Michael F. McKenna and Kanwal S. Awan win a $15.3 Million Decision in Favor of Scalamandre-Oliveira, JV II
In a breach of contract matter, Cohen Seglias litigators Michael McKenna and Kanwal Awan represented our client, Scalamandre-Oliveira, JV II (SOJV), a joint venture between Peter Scalamandre & Sons, Inc. and Oliveira Contracting, Inc., against the New York-based contractor, Judlau Contracting, Inc., and its sureties, Travelers Casualty and Surety Company of America, Zurich American Insurance Company and Liberty Mutual Insurance Company. In December 2023, following five weeks of trial, the Hon. Andrew Borrok, J.S.C., granted SOJV a judgment against Judlau and its sureties in the amount of $15.35 million. Judge Borrock’s decision cautions contractors as to their treatment of their subcontractors, as well as how small changes to contract language can make or break recovery for project impacts.
Case Overview
Judlau entered into a $258 million contract with the Metropolitan Transportation Authority (MTA) to perform work for the first phase of the 2nd Avenue Subway system project. Judlau entered into a subcontract with SOJV for the performance of the forming and placement of concrete for two buildings at either end of the project, referred to as Ancillary 1 and Ancillary 2. Judlau also entered into two separate subcontracts for the furnishing and placement of reinforcing steel (rebar), which is not normally subcontracted separately from the concrete work. Further, our client’s in-house attorney changed the “no damages for delay” language, making Judlau liable for any delays caused by it or its subcontractors. This was a key in our recovery. Another subcontractor on the project under very similar circumstances had their case thrown-out on a motion to dismiss because they had not made this change to Judlau’s originally proposed subcontract terms.
SOJV’s work was originally to take about one year to complete. Instead, mainly for reasons outside of its control the work took about two years. Accordingly, SOJV sought recovery against Judlau and its sureties in the amount of $8,961,906, plus pre-judgment interest at 9% starting on December 14, 2015, for a total of $15.3 million (with 9% interest continuing to accrue).
There were issues on the project impacting SOJV from the start, not the least of which was that Judlau’s project manager, in an internal email, declared “war” on SOJV. Judlau failed to give SOJV basic scheduling information, failed to coordinate SOJV’s work with that of Judlau’s other subcontractors, particularly the two rebar subcontractors, failed to provide suitable cranes, and failed to provide access to each of the two buildings, requiring SOJV’s workers to traverse underground for nearly three blocks. Then, when SOJV’s work was more than 95% complete, Judlau sought to terminate SOJV as a pretext to avoid paying SOJV for the impact of the numerous Judlau-caused delays. Following a bench trial, the court agreed that the treatment of SOJV was a breach of contract and awarded SOJV basically all the damages it sought.
Key Takeaway
Here, there was no question that Judlau’s treatment of SOJV was egregious and constituted bad faith. However, during pre-contract negotiations, SOJV added language to the contract holding Judlau responsible for the impact of delays caused by Judlau and its subcontractors. This negotiated contract modification was a key to success.
