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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1 Start Elevator, Inc. v. Dep t. of Correction OATH Index No. 1160/11, mem. dec. (Feb. 28, 2011), aff d, Index No /11 (Sup. Ct. N.Y. Co. Jan. 9, 2012), appended, aff d, 104 A.D.3d 488 (1 st Dep t 2013) Petition seeking compensation for alleged unpaid work denied. Claim dismissed as untimely. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS CONTRACT DISPUTE RESOLUTION BOARD In the Matter of START ELEVATOR, INC. Petitioner - against - DEPARTMENT OF CORRECTION Respondent MEMORANDUM DECISION FAYE LEWIS, Administrative Law Judge/Chair KEVIN HANRATTY, Deputy Counsel, Mayor's Office of Contracts MARK CONRAD, ESQ., Prequalified Panel Member Pending before the Contract Dispute Resolution Board is the motion of respondent, the Department of Correction ( DOC ), to dismiss petitioner s appeal as time barred due to untimely filings with the agency head and the Board. In its appeal, petitioner, Start Elevator, Inc. ( Start ) seeks payment totaling $216,352 for work performed for which it contends it was not paid under a contract with respondent to provide maintenance, repair and emergency response services for elevators in correctional facilities. For the reasons set forth below, the Board finds petitioner s claims are time-barred and grants respondent s motion to dismiss. BACKGROUND This dispute arises out of a contract between DOC and Start to repair elevators at DOC facilities. The contract was entered into in 2000 and was renewed for August 1, 2002
2 -2- through July 30, 2003 (Pet. Ex. 3). Start claims it was not paid for work performed from 2000 to 2003, for which it submitted 81 invoices, totaling $216,352 (Pet. Ex. 3). On May 7, 2003, respondent sent Start a letter signed by its ACCO, Arnold Martin, referencing a mutually agreed corrective action plan in which Start would complete certain work, including elevator installation and repair, addressing outstanding violations, and reconciling purportedly improper billing on its invoices (Pet. Ex. 3; Resp. Ex. B). The letter warned Start that failure to complete this work by June 13, 2003, will result in Start Elevator being declared wholly in default pursuant to Article 45 of the Agreement. In the event of default, DOC would hire another contractor and bill Start for all expenses incurred for their unfinished work. Id. On December 4, 2003, Mr. Martin informed Start by letter that it had not completed the elevator work set forth in the corrective action plan (Pet. Ex. 3; Resp. Ex. B). DOC was assessing liquidated damages of $53,500 against Start for that failure, and was also backcharging Start $17,604 for the cost of the elevator repair that was completed by another contractor. The total liquidated damages were $71, (Pet. Ex. 3; Resp. Ex. B). Nearly five years later, on November 26, 2008, Start filed a Notice of Claim with the Comptroller, alleging that DOC had failed to pay $216,532 for labor, work, and materials on the contract (Pet. Ex. 1; Resp. Ex. C). On February 3, 2009, Start wrote to DOC Commissioner Horn, disputing the Department s failure to pay $216,352 plus interest (Resp. Ans. Ex. D). In the letter, Start noted that it had filed a Notice of Claim with the Comptroller but had received no response and that this is not surprising as the New York City Department of Correction has never advised Start Elevator, Inc., if their claim was ever approved or denied. We dispute the failure of NYC Department of Correction to pay Start Elevator, Inc., the sum of $216, plus interest which is due and owing to Start Elevator, Inc. Please advise me of your intention. The Commissioner did not respond. On March 23, 2009, the Comptroller requested more information from Start, which Start subsequently supplied (Pet. Exs. 2, 3). The Comptroller did not issue a decision. Start filed its petition to the CDRB on November 10, On or about December 21, 2009, Start brought an action in New York State Supreme Court (Resp. Ex. E). The City moved to dismiss the State court action on April 23, 2010 on
