Gemma Constr. Co. v. City of New York

In Gemma Constr. Co. v. City of New York (246 AD2d 451 [1998]), the Appellate Division was called upon to determine the applicability to a delay damage claim of a notice provision First, the Gemma Court examined the notice provision in the context of the contract as a whole. The Court held that its requirement of contemporaneous notice was in conflict with another provision of the contract which permitted deferred notice of delay damages, and that application of the notice provision to delay damages would therefore violate " 'a cardinal rule of construction' " by rendering the delay damage provision meaningless. (Gemma Constr. Co. v. City of New York, supra, at 454.) The Court also noted that the notice provision was contained in an article of the contract, located within a chapter of the contract, which governed claims for damages for extra work. Moreover, the notice provision provided that the documentation of the damages was required " 'if the Contractor shall also claim to be sustaining damages by reason of any act or omission of the City'." (Gemma Constr. Co. v. City of New York, supra, at 455.) Focusing on the use of the word "also" in this provision, the Gemma Court reasoned that the provision was applicable only where the plaintiff asserted a claim for delay damages as well as such other damages as extra work, but that it had "no application to a claim predicated entirely on the City's delay." (Id., at 455.) Gemma (supra) also supplied a rationale for distinguishing between extra work and delay damage claims for purposes of enforcement of such a notice provision: the Court explained that in the case of an extra work claim, detailed contemporaneous records of the work are necessary to enable the City to verify whether the extra work was done and, if so, whether the price was reasonable. In contrast, while delay damages may involve additional work performed on account of a delay, " 'delay damage claims seek compensation for increased costs ... whether the costs result because it takes longer to complete the project or because overtime or additional costs are expended in an effort to complete the work on time' ." (Id., at 453.) "A significant item in delay damages is the increase in fixed costs and overhead incurred by reason of the deferral of the completion date of the project." (Id.)