New York Litigation Update
 
December 13, 2000
 

In Windsor Metal Fabrications, Ltd. v. General Accident Insurance Company of America, the court ruled that the one-year limitation period to sue a surety on a public improvement construction bond, starts when a subcontractor has demanded final payment from the general contractor and 90 days have passed since the subcontractor ceased work on the project. The time period may not be extended or overridden by provisions of the subcontract.

Eberhard Construction Company (Eberhard) contracted with the State of New York to construct a healthcare center at the Greenhaven Correctional Facility. Windsor Metal Fabrications, Ltd. (Windsor) subcontracted with Eberhard to provide and erect structural steel. General Accident Insurance Company of America (General Accident) provided the payment bond for the project. After Windsor began its work, the state terminated its contract with Eberhard which resulted in Windsor’s subcontract being terminated. Windsor won an arbitration award against Eberhard; however, Eberhard was insolvent. Thus, Windsor sued General Accident, which raised a statute-of-limitations defense. The trial court granted General Accident’s summary judgment on this ground, which the Appellate Division reversed. The Court of Appeals reinstated the trial court’s ruling.

In F. Garofalo Electric Co., Inc. v. New York University, F. Garofalo Electric Co., Inc. (Garofalo) contracted with New York University (NYU) to install electrical systems on new buildings at NYU. Garofalo alleged the project was delayed, and that NYU and its construction manager required and directed it to perform extra work and to provide extra materials to the project not required under the contract. Garofalo also alleged that NYU and its construction manager orally agreed to pay for the additional work and additional materials, and Garofalo performed the additional work and furnished the additional materials based upon those oral representations. The Appellate Division reversed the trial court’s allowance of these claims because satisfaction of the contract’s notice requirements for extra work and delay damages was a condition precedent to Garofalo’s recovery.

The Appellate Division held that the written contract (which provided that it could be modified only in writing) could be modified orally only if the oral modification was “fully executed” or there had been “partial performance ‘unequivocally referable’ to the oral modification.” There was nothing in the record which could be viewed as “unequivocally referable to an intent to modify the provisions in question.”