3 -3- the ground that Start had not exhausted its remedies under the contract by availing itself of the alternative dispute resolution process. On December 7, 2010, the State Supreme Court judge stayed the action to March 1, 2011, to allow the Contract Dispute Resolution Board to hear the claim. ANALYSIS The time frames for dispute resolution established by the contract and the Procurement Policy Board ( PPB ) rules may not be disregarded without good cause. Delcor Assoc. v. Dep t of Housing Preservation & Development, OATH Index No. 1872/10, mem. dec. (Apr. 13, 2010); Kreisler Borg Florman v. Dep t of Design & Construction, OATH Index Nos. 338/07, 339/07 & 340/07, mem. dec. (Jan. 26, 2007); Alta Indelman, Architect/Builders Group, LLC v. Dep t of Sanitation, OATH Index No. 1092/05, mem. dec. (June 16, 2005); D&D Mason Contractors, Inc. v. Dep t of Parks and Recreation, OATH Index No. 158/01, mem. dec. (Aug. 21, 2000). Article 51.5(d) of the contract (Pet. Ex. A at 82) and section 4-09(d)(4) of the PPB rules give the Comptroller up to 90 days from receipt of all material from the contractor to act on the claim. 9 RCNY 4-09(e) (4). Article 51.7 of the contract (Pet. Ex. A at 83) and section 4-09(g) of the PPB further provide: [I]n the event the claim has not been settled or adjusted by the Comptroller within the period provided in this section, the vendor, within thirty days thereafter, may petition the CDRB to review the Agency Head determination. The plain meaning of this rule is that the contractor has 30 days to file its petition with the CDRB. Respondent asserts that petitioner missed the time frame to file with the CDRB. We agree. Start filed a Notice of Claim with the Comptroller on December 3, The Comptroller asked for additional material from Start in March Start provided the material on March 18, Assuming that the material was received by the Comptroller one week later, the Comptroller received the material on March 25, The Comptroller had 45 days from that date to compromise or adjust the claim, i.e., until approximately May 11, RCNY 4-09(e)(4). Therefore, pursuant to PPB rule 4-09(g), Start had 30 days from May 11, 2009, or
4 -4- until June 11, 2009 to file its petition with the CDRB. The contractor filed its petition with the CDRB on November 8, This was one year and four months late. 1 Under PPB rule 4-09(g), the Board lacks jurisdiction to hear this case. The CDRB has consistently dismissed petitions which were filed, like this one, well after the permissible time frame. See, Delcor Assoc., OATH 1872/10, mem. dec. at 3 (petition dismissed as time-barred where vendor missed the deadline [to file petition at the CDRB] by over a month ); Kreisler Borg Florman/L.A. Wenger Contracting Co., Inc. v. Dep t of Design & Construction, OATH Index No. 1088/03, mem. dec. at 6-7 (June 11, 2003) (petition to CDRB dismissed as untimely where it was filed seven months after Comptroller denied claim); Cab Associates, Inc. v. Dep t of Transportation, OATH Index No. 1728/05, mem. dec. at 5-6 (Mar. 6, 2007) (petition filed at CDRB more than two years after the Comptroller s time to resolve claim expired was dismissed as untimely). Because we conclude that the Board lacks jurisdiction to hear this case based upon petitioner s untimely filing with the CDRB, we do not reach the issue of whether petitioner filed a notice of dispute timely with the agency head. CONCLUSION Accordingly, the petition is dismissed as untimely. All concur. Feb. 28, 2011 APPEARANCES: AGULNICK & GOGEL, LLC Attorneys for Petitioner BY: WILLIAM A. GOGEL Faye Lewis Administrative Law Judge 1 The Comptroller s 45 day period to resolve the claim may be extended by agreement between the vendor and the Comptroller, to a maximum of ninety days from the Comptroller s receipt of all materials. 9 RCNY 4-09(e)(4). There was no showing that the Comptroller s time frame was extended to 90 days in this case. But even if it were, that would mean the Comptroller s deadline to resolve the dispute would be 90 days from March 25, 2009 or until June 25, The deadline for filing at the CDRB would be 30 days after June 25, 2009, or July 25, Therefore, Start s November 8, 2010 filing would still be more than one year, three months late.
