Perfetto Enterprises v. Dep t of Parks & Recreation OATH Index No. 1646/15, mem. dec. (June 11, 2015)

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1 Perfetto Enterprises v. Dep t of Parks & Recreation OATH Index No. 1646/15, mem. dec. (June 11, 2015) Petition seeking additional payment for asphalt work denied because claim was untimely, waived, and covered by lump-sum provision of the contract. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS CONTRACT DISPUTE RESOLUTION BOARD In the Matter of PERFETTO ENTERPRISES Petitioner - against - DEPARTMENT OF PARKS AND RECREATION Respondent AMENDED MEMORANDUM DECISION KEVIN CASEY, Administrative Law Judge/Chair PAUL PRISSEL, ESQ., General Counsel, Mayor s Office of Contract Services MARK CONRAD, ESQ., Prequalified Panel Member Pending before the Contract Dispute Resolution Board ( Board ) is a petition of Perfetto Enterprises ( Perfetto ) seeking additional compensation under a contract with the Department of Parks and Recreation ( DPR ). Perfetto claims that it is entitled to an additional payment of $86, for certain asphalt work based on the unit price per square yard (Pet. at 1-2; Reply at 5). DPR claims that Perfetto s Notice of Dispute was untimely, it waived its claim by failing to include it in requests for extension of time, and payment for work was included in a lump-sum provision of the contract (Ans. at 3-9). Oral argument was held on April 27, For the reasons below, the petition is denied. BACKGROUND In 2011, DPR entered into a multi-million dollar contract with Perfetto for construction of an annex to the Olmstead Center in Flushing Meadows Corona Park (Ans. at

2 -2-1). On November 26, 2013, Perfetto presented a dispute to DPR s Construction Manager Jennifer Bolstad concerning payment for roadway asphalt work. Perfetto asserted that the work should be paid for on a unit price per square yard basis under Contract Item 40 ( Full Depth Asphalt Pavement Asphalt Pavement for Tennis Courts ) (Ans. Exs. C, D). By e- mail sent November 27, 2013, Ms. Bolstad denied Perfetto s claim and stated that the disputed work was included in the lump sum payment under Contract Item 39 ( Restoration of Street Pavement ). Ms. Bolstad concluded the by stating, If you disagree you are advised to seek a Commissioner s Determination (Ans. Ex. C). On January 17, 2014, Perfetto filed a Notice of Dispute with DPR s Commissioner (Pet. Ex. 1). DPR did not respond. On March 13, 2014, Perfetto filed a Notice of Claim with the Comptroller (Pet. Ex. 2). On December 30, 2014, after requesting and receiving additional documentation, the Comptroller found that the work was payable under Item 39 and denied Perfetto s claim (Pet. Ex. 4). On January 26, 2015, Perfetto filed its petition with the Board. ANALYSIS The Board s authority to resolve disputes between a contractor and the City is based on section 4-09 of the rules of the Procurement Policy Board ( PBB ) and Article 27 of the Contract. Section 4-09(d)(1) of the PPB Rules require a contractor to file a Notice of Dispute with the Agency Head within 30 days of receiving notice of the determination or action that is the subject of the dispute (Ans. Ex. B at 27.4). A dispute arises when an engineer, resident engineer, audit officer, or other designee of the Agency Head makes a determination with which the contractor disagrees (Ans. Ex. B at ). Failure to comply with the time limits set forth in the contract and PPB Rules for seeking additional payment is grounds for dismissal. See Start Elevator, Inc. v. City of New York, 104 A.D.3d 488 (1st Dep t 2013) (upholding dismissal of claim for failure to comply with PBB Rules and contract provisions regarding timely filing of petition with CDRB); see also SPMP Joint Venture v. Dep t of Environmental Protection, OATH Index No. 808/06, mem. dec. (Jan. 31, 2006); D & D Mason Contractors v. Dep t of Parks & Recreation, OATH Index No. 158/01, mem. dec. (Aug. 21, 2000).

