Contractor’s claim advances

PS 106 in the Bronx. Image Credit: Google Maps.

School construction contractor sought extra compensation for change orders and delay caused by the School Construction Corporation. In July 2013, the Arnell Construction Company won a $42 million contract with the New York City School Construction Authority to construct a three-story school building and renovate the existing structure at Public School 106 in the Bronx. The contract required the work to be completed by April 12, 2016. During the course of the construction, Arnell, upon the request of the School Construction Authority installed 27 additional caissons (box-like foundational structures) at the project site. The project was not substantially completed until December 28, 2016.

In 2014, 2015 and 2017, Arnell filed notices of claims with the School Construction Authority for unpaid costs for extra work associated with the installation of the additional caissons and for costs incurred as a result of delays attributable to the School Construction Authority. Arnell and the School Construction Authority failed to come to an agreement on payment and Arnell sued.

Arnell claimed $2,711,716, primarily for additional work related to the caissons. In a second cause of action, Arnell claimed $6,071,304 for delays which Arnell attributed to the School Construction Authority’s failure to provide notice regarding the exits and points of egress that needed to be closed off.

The School Construction Authority moved to dismiss all of Arnell’s claims arguing prior payment and the failure to file timely notices of claim. Supreme Court Justice Kevin J. Kerrigan denied the School Construction Authority’s motion and ruled in favor of Arnell. The School Construction Authority appealed.

The Appellate Division, Second Department, reversed in part but allowed many of Arnell’s claims to go forward.

The School Construction Authority claimed that it had paid 18 of 24 extra works related to the caissons claims totaling $521,480. The Appellate Division refused to dismiss these claims and upheld the lower court, ruling that the evidence failed to establish that the School Construction Authority had paid Arnell. The Appellate Division reversed the lower court and dismissed $129,388 of Arnell’s claim, ruling that Arnell had failed to give a timely notice of these claims when the work was substantially completed. The School Construction Authority produced detailed invoices establishing when the work was substantially completed and thereby proved that Arnell missed the deadline to file the required notices of claim.

The Appellate Division upheld Arnell’s complaint with respect to its other claims, ruling that they were not precluded because of lack of notice. The court allowed $3,371,955 of the claims for the delay to go forward.

The case was returned to the lower court for further proceedings.

Arnell Constr. Corp. v. New York City Sch. Constr. Auth., 129 N.Y.S.3d 129 (2nd Dep’t 2020).

By: Michael Falbo (Michael is a New York Law School graduate, Class of 2021.)



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