5 MICHAEL A. CARDOZO, ESQ. CORPORATION COUNSEL Attorney for Respondent BY: MEREDITH VICTOR, ESQ. -5-
6 -6- SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY: IAS PART In the Matter of the Application of START ELEVATOR, INC., For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules -against- THE CITY OF NEW YORK, THE NEW YORK CITY DEPARTMENT OF CORRECTION, THE CONTRACT DISPUTE RESOLUTION BOARD and THE NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS, Petitioner, Index No /11 Motion Seq. No. 001 Motion Date: 9/28111 Respondents BRANSTEN, J.: In this CPLR Article 78 proceeding, the petitioner Start Elevator, Inc. ( petitioner ) seeks judicial review of a decision by the respondent The Contract Dispute Resolution Board (the CDRB ), dated February 28, 2011 (the CDRB Decision ). The CDRB held that Petitioner s petition was time-barred, and that, therefore, CDRB lacked jurisdiction to address petitioner s substantive claims. Petitioner seeks and order directing the CDRB to render a decision on petitioner's substantive claims. For the reasons that follow, the petition is denied.
7 -7- BACKGROUND Petitioner is engaged in a business of installation, repair, and maintenance of elevators. In June 2000, petitioner entered into a supply and service contract (the Contract ) with respondent The New York City Department of Correction (the "DOC"). Pursuant to the Contract, petitioner was to repair elevators and dumbwaiters located at various DOC facilities (the Project ). It appears that the DOC was not satisfied with petitioner's work. In May 2003, the DOC and petitioner had a meeting to address the DOC's concerns with petitioner s work. The parties agreed upon a corrective action plan, pursuant to which petitioner was to complete three specific items that were outlined in a letter, dated May 7, 2003, from the DOC to petitioner. See Verified Answer, Ex. B. The DOC warned that petitioner would be in default if it failed to complete the outstanding items by June 13, 2003, and that, if the DOC had to hire another contractor to complete the Project, petitioner would be responsible for the associated expenses. See id. By letter dated December 4, 2003, the DOC advised petitioner that it failed to complete two out of three outstanding items stated in the May 7, 2003 letter, and that, as a result, petitioner had to pay the DOC a total of $71, in liquidated damages and costs. See id. On November 26, 2008, petitioner filed a notice of claim (the Notice of Claim ) with the Comptroller of the City of New York (the Comptroller ). Petitioner claimed that the DOC breached the Contract by failing to pay petitioner for work done on the
8 -8- Project and seeking $216, (the Claimed Amount ) plus interest. See Verified Answer, Ex. C. In February 2009, petitioner advised the DOC in writing that it did not receive a response to the Notice of Claim from the Comptroller, and that the DOC owed petitioner the Claimed Amount for work on the Project. See Verified Answer, Ex. D. By letter dated March 23, 2009, the Comptroller requested that petitioner provide additional information in order to allow the Comptroller to evaluate petitioner s claim. See Petition, Ex. 3. By letter dated March 18, 2009, petitioner provided various documents related to the Project to the Comptroller. See Record, Ex. 4. Petitioner did not receive a response from the Comptroller. In January 2010, petitioner commenced an action in the Supreme Court, New York County, captioned Start Elevator, Inc. v. The City New York and The New York City Department of Correction, Index No /09, to recover the Claimed Amount plus interest (the Related Action ). See Verified Answer, Ex. E. The defendants in the Related Action moved to dismiss petitioner s complaint. The defendants argued that, among other things, petitioner had not exhausted its administrative remedies because it had not petitioned the CDRB to review its claims. There, petitioner cross-moved for an order directing the defendants to render an evaluation and decision on petitioner s claim.
9 -9- While the motion and the cross-motion in the Related Action were pending before the court, on November 10, 2010, petitioner filed a petition (the Petition ) with the CDRB seeking an award of the Claimed Amount for work performed on the Project. In December 2010, respondent The City of New York ( City ) and the DOC moved the CDRB to dismiss the Petition as time-barred. On February 28, 2011, the CDRB granted the City and DOC s motion, dismissing the Petition as time-barred. Petitioner now seeks a review of the CDRB Decision. DISCUSSION The parties agree that the Contract provides for dispute resolution procedure. The Contract, in relevant part, states that: [a]ll disputes between the City and the supplier... that arise under, or by virtue of, this Contract shall be finally resolved in accordance with the provisions of this section and Section 5-11 of the Rules of the Procurement Policy Board ( PPB Rules ). 2 The procedure for resolving all disputes of the kind delineated herein shall be the exclusive means of resolving any such disputes. Contract, Resolution of Disputes, Article 51, 1; see also 9 RCNY 4-09(a) (the PPB Rules apply to contract disputes between the City and vendors). The Contract provides, in relevant part, that the judicial review of a CDRB decision shall be limited to the question of whether or not [it]... was made in violation of lawful procedure, was affected by an error of law, or was arbitrary and capricious or an abuse of discretion. Contract, Resolution of Disputes, Article 51, 7(f); see also 9 2 PPB Rules apply to the procurement of all goods, services, and construction to be paid for out of the City treasury or out of monies under the control of or assessed or collected by the City. 9 RCNY 1-02 (a).
