Decision of Note

In 400 15th Street, LLC v. Promo-Pro, Ltd., 28 Misc. 3d 1233(A) (2010 NY Slip Op 51580(U)) an owner sought damages from a contractor and a surety that issued a performance bond on the project.  Apparently, the owner entered into an agreement with the contractor (an AIA A101 that incorporated the AIA A201).  Certain payment dates were set forth in the subject construction agreement.  Notably, General Condition 14.1.1 provided that the contractor could terminated the contract if the owner did not make payments as set forth in the agreement.  Section 14.2.1 of the agreement provided that the owner could terminate the contractor if the contractor failed to promptly and diligently prosecute the work and pay subcontractors and suppliers.  A number of other contract provisions are discussed but I will not go into them in detail here. 

Suffice to say that after the contractor commenced work a dispute arose with the owner over whether the excavation and underpinning operations had been performed in accordance with the contract specifications.  The owner claims that due to the contractors negligence, a brick wall adjacent to the site cracked, became unstable and required replacement.  An adjoining property collapsed and the owner of that property brought an action against the contractor.  That action included injunctive relief that delayed the owner's project in this case.  The contractor was ultimately terminated, which the owner alleged was for cause.  This action resulted.

Vincent T. Pallaci is a partner at the New York law firm of Kushnick Pallaci, PLLC where his practice focuses primarily on the area of construction law.  He can be reached at (631) 752-7100 or vtp@kushnicklaw.com