Decision In Prior Case Between The Parties Barred Most Of Plaintiff’s Claim

In an Opinion, dated September 26, 2022, in Five Star Elec. Corp. v. Silverite Constr. Co., 2022 NY Slip Op 50899(U), Justice Robert R. Reed held that a prior decision by Justice Cohen in a different dispute between the parties barred substantially all of Five Star’s claim. The Court explained:

In that case, which involved a project for the MTA, the contract and the parties' subcontract both contained no-damages for delay clauses like the ones at hand. There, too, Silverite made claims for time extensions. Though it obtained the extensions, the MTA did not provide any added compensation for the work and Silverite did not further compensate Five Star. In finding that the no-damages for delay provision was enforceable, Justice Cohen noted that the subcontract was "between two very sophisticated and experienced parties" (NYSCEF Doc. No. 12 [Argument Transcript], p 40 lines 9-10). The judge noted that such clauses were common, that they were "routinely and strictly enforced," and that "a party . . . seeking to invoke any of the exceptions to the general rule that no-damages-for-delay clauses are enforceable bears a heavy burden" (id., p 41 lines 1-4). The judge noted that the exceptions set forth in the seminal case, Corinno Civetta Constr. N.E.2d 905, 502 N.Y.S.2d 681 [1986] [Corinno Civetta]), were narrow ones and he opined that, if the exceptions to the rule were applied in the context of the case before him, "it would swallow the rule" (id., p 41 line 21).

Collateral estoppel, or issue preclusion, bars the relitigation of issues that a court decided between the same parties in a prior suit (Rojas v Romanoff, 186 AD3d 103, 108, [1st Dept 2020]; see Moskovits v. State of New York, 206 AD3d 535, 536, 168 N.Y.S.3d 691 [1st Dept 2022]). The court concludes that, with one exception noted below, the decision in large part collaterally estops Five Star from seeking damages for delay here. The facts of this case are largely the same as the ones before Justice Cohen, and the reasoning is applicable. Moreover, the judge cited cases that are binding in the case at hand. It is persuasive that Justice Cohen acknowledged the ongoing relationship between the parties, but he did not find that any informal course of dealing would apply to claims worth several million dollars. Here, too, Silverite's informal practice of attempting to obtain compensation for extensions does not apply to a claim of over $6 million. Thus, for the most part, Five Star's case is barred.

Issue or claim preclusion based on prior litigation can be a thorny issue. The attorneys at Schlam Stone & Dolan frequently litigate such issues. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.