10 -10- RCNY 4-09(g)(6) (stating same); see also Matter o/weeks Mar. v. City of New York, 291 A.D.2d 277, (1st Dep't 2002) (in reviewing CDRB s determination, the court applied the standard of review specified in the subject contract, as well as the standard of whether CDRB or the agency acted erroneously, arbitrarily, capriciously, or in violation of lawful procedure ). The Contract outlines a three-step procedure to resolve disputes, which starts with the supplier filing a notice of dispute with the Agency Head. Contract, Article 51, 4(a). The Agency Head s decision shall be final and binding on all parties, unless presented to [the CDRB] pursuant to this section. Id., 4(d). However, [b]efore any dispute may be brought by the supplier to the CDRB, the supplier must first present its claim to the Comptroller for his or her review, investigation, and possible adjustment. Id., 5. The supplier has 30 days of receipt of a decision by the Agency Head to submit a Notice of Claim to the Comptroller. Id., 5(a). The Comptroller has 45 days from receipt of all materials to investigate the disputed claim. Id., 5(d). Upon agreement between the supplier and the Comptroller, this period may be extended to 90 days from the Comptroller s receipt of all the material. Id. The supplier may not present its petition to the CDRB until the period for investigation and compromise [by the Comptroller] delineated in this paragraph has expired. Id.
11 -11- The Contract then provides that [i]n the event the claim has not been settled or adjusted by the Comptroller within the period provided in this section, the supplier, within thirty (30) days thereafter, may petition the CDRB to review the Agency Head determination. ld., 7 (emphasis added); see also 9 RCNY 4-09(g). The CDRB s decision is final and may be reviewed by way of a CPLR Article 78 proceeding. Id., 7(f). Here, the CDRB held that it lacked jurisdiction to address petitioner s substantive claims. The CDRB held that petitioner s petition to the CDRB was time-barred. CDRB Decision, at 4. Specifically, the CDRB held that petitioner had 30 days to petition the CDRB starting from the time when the Comptroller s period to settle or adjust the claim had passed. Id. at 3, citing and quoting 9 RCNY 4-09(g). The parties do not dispute that, pursuant to the Contract and the PPB Rules, the Commissioner had 45 days from the receipt of the documents provided by petitioner to settle or adjust the claim. Contract, Article 51, 5(d); see also 9 RCNY 4-09(e)(4). The record reveals that petitioner provided the documents to the Comptroller under a cover letter dated March 18, Petition, Ex. 4. In its Decision, the CDRB assumed that the Comptroller received them on March 25, CDRB Decision, at 3. There is no evidence that the Comptroller s time to settle or adjust the claim was extended to 90 days. Accordingly, the CDRB held and the parties do not dispute that, the 45-day period for the Comptroller s action expired approximately on May 11, CDRB Decision, at 3; see also Contract, Article 51, 5d); 9 RCNY 4-09(e)(4).
