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Kreisler Borg Florman on behalf of L. A. Wenger Contracting

Co. v. Dept. of Design and Construction

OATH Index Nos. 338/07, 339/07, 340/07, mem. dec. (Jan. 26, 2007)

Petitions seeking compensation for denied claims dismissed as untimely.

______

NEW YORK CITY OFFICE OF

ADMINISTRATIVE TRIALS AND HEARINGS

CONTRACT DISPUTE RESOLUTION BOARD

In the Matter of

KREISLER BORG FLORMAN

Petitioner

- against -

DEPARTMENT OF DESIGN AND CONSTRUCTION

Respondent

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MEMORANDUM DECISION

FAYE LEWIS, Administrative Law Judge/Chair

KENNETH JOCKERS, Deputy Counsel, Mayor's Office of Contracts

BRUCE FEFFER, Prequalified Panel Member

Pending before the Contract Dispute Resolution Board ("the Board") are the petitions of Kreisler Borg Florman ("petitioner" or “KBF”) on behalf of its subcontractor L.A.Wenger Contracting Co. (“LAW”) seeking payment totaling $522,233 under a construction management contract it entered into with the Department of Design and Construction (“DDC” or “respondent”). On July 26, 2006, LAW submitted three petitions based on claims arising out of this contract to the Board. Respondent moved to dismiss the petitions because LAW,as a subcontractor, lacked privity of contract with the City. While this motion was pending, KBF filed petitions identical to LAW’s on LAW’s behalf. By agreement, KBF’s petitions were substituted for LAW’s petitions and were deemed to have been filed on September 27, 2006.

On November 9, 2006, respondent moved to dismiss KBF’s petitions because of the contractor’s failure to meet contractual timeframes. Petitioner submitted a response in opposition to the motion on December 12, 2006. Respondent submitted a reply on December 28, 2006. For the reasons set forth below, the Board finds petitioner’s claims are time-barred and grants respondent’s motion to dismiss.

BACKGROUND

On January 14, 1999, DDC entered into a contract with KBF for the construction of a center and training facility for the Administration for Children’s Services. On May 7, 1999, KBF entered into a subcontract with LAW to perform general construction work on this project. The three claims arise out of this contract.

Index No. 338/07 – Additional demolition of elevator components

This petition seeks compensation in the amount of $29,640 for the cost of the demolition of elevator components. On June 4, 1999, LAW requested a clarification from KBF about how to proceed after discovering an existing elevator and elevator components in an excavated elevator pit (Pet. Ex. A). In a letter dated June 14, 1999, KBF directed LAW to remove these components without additional compensation (Pet. Ex. A). This letter was followed by two KBF field memos dated August 2, 1999 and October 6, 1999, which directed LAW to remove other existing elevator components and motor generators (Pet. Ex. A). LAW indicated in the “response” section of the August 2 field memo that it did not consider the removal of these components to be part of its contract but would comply with KBF’s direction and “submit daily time and material sheets for performing this work.” (Pet. Ex. A).

In a January 28, 2003 letter, DDC informed KBF that because of the complexity of the project, it was extending the 10-day deadline for submission of Notices of Dispute to March 1, 2003 (Pet. Ex. D). By letter dated February 3, 2003, KBF provided LAW with a copy of this letter and advised LAW that it should submit all notices of dispute to KBF by February 26, 2003 (Pet. Ex. D). LAW submitted this claim seeking compensation for the demolition of the existing elevator components to KBF on November 7, 2003 (Pet. Ex. D). Because the claim was received eight months after the deadline and KBF believed DDC would find the claim untimely, it did not submit the claim to DDC (Petition at 1). KBF represented that it later became aware that claims “deemed untimely” by DDC could be filed with the Comptroller’s Office (Petition at 1). On December 22, 2005, LAW asked KBF to submit this claim to the Comptroller, and it did so on December 30, 2005 (Pet. Ex. D).

