article 29.1 of the KBF-Minelli contract provides: Any dispute concerning 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 contractor s work with the contract and the acceptability and quality of the contractor s work shall be resolved in accordance with this article, Article 67.2 of the contract and section 7-05 of the rules of the Procurement Policy Board. (Pet. 1 Ex. 1C; Pet. 2 Ex. 1C).
6 -6- Article 67.2 of the KBF-Minelli contract provides that KBF may, at Minelli s request, appeal on Minelli s behalf any ruling of decision of the owner, the agency head or the dispute resolution board. PPB Rule 7-05 provided: The supplier shall present its dispute in writing ( Notice of Dispute ) to the Agency Head within the time specified in the contract, or if no time is specified, within ten days of receiving written notice of the determination or action that is the subject of this dispute. Rule 7-05 was twice renumbered and amended. The current version is rule 4-09, which now gives suppliers 30 days to file a Notice of Dispute, unless the contract provides otherwise: The supplier shall present its dispute in writing ( Notice of Dispute ) to the Agency Head within the time specified in the contract, or if no time is specified, within thirty days of receiving written notice of the determination or action that is the subject of this dispute. 9 RCNY 4-09(d). The parties dispute which correspondence constitutes notice of the determination or action from which the time to present the dispute to the agency head begins to run. Respondent argues that the February 5, 2003, September 3, 2003 and February 6, 2004 letters from KBF gave Minelli notice of the determinations or actions triggering the dispute resolution process under the KFB-Minelli contract; and therefore Minelli s requests for review, dated November 5, 2004 and November 10, 2004, were well outside of the deadline set by the contract and the relevant Procurement Policy Board rule. In its response to the motion to dismiss, Minelli argues that the September 3, 2003 and February 6, 2004 letters did not give it notice of action[s] or determination[s] which triggered the dispute resolution process but instead were mere proposals or invitations to negotiate. In support of such an interpretation, Minelli cites to the language in those letters, where KBF forwarded credit change orders to Minelli for its review and signature and directed Minelli following authorization to return one original document to KBF for processing. Minelli argues that if KBF intended to notify Minelli that final action had already been taken, then there would have been no need for KBF to direct Minelli to review, sign and authorize the changes; therefore, those letters were mere proposals. As for the February 5, 2003 letter, Minelli contends that the document was insufficient to put it on notice that a final determination had been rendered. The credit change orders were not
7 -7- attached; instead attached was a document titled Minelli s Contract Summary 1/27/2003, without backup documentation. According to Minelli, it did not receive notice that final action had been taken until it received the October 20, 2004 and November 1, 2004 letters from KBF, which attached the challenged credit change orders and informed Minelli Should you dispute any of the referenced credit change orders, in accordance with Article 29 of your contract, you may request that KBF forward your claim to the Commissioner for his determination (Pet. 1 Ex. 1A; Pet. 2 Ex. 1A). Therefore, Minelli s letters dated November 5, 2004 and November 10, 2004, notifying KBF that it was disputing the credit change orders were timely protests under the contract (Pet. 1, Ex. 1B; Pet. 2, Ex. 3). The Board finds, like Justice Madden did in the proceeding before her, that the February 5, 2003 letter supplemented by the February 21, 2003 letter, notified Minelli of the determination which triggered the deadline for Minelli to request KBF file a Notice of Dispute on its behalf. The summary attached to that letter lists credit change orders (deductions) MIN-015, MIN-016, MIN-017, MIN-018, MIN-020, with a description of the ground for each deduction and the amount of each deduction. KBF s February 23, 2003 letter to Minelli, stating that it constituted official notice that all Notices of Dispute for the ACSBELL project, in accordance with Article 29 of the contract, must be presented for a Commissioner s Determination by March 1, 2003 (Resp. Ex. J) made clear that these were final determinations. Therefore, Minelli s November 5, 2004 and November 10, 2004 requests for review of those credit change orders were untimely. The Board agrees with Minelli that the September 3, 2003 and February 6, 2004 letters, relating to credit change orders MIN-021, MIN-022 and MIN-023, did not clearly put Minelli on notice that a final determination has been made, given the instruction that Minelli authorize, review and sign the orders. If a final decision had already been made, there would be little purpose to obtaining Minelli s authorization. At best, those letters created an ambiguity as to whether there was a final determination, and such ambiguity must be resolved in Minelli s favor. See Mundy v. Nassau Co. Civil Service Comm n, 44 N.Y.2d 352, 358, 405 N.Y.S.2d 660, 662 (1978) (ambiguity created by a public body should be resolved against it in order to reach a
8 -8- determination of the merits and not deny a party its day in court); Montalvo v. Crotty, 137 A.D.2d 437, 524 N.Y.S.2d 449 (1 st Dep t 1988). The Board finds that Minelli was not notified that a final determination was made until it received the November 1, 2004 letter from KBF. Therefore, that letter triggered Minelli s duty to timely request that KBF file a Notice of Dispute with the Commissioner on its behalf, which Minelli did on November 10, Therefore, Minelli s challenge to Credit Change Orders 21, 22 and 23 was timely. Respondent is directed to file an answer with respect to those credit change orders within 30 days of this determination. CONCLUSION Respondent s motion to dismiss the petition as time barred is granted in part and denied in part. The Board dismisses as untimely Minelli s challenge to credit change orders MIN-015, MIN-016, MIN-017, MIN-018, MIN-020. The Board denies the motion to dismiss as untimely Minelli s challenge to credit change orders MIN-021, MIN-022 and MIN-023. All concur. Roberto Velez Chief Administrative Law Judge/Chair June 1, 2006 APPEARANCES: ERIC PLATT, PROJECT MANAGER Representative for Kreisler Borg Florman General Construction Co. LAW OFFICES OF MELVIN J. KALISH Attorney for Minelli Construction Co., Inc. BY: MELVIN J. KALISH, ESQ. MICHAEL A. CARDOZO, ESQ. NEW YORK CITY CORPORATION COUNSEL Attorney for Respondent BY: BRETT T. PERALA NANCY F. BRODIE, ESQ.
Petition seeking compensation for alleged unpaid work denied. Claim dismissed as untimely. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS
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