Commercial Division Bench Trial Demonstrates Importance of Witness Preparation
Justice Borrok of Manhattan’s Commercial Division presided over a bench trial between a contractor and a sub-contractor concerning payments connected to work on New York City Housing Authority’s (NYCHA) Harlem River Houses.[i] The sub-contractor, Citi Building Renovation (Citi), brought an action claiming monies due on the amended sub-contract signed with the contractor, Neelam Construction Corp. (Neelam). At trial, Citi asserted three causes of action—breach of contract; promissory estoppel; and unjust enrichment—claiming damages of $426,688 plus interest.
The dispute centered on a modification to the parties’ original sub-contract, which they agreed was signed roughly a year and a half after the original sub-contract worth $2.4 million. Citi argued that in the modification the parties agreed to $288,000 as a fixed final price for certain additional glazed tile work, while Neelam argued that a fixed final price was not determined, but that the parties’ agreed that Citi’s proposal was for $288,000 and that Citi would receive from Neelam whatever Neelam received from the project’s construction manager and NYCHA. Citi also argued the parties orally entered into a second modification to the sub-contract in which Neelam agreed to pay an additional $40,000 to Citi for separate glazed tile work. Neelem answered Citi’s complaint, claiming that the action was barred by a release and lien waver signed by the parties and that, regardless, Citi had been paid in full. Neelem’s motion to dismiss based on the waiver was denied, and the parties proceeded to trial.
After trial, the court found that the $288,000 in the modification was not intended to be a final agreed upon amount, but instead that the final amount still needed to be negotiated between Neelam, the construction manager, and NYCHA. Justice Borrok did not find the testimony of Citi’s witness on this point to be compelling. Citi’s witness did not fare better when explaining the total amount owed to Citi by Neelam, as Justice Borrok found the witness’s testimony suffered from multiple inconsistencies. The court also found no evidence of two different sets of tile work in the record or evidence sufficient to support a factual finding of a second modification to the original sub-contract.
The court held that Citi did not meet its burden for showing breach of contract as it was unable to show that it was owed any additional compensation on the sub-contract, and the record establishes that Citi was actually paid more than what was owed. The court also found that Citi failed to show that Neelem made an unambiguous promise to pay $288,000 for the glazed tile work, or an additional $40,000 pursuant to a verbal change order, and that Citi was paid the money due. As such, the court also found that Citi failed to demonstrate that Neelam was enriched at Citi’s expense. Thus, the court dismissed all claims against Neelam.
Although Justice Borrok’s opinion rests heavily upon the facts of the case there are still lessons to be learned from this decision. In particular, Citi’s testifying witness appears to have been unable to adequately support its claims. This was especially detrimental to Citi’s claims for promissory estoppel, as the court found that Citi was unable to adduce evidence of an unambiguous promise to pay for the glazed tile work. The inability of Citi’s witness to keep track of the amounts he alleged Citi were owed was similarly fatal to its unjust enrichment claim. In the end, Justice Borrok’s opinion demonstrates the importance of witness preparation, including the need to make a clear-eyed judgement of witness credibility and performance before proceeding to trial.
[i] Citi Bldg. Renovation, Inc. v. Neelam Constr. Corp., 70 Misc.3d 1204(A) (Sup. Ct., NY Cnty., Dec. 9, 2020).