On July 5, 2006, the Comptroller dismissed the claim as untimely, reasoning that KBF’s July 14, 1999 letter stating that LAW would not be compensated for the contested demolition was a determination or action triggering the 10-day deadline for LAW to file a Notice of Dispute with the Commissioner; LAW’s submission of this claim to KBF on November 7, 2003 was late both for the contractual 10-day deadline and the DDC’s extended deadline of March 1, 2003 (Pet. Ex. C).[1]

Index No. 339/07 – Back charge for Cleanup and Housekeeping by KBF

This petition seeks compensation in the amount of $474,093 for cleaning and housekeeping costs KBF charged to LAW, allegedly because LAW failed to maintain the worksite as required by contract.

On March 10, 2000, KBF notified LAW by letter that the worksite was not being maintained as the contract required and that KBF was adding additional laborers to perform cleanup and housekeeping work, with compensation to be determined later (Pet. Ex. C). On April 11, 2000, KBF sent another letter stating that its laborers were cleaning the site and that it would determine the amount of time the laborers spent cleaning up after each subcontractor (Pet. Ex. E). KBF informed all the subcontractors on May 23, 2000 that it was increasing the labor force devoted to cleaning and that the subcontractors would be back charged for this expense (Pet. Ex. C). LAW responded with letters dated May 26, 2000 and November 13, 2000 stating that it was maintaining the site as required and would not accept any back charge (Pet. Ex. E; Pet. Ex. C). On May 1, 2001, KBF recommended that LAW pay a back charge of $474,093.

On February 24, 2003, LAW timely asked KBF to forward its dispute of this charge to the DDC Commissioner, and KBF did so on February 26, 2003 (Pet. Ex. C). The Commissioner denied LAW’s claim on March 29, 2004 and permitted the back charge “contingent upon KBF resolving” disputed cost issues (Pet. Ex. B). On January 8, 2006, LAW asked KBF to forward this claim to the Comptroller’s Office (Pet. Ex. E), which it did on January 10, 2006. On July 5, 2006, the Comptroller found that the claim was untimely because LAW was required to file its Notice of Claim within 20 days of the Commissioner’s determination but instead had waited over one and a half years (Pet. Ex. D).

Index No. 340/07 – Batt Insulation on Ground Floor

This petition seeks compensation in the amount of $18,500 for the installation of batt insulation on the ground floor in lieu of airkrete.

In a letter dated February 26, 2003, LAW asked KBF to forward this claim to the DDC Commissioner (Pet. Ex. C). KBF claims not to have received this letter until March 5, 2003 and the letter bears a date stamp indicating that it was received on that day. However, KBF forwarded the claim to DDC by a letter dated March 4, 2003 (Pet. Ex. C). DDC rejected the claim on March 20, 2003 because it was received after the March 1 deadline (Pet. Ex. B). This rejection triggered a 20-day deadline to file a Notice of Claim. LAW did not request that KBF forward this claim to the Comptroller’s Office until January 8, 2006. KBF filed the claim with the Comptroller on January 10, 2006.

On July 5, 2006, the Comptroller denied the claim as untimely because it was not submitted to the Commissioner by the March 1, 2003 deadline and because the Notice of Claim was not filed within 20 days of the Commissioner’s decision (Pet. Ex. D).

ANALYSIS

The time frames for dispute resolution established by the contract and the Procurement Policy Board (“PPB”) may not be disregarded without good cause. 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). The time frames relevant to this contract are as follows. Article 29.4(B) of the contract and section 7-05(d)(2) of the PPB rules require the contractor to submit a Notice of Dispute to the agency head within ten days of “receiving notice of the determination or action which is the subject of the dispute.” However, because of the complexity of the project, DDC extended the deadline for the submission of disputes until March 1, 2003. Article 29.6(A) of the contract and section 7-05(f)(1) of the PPB rules require the contractor to submit a Notice of Claim to the Comptroller within 20 days of the agency head’s decision. Section 7-05 (g) of the PPB rules require that the contractor file petitions with the Board within 30 days of the Comptroller’s decision.

