        SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

1441
CA 12-00398
PRESENT: CENTRA, J.P., PERADOTTO, LINDLEY, WHALEN, AND MARTOCHE, JJ.


HAYWARD BAKER, INC.,
PLAINTIFF-RESPONDENT-APPELLANT,

                    V                             MEMORANDUM AND ORDER

C.O. FALTER CONSTRUCTION CORP., ZURICH
AMERICAN INSURANCE COMPANY, AND FIDELITY
AND DEPOSIT COMPANY OF MARYLAND,
DEFENDANTS-APPELLANTS-RESPONDENTS.
(APPEAL NO. 1.)


ALARIO & FISCHER, P.C., SYRACUSE (LINDA E. ALARIO OF COUNSEL), FOR
DEFENDANTS-APPELLANTS-RESPONDENTS.

BOND, SCHOENECK & KING, PLLC, SYRACUSE (CLIFFORD G. TSAN OF COUNSEL),
FOR PLAINTIFF-RESPONDENT-APPELLANT.


     Appeal and cross appeal from an order of the Supreme Court,
Onondaga County (Anthony J. Paris, J.), entered June 28, 2011. The
order, among other things, granted in part plaintiff’s motion for
partial summary judgment and granted defendants’ cross motion for
partial summary judgment dismissing the second cause of action, for
unjust enrichment.

     It is hereby ORDERED that the order so appealed from is
unanimously modified on the law by denying the motion in its entirety
and by denying the cross motion and as modified the order is affirmed
without costs.

     Memorandum: Plaintiff was hired by defendant C.O. Falter
Construction Corp. (Falter) as a subcontractor to complete
foundational work on a wastewater treatment plant project in Onondaga
County. During the course of construction, various issues arose
concerning the adequacy of plaintiff’s installation of a jet grout
bottom seal, and Falter ultimately refused to pay plaintiff the
balance due on their contract. Plaintiff thereafter commenced this
action seeking recovery of that amount together with the additional
expenses that it allegedly incurred in performing remedial work in
connection with the jet grout bottom seal. Falter asserted in a
counterclaim that plaintiff had breached their contract based on its
deficient installation of the jet grout bottom seal. Supreme Court
granted in part plaintiff’s motion for partial summary judgment and
awarded plaintiff the contract balance. The court concluded, however,
that there are issues of fact concerning plaintiff’s entitlement to
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                                                        CA 12-00398

the additional expenses, and it therefore denied plaintiff’s motion
for partial summary judgment to that extent. In addition, the court
granted defendants’ cross motion for partial summary judgment
dismissing the second cause of action, for unjust enrichment.

     Defendants contend on their appeal that the court erred in
granting that part of plaintiff’s motion with respect to the balance
of the amount due on the contract because they have a viable
counterclaim for plaintiff’s breach of contract arising from the same
transaction. We agree (see Yoi-lee Realty Corp. v 177th St. Realty
Assoc., 208 AD2d 185, 189-190). Indeed, there is no dispute that
there were deficiencies in the jet grout bottom seal, and defendants
submitted evidence that plaintiff failed to follow its own procedures
in completing the work (see generally Zuckerman v City of New York, 49
NY2d 557, 562). We therefore modify the order in appeal No. 1
accordingly.

     Plaintiff contends on its cross appeal that the court erred in
denying its motion for partial summary judgment with respect to its
alleged additional costs based upon a “changed conditions” clause in a
different contract that, according to plaintiff, was incorporated into
the contract between plaintiff and Falter. We reject that contention.
“[A] reference by the contracting parties to an extraneous writing for
a particular purpose makes it a part of their agreement only for the
purpose specified” (Guerini Stone Co. v Carlin Constr. Co., 240 US
264, 277; see Bussanich v 310 E. 55th St. Tenants, 282 AD2d 243, 244).
Here, the only references in the contract to the extraneous writing at
issue do not relate to or incorporate the “changed conditions” clause
in the extraneous writing. The court therefore properly concluded
that the “changed conditions” clause was not incorporated into the
contract between plaintiff and Falter and that plaintiff thus cannot
recover any additional expenses under that clause.

     We further conclude that there are issues of fact concerning
whether the contract was one of performance or design specification,
thus precluding summary judgment with respect to the additional
expenses that plaintiff allegedly incurred in remediating the jet
grout bottom seal. “A performance specification [contract] requires a
contractor to produce a specific result without specifying the
particular method or means of achieving that result” (Fruin-Colnon
Corp. v Niagara Frontier Transp. Auth., 180 AD2d 222, 229). “In other
words, the contractual risk of nonperformance is upon the contractor”
(id.). In contrast, a design specification contract is one in which
“the owner specifies the design, materials and methods and impliedly
warrants their feasibility and sufficiency” (id.). “In that instance,
the contractor’s guarantee . . . is limited to the quality of the
materials and workmanship employed in following the owner’s design”
(id. at 230). The proper characterization of a construction contract
as one of either performance or design specification “depends upon the
language of the contract as a whole,” and relevant factors in such an
inquiry “include the nature and degree of the contractor’s involvement
in the specification process, and the degree to which the contractor
is allowed to exercise discretion in carrying out its performance”
(id.). Here, the unresolved issues of fact with respect to those
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                                                         CA 12-00398

factors, particularly as to plaintiff’s ability to change the design
without Falter’s approval, precludes a determination whether as a
matter of law the subject contract is one of either performance or
design specification, and thus whether plaintiff may recover expenses
incurred in remediating the jet grout bottom seal.

     The court likewise properly denied that part of plaintiff’s
motion for partial summary judgment on its cause of action for unjust
enrichment. We agree with the court that plaintiff did not meet its
burden on the motion. “A cause of action for unjust enrichment
requires a showing that (1) the defendant was enriched, (2) at the
expense of the plaintiff, and (3) that it would be inequitable to
permit the defendant to retain that which is claimed by the plaintiff
. . . The essence of such a cause of action is that one party is in
possession of money or property that rightly belongs to another”
(Clifford R. Gray, Inc. v LeChase Constr. Servs., LLC, 31 AD3d 983,
987-988). Here, there is no evidence that defendant was paid by
Onondaga County for the work that plaintiff allegedly performed, and
there is thus no support for plaintiff’s allegation that defendant was
in any way unjustly enriched by such work. The court erred, however,
in granting defendants’ cross motion for partial summary judgment
dismissing that cause of action because it is well established that a
“ ‘bona fide dispute’ ” concerning whether additional work is covered
by a contract is sufficient to permit an unjust enrichment cause of
action to proceed (Tom Greenauer Dev., Inc. v Burke Bros. Constr.,
Inc., 74 AD3d 1747, 1748, quoting Pulver Roofing Co., Inc. v SBLM
Architects, P.C., 65 AD3d 826, 828). We therefore further modify the
order in appeal No. 1 accordingly.

     Defendants contend in appeal No. 2 that the court erred in
granting plaintiff’s cross motion for leave to renew its motion for
partial summary judgment at issue in appeal No. 1. We note, however,
that the court, upon granting leave to renew, adhered to its prior
decision. We thus agree with plaintiff that defendants are not
aggrieved by the order in appeal No. 2 (see Savino v DeLeyer, 160 AD2d
989, 990-991). We further conclude in appeal No. 2 that, contrary to
plaintiff’s contention on its appeal, the court upon renewal properly
denied its motion for partial summary judgment with respect to the
additional expenses sought.




Entered:   March 15, 2013                       Frances E. Cafarell
                                                Clerk of the Court