3 -3- Here, the dispute arose on November 27, 2013, when DPR s Construction Manager wrote that street asphalt pavement was payable under Item 39 rather than Item 40. The Construction Manager explicitly advised Perfetto that, if it disagreed, it should seek a determination from DPR s Commissioner. Perfetto had until December 27, 2013, to file a Notice of Dispute with DPR s Commissioner. But Perfetto failed to meet that deadline. It did not file a Notice of Dispute until January 17, 2014, more than 20 days late. In its written submission to the Board and during oral argument, Perfetto faulted DPR s Commissioner for failing to rule on this and other Notices of Dispute (Pet. Reply at 2; Tr. 33). Perfetto argued that this caused a hardship for contractors who must choose between continuing negotiations and prematurely filing a claim with the Commissioner (Pet. Reply at 2-3). For this dispute, Perfetto claimed that it elected to continue to negotiate after receiving the Construction Manager s written determination (Tr. 11). Perfetto conceded that its claims regarding settlement discussions and the Commissioner s pattern of failing to rule on Notices of Dispute are not part of the record before the Board (Tr. 9-10). There was also no risk of filing a premature Notice of Dispute here, where the Construction Manager explicitly reminded Perfetto of the need to bring the issue to the Commissioner s attention. If the Commissioner had not ruled on prior disputes, that would not have relieved Perfetto of its obligation to file a timely Notice of Dispute here. Instead of filing a timely Notice of Dispute, Perfetto claimed that it chose to pursue negotiations. Having made that decision, Perfetto cannot now seek relief under the contract s dispute resolution provisions. Because Perfetto filed an untimely Notice of Dispute, the petition should be dismissed. Even if Perfetto had filed a timely Notice of Dispute, its claim was waived. Article 13 of the Contract provides that any application for an extension of time requires the contractor to reserve any potential claims against the City (Ans. Ex. G ). Courts have consistently enforced waiver of claims in connection with extensions of time. See Mars Assoc., 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); see

4 -4- also Commodore Maintenance Corp. v. Dep t of Transportation, OATH Index No. 1118/14, mem. dec. at 7-9 (Apr. 3, 2014). The dispute arose on November 27, 2013, when DPR rejected Perfetto s claim that the disputed asphalt work should be paid on a unit price bid under Contract Item 40. On December 27, 2013, Perfetto submitted a time extension request based on delays caused by Hurricane Sandy and other factors. In consideration for granting the extension, Perfetto agreed to waive all claims that it had against the City except for 21 specified items (Ans. Ex. H). That list of excepted items did not include the asphalt work now at issue. On March 25, 2014, Perfetto submitted another time extension request. Perfetto again agreed to waive all but 21 specified claims and the asphalt issue was not on the list of excepted claims (Ans. Ex. I). On May 29, 2014, Perfetto filed another time extension request and, for the first time, included the disputed asphalt work among its reserved claims (Ans. Ex. J). Perfetto now contends that its claim did not arise until December 23, 2014, the date of the Comptroller s decision (Reply at 3). Alternatively, Perfetto argues that, as a matter of equity, if it did not comply with some of the technical aspects of the contract particularly with the reservation of claim under the time extension application, that should be excused because DPR s Commissioner did not follow the contract provision that requires a ruling on the Notice of Dispute within 30 days (Tr ). Those arguments are mistaken. As noted, the dispute arose when DPR s construction manager rejected Perfetto s claim that it was entitled to be paid under Contract Item 40 rather than Item 39 for the contested work. See Ferreira Construction Co. v. Dep t of Transportation, OATH Index No. 1619/12, mem. dec. at 13 (Nov. 16, 2012) (finding without merit contractor s argument that it did not have to reserve claim because Commissioner had not yet ruled on it). Furthermore, Perfetto did not wait for the Comptroller s decision on December 23, 2014, to attempt to reserve this claim. In a request for time extension on May 29, 2014, Perfetto listed the disputed asphalt work among its reserved claims, even though it had waived this claim twice before, on December 27, 2013, and March 25, As the May 29 request for time extension shows, the current claim arose well before the Comptroller s decision. Perfetto offered no persuasive explanation for its failure to include this claim in two prior time extensions requests.