Respondent asserts that all of petitioner’s claims are time-barred and should be dismissed. The Board agrees. KBF did not file these petitions with the Board within the mandated time frame. The Comptroller’s determination for each of the three petitions was issued on July 5, 2006, requiring KBF to file with the Board within 30 days. KBF did not file these petitions until September 27, 2006, over two months after the Comptroller’s determination. Although LAW’s original petitions were timely filed, the parties agreed that KBF’s petitions would not relate back to LAW’s submission date.

Moreover, even if the petitions had been timely filed with the Board or their lateness was excused, the petitions would still be dismissed because the contractor missed earlier deadlines. For each petition, a Notice of Claim was not timely submitted to the Comptroller. Additionally, KBF never submitted the first petition, 338/07, to DDC as required by the dispute resolution rules, and submitted the third petition, 340/07, to the DDC after the applicable deadline had passed.

In the first petition, Index No. 338/07, seeking compensation for the demolition of elevator components, KBF never submitted a Notice of Dispute to DDC and failed to timely submit a Notice of Claim to the Comptroller. Indeed, KBF did not file with the Comptroller until December 30, 2005, almost six years after this dispute arose. KBF’s assertion that it was unaware that it could file late claims with DDC or file claims that were rejected at the agency level with the Comptroller does not excuse its failure to abide by contractual time frames.

In the second and third petitions, Index No. 339/07 and Index No. 340/07, DDC denied the claims on March 29, 2004 and March 20, 2003, respectively. Petition 340/07 was denied because DDC had not received the Notice of Dispute by the March 1, 2003 deadline. These denials triggered a 20-day deadline for the submission of a Notice of Claim to the Comptroller. However, for both of these claims, a Notice of Claim was not submitted until January 10, 2006.

KBF contends in its reply that there was an ambiguity as to whether certain communications triggered the 10-day deadline to submit a Notice of Dispute and therefore the claims should not be dismissed. However, the Board is not relying upon the 10-day contractual deadline, but rather on the later March 1, 2003 deadline set by DDC for the submission of all Notices of Dispute. Moreover, the case cited by KBF -- Kreisler Borg Florman General Construction Co. on behalf of A & F Fire Protection Co., Inc. v. Dep’t of Design and Construction, OATH Index Nos. 800/06, 801/06, 802/06, 803/06 & 1154/06, mem. dec. (Apr. 12, 2006) -- in support of its claim of ambiguity is wholly inapposite. In A & F, the claims at issue had been remanded to the conflict dispute resolution process from Supreme Court. Two weeks after this order, the subcontractor’s attorney forwarded the claims to DDC and asked for its review. The Board ruled that two subsequent letters from KBF, the construction manager, to the subcontractor, did not trigger the 10-day deadline to submit a Notice of Dispute to DDC because it was unclear that KBF was denying the remanded claims. No such ambiguity exists here.

There is ample caselaw to support dismissing the petitions because of untimeliness. SPMP Joint Venture v. Dep’t of Environmental Protection, OATH Index No. 808/06, mem. dec. (Jan. 31, 2006) (dismissing petition where contractor filed late claim with Comptroller); Kreisler Borg Florman/L.A. Wenger Contracting Co., Inc. v. Dep’t of Design and Construction, OATH Index No. 1088/03, mem. dec. (June 11, 2003) (dismissing petition where contractor missed deadlines to submit claim to Comptroller and the Board); D & D Mason Contractors, Inc. v. Dep’t of Parks and Recreation, OATH Index No. 158/01, mem. dec. (Aug. 21, 2000) (granting City’s motion to dismiss where contractor filed untimely claims to the agency head and the Board).

CONCLUSION

Accordingly, the petitionsare dismissed as untimely. All concur.

Faye Lewis

Administrative Law Judge/Chair

Dated: January 26, 2007

APPEARANCES:

KREISLER BORG FLORMAN

Petitioner

BY: ERIC PLATT

MICHAEL A. CARDOZO, ESQ.

NYC Corporation Counsel, Attorney for Respondent

BY: GARY ROSENTHAL, ESQ.

[1] Although KBF did file this claim with the Comptroller, the claim was never submitted to DDC.