United States of America v. Westchester Fire Insurance Company

Background

Kirlin Builders, LLC, the general contractor, subcontracted with Profex, Inc. for repair and renovation work at the Johnson Veterinary Clinic at West Point, New York. The subcontract was governed by New York law and included procedures for payment, change orders, disputes, default, termination, and attorneys’ fees.

Profex asserted claims for breach of contract, quantum meruit, and action on surety bonds, seeking payment for labor, materials, equipment, and proposed change orders. Kirlin claimed that Profex caused substantial delays, failed to address notices of default and notices to cure, failed to pay subcontractors and suppliers, and abandoned the work. Kirlin terminated Profex for cause and later sought $330,754.49 in completion costs through a counterclaim against Profex and a third-party action against Western Surety Company.

Profex’s claims

The court granted the defendants’ motion for summary judgment. It held that Section 19 of the subcontract created a strict notice condition: Profex had to provide written notice of a dispute within a reasonable time, or the claim would be treated as waived or abandoned. The court concluded that Profex did not strictly comply with this requirement and did not present clear evidence that Kirlin had waived it. Because the notice requirement barred Profex’s breach-of-contract claim, the court did not reach the defendants’ additional arguments on that claim.

The court also ruled that Profex’s quantum-meruit claim failed because a valid, enforceable subcontract governed the same subject matter. Quantum meruit is an equitable claim seeking the reasonable value of services, but the court explained that New York law does not allow that remedy when an express contract covers the parties’ work and payment. The court likewise barred any unjust-enrichment theory because it was not pleaded in the complaint and, in any event, was foreclosed by the valid subcontract.

Kirlin’s counterclaim and third-party action

The court denied Kirlin’s motion for partial summary judgment on its counterclaim against Profex and its third-party complaint against Western Surety Company. Kirlin relied on a ledger to support its claimed completion costs, but the court found that Kirlin had not provided invoices or other evidence establishing that the costs were incurred to complete Profex’s work or were directly caused by Profex’s alleged default. The court therefore found a genuine factual dispute about whether some or all of the claimed damages resulted from Profex’s default, Kirlin employees’ errors, or work beyond the scope of Profex’s obligations.

Attorneys’ fees and disposition

The court held that the defendants were entitled to reasonable attorneys’ fees for their successful motion for summary judgment under the subcontract’s fee-shifting provision. It ruled that fees were not recoverable for Kirlin’s denied partial-summary-judgment motion. The parties were referred to Magistrate Judge Judith C. McCarthy for a hearing to determine the amount of reasonable fees.

Judge Nelson S. Roman directed the clerk to terminate the main action and enter judgment for Kirlin, Liberty Mutual Insurance Company, and Westchester Fire Insurance Company against Profex. The court dismissed Profex’s causes of action and listed the proposed change orders on which the defendants obtained summary judgment. The court also directed the clerk to reopen Kirlin’s counterclaims and third-party action after reviewing Kirlin’s motion for correction or clarification, and directed the relevant parties to appear by teleconference on December 3, 2025. The opinion’s final scheduling paragraph is incomplete in the provided text, so its precise stated purpose cannot be determined from that paragraph alone.