J&A Concrete Corp. v. Dobco Inc.

Background

J&A Concrete Corp. was a subcontractor on a police-station construction project for which Dobco Inc. served as general contractor. The subcontract required J&A to perform concrete work, including installing embedded materials supplied by others. The parties later disputed whether J&A also had to perform steel cutting and welding needed to install certain embeds. Dobco hired another firm to perform that work and issued a $65,336 deduction.

J&A submitted several payment applications. Dobco received $110,105 from the project owner for work covered by those applications but did not pay J&A. Dobco maintained that J&A had to execute the final payment application and provide specified supporting documents before payment was required. J&A declined to do so, terminated the subcontract on June 4, 2021, and stopped performing. Dobco later terminated the subcontract based on J&A’s alleged abandonment.

J&A asserted claims against Dobco for breach of contract, quantum meruit, unjust enrichment, violation of New York’s Prompt Payment Act, diversion of construction trust funds, and declaratory relief. J&A also sought foreclosure of a mechanic’s lien and payment under a payment bond issued by Arch Insurance Company. Dobco asserted contract and declaratory-judgment counterclaims against J&A. Arch had separately asserted indemnity claims, but the opinion explains that Arch and J&A settled their disputes except for J&A’s mechanic’s-lien and payment-bond claims, and Arch withdrew its summary-judgment motion.

J&A’s Summary-Judgment Motion

The court denied J&A’s motion for summary judgment on its breach-of-contract claim against Dobco. The subcontract was ambiguous about whether the disputed Embed Work fell within J&A’s original scope of work, creating a genuine factual dispute. However, the court held that Dobco was not required under the subcontract’s modification provision to refer the dispute to the project architect or owner because the dispute concerned whether the work was a modification at all, rather than the value of an agreed modification.

The court also held that Dobco’s payment obligation had not been triggered. The subcontract allowed Dobco to withhold payment when it asserted an offset or claim, and J&A had not strictly complied with contractual conditions requiring an executed payment application and supporting documents. Because payment was not yet due, J&A’s termination after claiming nonpayment for 60 days or longer was improper. The court therefore concluded that J&A breached the subcontract and could not recover the termination-related damages described in the subcontract.

The court denied J&A’s motion concerning its mechanic’s lien. It held that J&A had not shown that it was owed the claimed amount and had not shown that it filed the notice of pendency required to continue a public-improvement lien beyond one year. The fact that the lien had been discharged by a surety bond did not eliminate that requirement under the applicable New York statute.

The court denied J&A’s motion on its payment-bond claim against Arch. The payment bond covered lawful claims for labor and materials, but J&A sought damages based on the subcontract’s termination provision. Because J&A had wrongfully terminated the subcontract and abandoned the project, the court held that J&A was not entitled to the claimed damages under the payment bond.

The court also denied J&A’s motion on its declaratory-judgment claim because that claim duplicated the other claims and would not provide relief beyond the court’s resolution of the parties’ contractual rights. The court stated that J&A’s motion was denied as to all five claims on which J&A sought summary judgment: breach of contract, mechanic’s-lien foreclosure, the Prompt Payment Act claim, payment-bond liability, and declaratory relief. The court separately denied J&A’s motion to strike certain expert reports without prejudice to consideration at the pretrial stage.

Dobco’s Summary-Judgment Motion

The court granted Dobco’s motion to dismiss J&A’s breach-of-contract and equitable claims against Dobco. It held that Dobco had not breached the subcontract and that J&A’s quantum-meruit and unjust-enrichment claims were unavailable because the express subcontract governed the subject matter of the dispute. The court also explained that J&A’s Prompt Payment Act claim failed for the same reason that its contract claim failed: payment had not yet become due. Dobco had not moved for summary judgment on J&A’s diversion-of-construction-trust-funds or declaratory-judgment claims.

The court granted Dobco summary judgment as to liability on Dobco’s breach-of-contract counterclaim against J&A. It held that J&A breached the subcontract by improperly claiming a right to terminate, abandoning the project, and refusing to resume performance after Dobco issued written notice of default. The court denied summary judgment on Dobco’s declaratory-judgment counterclaim because that claim duplicated the breach-of-contract counterclaim and the court had already resolved the underlying termination issue.

Disposition

J&A’s motion for summary judgment was denied. Dobco’s motion for summary judgment was granted in part and denied in part: it was granted as to dismissal of J&A’s breach-of-contract and equitable claims and as to liability on Dobco’s breach-of-contract counterclaim, but denied as to Dobco’s declaratory-judgment counterclaim. The court directed the Clerk to close all pending motions.