NY Court Disallows Recovery For Additional Work Performed Pursuant To Oral Modification Because Contract Required Written Change Orders

Charles T. Driscoll Masonry Reconstruction Co., Inc. v. County of Ulster
2007 N.Y. App. Div. LEXIS 6068 (N.Y. App. Div., May 17, 2007)

The Appellate Division of the Supreme Court of New York held that a construction contract must be enforced according to its terms and, therefore, oral modifications of an agreement which specifically calls for modifications to be in writing will be unenforceable. Although recognizing that written modification clauses may be waived based upon the conduct of the parties, the court found that the conduct of the parties in this case did not support a waiver.

The County of Ulster, New York retained Charles T. Driscoll Masonry Reconstruction Company, Inc. to perform, among other things, window installation and External Foam Insulation System (“EFIS”) repair. The contract price included a $8,000 contingency allowance available only upon the execution of a signed change order. Based upon complaints by the County about the uniformity of the sealant over the EFIS, Driscoll agreed to perform a sample application of sealant using a different product and procedure. Driscoll and the County also orally agreed to change the product being used to clean mold off the façade of the building. These items of additional or changed work were performed by oral agreement only and without a written change order.

A rocky relationship between the parties continued until the contract was terminated by the County prior to the completion of the project. At that time, Driscoll submitted a payment requisition for work performed in areas of the building which were completely finished. Driscoll claimed there was also additional work performed in areas which were not completely finished (i.e. not all the painting was completed) and for amounts incurred pursuant to the oral modifications. The County disputed the amount owed and Driscoll instituted an action claiming breach of contract and quantum meruit.

The trial court found that the County breached the contract and owed Driscoll for the portion of work completed and for additional work performed pursuant to the oral modifications. The County appealed the trial court’s decision and the Appellate Division affirmed in part and reversed in part the trial court’s ruling.

Specifically, the Appellate Division first affirmed the award for breach of the original contract citing to the trial testimony which supported a finding that the work performed by Driscoll was not defective and, therefore, there was no basis for the County to terminate the contract. Next, the Appellate Division reversed the trial court’s award of damages for work performed without a written, signed change order. Because the parties’ contract expressly stated that any payments from the contingency allowance for additional or changed work would only be permitted via a written change order, the Appellate Division held that oral modifications were not enforceable.

In rendering its ruling, the court recognized the proposition that clauses requiring written modifications could be waived in certain circumstances, but declined to find that such a waiver occurred here. Relying on Austin v. Barber, 227 A.D.2d 826, 828 (1996), the court opined that waiver exists if “the conduct of the parties demonstrates an indisputable mutual departure from the written agreement and the changes were clearly requested by [defendant] and executed by [plaintiff].” Applying this standard to facts at hand, the court recognized that there was clear evidence that the County agreed that the additional work should be done. The court, however, distinguished the present facts from that of cases finding waiver such that Driscoll was repeating work it already performed and which work was contemplated under the original contract. In cases finding waiver, the court noted that the additional work requested via oral modification was typically work clearly outside the scope of the original written agreement. The court further explained that the additional work performed by Driscoll was due to the County’s dissatisfaction with the original work and it was not clear that the County anticipated compensating Driscoll for the additional work. Lastly, the court found the existence of at least two other written change orders from the same time period to be detrimental to a finding that the written modification clause was waived.

Similar to its refusal to find a waiver of the written amendment requirement, the court declined to permit Driscoll to recover under a quantum meruit theory. Because the additional work performed was not based upon an agreement which “constitute[d] ‘a qualitative change in the nature of the work outside the contemplation of the contract” quantum meruit was not appropriate. Thus, Driscoll was without a remedy with respect to the additional work performed pursuant to its oral modifications with the County.

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