12 -12- The CDRB held that, pursuant to the Contract (Article 51, 7) and the PPB Rules (9 RCNY 4-09 [g]), petitioner had 30 days from May 11, 2009, or until June 11, 2009, to petition CDRB. CDRB Decision, at 3. Petitioner did so on November 8, On this basis, the CDRB held that the Petition was time-barred. CDRB Decision, at 4. Petitioner contends that: (1) despite numerous requests via telephone and in writing, it never received a response from the Comptroller; (2) that there was no Agency Head decision for the Comptroller to review; and (3) that the language of section 7 in Article 51 of the Contract did not place petitioner on notice that it had to act within 30 days after the Comptroller's period to settle the claim had passed. See Petition, paras As to the first argument, the Contract and the PPB Rules explicitly provide that: the Comptroller may not issue a determination; the lack of response does not prejudice a vendor/supplier from proceeding along the three-step administrative review process; and the time limitations to do so still apply. See Contract, Article 51, 2, 7; see also 9 RCNY 4-09(b); (g). Petitioner does not explain, nor presents any evidence that would show how the lack of response from the Comptroller, a contractually and statutorily provided for possibility, prevented it from petitioning the CDRB. As to the second argument, the record before the court shows that petitioner did not properly follow the contractually outlined dispute resolution process. See Contract, Article 51, 4, 5, 7. Petitioner did not first present a notice of dispute to the Agency Head, in this case the DOC, but rather, it first filed the Notice of Claim with the Comptroller. See Verified Answer, Ex. C. Having not received a response from the
13 -13- Comptroller, petitioner then wrote to the DOC. See id., Ex. D. Accordingly, petitioner may not claim that there was no Agency Head decision for the Comptroller to review, when petitioner did not follow the outlined dispute resolution procedure. As to the third argument, both the contract and the PPB Rules clearly provide that a vendor may petition the CDRB within 30 days, starting from the end of the Comptroller s review period. Contract, Article 51, 7; 9 RCNY 4-09(g). Accordingly, petitioner was on notice about the 30-day deadline. At oral argument, petitioner argued that the CDRB was wrong in interpreting the relevant statutory language in 9 RCNY 4-09 (g) to mean that petitioner had only 30 days after the Comptroller s time to adjust the claim had passed. Petitioner argued that, instead, the statute should be construed as setting the earliest period of time, not the latest period of time for petitioning the CORB. See Oral Arg. Tr., at 4. The relevant statute reads: [i]n the event the claim has not been settled or adjusted by the Comptroller within the period provided in this section, the vendor, within thirty days thereafter, may petition the CORB to review the Agency Head determination. 9 RCNY 4-09(g). Petitioner claims that the statute purposely uses the word may, not must, and that, therefore, it did not have to petition the CDRB within 30 days after the Comptroller s period to act had passed. See Oral Arg. Tr., at 4-6. Accordingly, petitioner s position is that the statute only provides a starting point when a vendor/supplier may petition the CDRB, and that, by inference, it imposes no deadline to do so.
14 -14- Although no deference is accorded the agency's determination in the areas of statutory interpretation and pure questions of law (see, e.g., Matter of Madison-Oneida Bd. of Coop. Educ. Servs. v. MiIls, 4 N.Y.3d 51, [2004]), here, the court finds that the CDRB s determination is consistent with the plain meaning and intent of the statute in question. Cf Matter of Daily Star v. Board of Trustees of Vil. of Cooperstown, 164 A.D.2d 531, 533 (3d Dep t 1991). Specifically, the plain meaning of the statute is that a vendor may petition the CDRB to review a decision by an agency. The vendor does not have to do so, which is what the word may refers to. It is merely an option that is available to the vendor if it is unsatisfied with the agency s decision. The statute also clearly provides that if the vendor decides to petition the CDRB, it has 30 days to do so. The 30-day period starts from the time when the Comptroller s period to act, either 45 or 90 days from document submission, has passed. Accordingly, the CDRB interpretation and application of the relevant contractual and statutory provision was not "affected by an error of law" (cf Daily Star, 164 AD2d at 533). The CDRB ascribed reasonable meaning to the relevant statutory terms. In order to petition the CDRB, petitioner had to do so within 30 days of the expiration of the 45-day period within which the Comptroller could address petitioner s claim. Petitioner petitioned the CDRB in November 2010, which is over a year beyond the 30-day period. Accordingly, the CDRB properly held that the Petition was time-barred, which results in the denial of this petition. Given this determination, the court need not address respondents argument that respondent The New York City Office of Administrative Trials and Hearings is not a proper party to this proceeding.
15 -15- CONCLUSION For the foregoing reasons, it is hereby ADJUDGED that the petition for judicial review of petitioner Start Elevator, Inc. is denied and the proceeding is dismissed. This constitutes the decision and judgment of this court. Dated: New York, New York January 9, 2012 Enter: Hon. Eileen Bransten, J.S.C.
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