5 -5- Under Article 13 of the contract, Perfetto s claim is waived. To the extent that Perfetto seeks equitable relief, the Board lacks authority to grant such relief and must render decisions according to contract terms. 9 RCNY 4-09(g)(4)(Lexis 2014); see Weeks Marine, Inc. v. Dep t of Sanitation, OATH Index No. 1296/00, mem. dec. at 9 (June 23, 2000), aff d, 291 A.D.2d 277 (1st Dep t 2002). Even if Perfetto s claim was timely and not waived, it lacks merit. The contested work involved removing a section of street asphalt, raising that section to meet a wheelchair accessible crossing, paving the street, and saw cutting the raised section s asphalt to form a clean edge with undisturbed asphalt (Tr. 26; Pet. Ex. 4; Ans. at 10). Perfetto s letter to the construction manager on November 26, 2013, and the construction manager s denial of the claim the next day, both referred to work performed in the street (Ans. Exs. C, D). This is confirmed by an enlarged contract drawing and photos appended to DPR s answer (Ans. Exs. O, P) (highlighted in yellow on diagram). Because the contested work was performed on an existing street, the Board agrees with DPR that it was covered by Item 39 of the contract, entitled Restoration of Street Pavement (Pet. Ex. 4; Ans. Ex N). Item 39 required the contractor to restore all pavement and pavement base removed or disturbed in the street as required for execution of work for a lump sum. The item further specified, [T]he Contractor shall saw cut all pavement edges as required for execution of the work and Pavement restorations, including the base shall be the same as surrounding pavements in all respects (Pet. Ex. 4; Ans. Ex. N). In contrast, Item 40 pertained to tennis courts and pathways. Item 40, entitled Full Depth Asphalt Pavement Asphalt Pavement for Tennis Courts, required the contractor to furnish and install asphalt for pavement and tennis courts based on a unit price bid per square yard. Contract diagrams confirm that Item 40 referred to pathways adjacent to the street (Pet. Ex. 4; Ans. Exs. O, P, Q). The nature of the asphalt that Perfetto used further supports DPR s conclusion that the work was covered by Item 39 rather than Item 40. Item 39 specified that all asphalt work was to conform to DPR standard specification for asphalt pavement full depth, except for the top course, which shall be NYS type 6 (Pet. Ex. 4; Ans. Ex. N). However, Item 40 specified that the top course shall be Type 7 or Type 7F as defined by the State Department of Transportation (Pet. Ex. 4; Ans. Ex. Q). Perfetto conceded that it used Type

6 -6-6 asphalt for the disputed work and that Type 7 asphalt was more appropriate for tennis courts (Tr. 10, 26; Pet. at 2; Ans. at 11). At oral argument, Perfetto maintained that the contested work involved milling down to grade level, which is more substantial work than the saw cutting and restoring asphalt referred to in Item 39 (Tr. 6, 17). Though Item 39 referred to saw cutting of pavement edges, it also required the contractor to restore all pavement and pavement base removed or disturbed in the street (Pet. Ex. 4; Ans. Ex. N). Thus, Item 39 includes more substantial work than simply replacing asphalt. Finally, it should be noted that in a pre-bid technical clarification question, Perfetto asked, Can Item #39 Restoration of Street Pavement s method of Measurement and Payment be changed from Lump Sum to cost per Square Foot? On February 7, 2011, DPR s Commissioner responded, The method of Measurement and Payment for this item shall remain Lump Sum (Ans. at Ex. M II (4)). Because Perfetto clarified that the work in Item 39 was to be paid on a lump sum basis and secured the contract on those terms, it would violate competitive bidding laws to modify the contract to pay a unit price per square yard for work covered by Item 39. See Lake Const. & Dev. Corp. v. City of New York, 211 A.D.2d 514, 515 (1st Dep t 1995) ( By seeking to modify its original bid and negotiate a more favorable agreement for itself, after it had already secured the contract as the low bidder, the [contractor] is in effect, improperly attempting to secure an unfair competitive advantage over other legitimate bidders.... ). In sum, Perfetto s claim is untimely and waived. Furthermore, DPR correctly classified the contested work as restoration of street pavement, which is covered by Item 39 of the Contract. CONCLUSION The petition is denied. All concur. June 11, 2015 Kevin Casey Administrative Law Judge/Chair

7 -7- APPEARANCES: GRAE & GRAE, LLC Petitioner s Attorney BY: MARK HARRIS GRAE, ESQ. ZACHARY CARTER, ESQ. NEW YORK CITY CORPORATION COUNSEL Respondent s Attorney BY: KENT LANGLOSS, ESQ.

Dell-Tech Enterprises, Inc. v. Dep t of Parks & Recreation OATH Index No. 410/16, mem. dec. (Jan. 21, 2016)

Dell-Tech Enterprises, Inc. v. Dep t of Parks & Recreation OATH Index No. 410/16, mem. dec. (Jan. 21, 2016) Contractor s petition for additional payment dismissed because it was untimely and waived. NEW