AETNA CAS. AND SUR. v. ANIERO CONCRETE

Citation Codes

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Docket Number

Docket Nos. 04-0843-CV(L), 04-1162-CV(XAP).

Attorney(S)

Benjamin D. Lentz, Torre, Lentz, Gamell, Gary Rittmaster LLP, Jericho, NY, for Plaintiff-Defendant-Appellant-Cross-Appellee. John M. Agnello (James E. Cecchi and Lindsey H. Taylor, on the brief), Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart Olstein, Roseland, NJ, for Plaintiff-Appellee-Cross-Appellant. Vincent J. Zichello, Zichello McIntyre, LLP, New York, NY, for Defendant-Counter-Claimant-Appellee. Fay NG (Pamela Seider Dolgow; Michael A. Cardozo, Corporation Counsel, on the brief), Office of the Corporation Counsel of the City of New York, New York, NY, for Defendant-Counter-Claimant-Cross-Appellee.

Judges

Amalya Lyle Kearse
Jose Alberto Cabranes
Robert David Sack

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Smart Summary

Factual and Procedural Background

This case arises from efforts to renovate Morris High School in Bronx, New York. Initially, the New York City School Construction Authority (SCA) contracted with P.J. Carlin Construction Company to perform the renovation. When the arrangement with Carlin collapsed, Aetna Casualty and Surety Company ("Aetna"), Carlin's surety, solicited bids to complete the work and accepted Aniero Concrete Company, Inc.'s ("Aniero") bid. A "Completion Agreement" was executed on March 18, 1994, between Aetna and Aniero.

After mobilizing on site, Aniero claimed it had been misled about the status of work completed by Carlin. In December 1994, Aniero initiated this lawsuit asserting tort and contract claims against Aetna and the SCA. Aetna filed a separate action against General Accident Insurance Company of America ("General"), Aniero's surety, which was consolidated with Aniero's case. The SCA filed counterclaims against Aniero and cross-claims against Aetna. The District Court, on March 30, 1998, held the Completion Agreement invalid due to an unsatisfied express condition precedent—the SCA's written consent to the assignment of the Carlin contract to Aniero. Consequently, the SCA's counterclaim was dismissed, the performance bond issued by General was declared a nullity, and Aetna's claims against General were dismissed. Aetna's motion for reconsideration was denied on May 19, 1998.

Following leave to amend, Aniero asserted a quantum meruit claim against Aetna and obtained a judgment exceeding $3.5 million after a bench trial. Aetna did not challenge this judgment except to request its vacatur if the Completion Agreement were found valid.

Legal Issues Presented

Whether the District Court correctly held that the Completion Agreement was invalid due to the failure of an express condition precedent—the SCA's written consent to the assignment of the Carlin contract to Aniero.
Whether the Completion Agreement was so ambiguous as to preclude summary judgment.
Whether Aniero's claims should be reinstated if the Completion Agreement were held valid.

Arguments of the Parties

Aetna's Arguments

The District Court incorrectly interpreted the Completion Agreement.
The Completion Agreement was ambiguous, thereby making summary judgment inappropriate.
Aetna requested vacatur of the quantum meruit judgment if the Completion Agreement were held valid.

Aniero's Arguments

Aniero cross-appealed seeking reinstatement of its claims in the event the Completion Agreement was found valid on appeal.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Aniero Concrete Co. v. N.Y. City Constr. Auth., 1997 WL 3268 (S.D.N.Y. Jan. 3, 1997)	Background factual context regarding the contract and performance issues.	Used to establish the factual foundation of the dispute and the parties' interactions.
Aniero Concrete Co. v. N.Y. City Constr. Auth., 1997 WL 83308 (S.D.N.Y. Feb. 27, 1997)	Further procedural and factual history related to the litigation.	Referenced for the procedural posture and development of claims.
Aniero Concrete Co. v. N.Y. City Constr. Auth., 1998 WL 148324 (S.D.N.Y. 1998) ("Aniero Summary Judgment")	Interpretation of the Completion Agreement and validity of the contract based on condition precedent.	Served as the basis for affirming the invalidity of the Completion Agreement due to unsatisfied condition precedent.
Aniero Concrete Co. v. Aetna Cas. Sur. Co., 301 F.Supp.2d 302 (S.D.N.Y. 2004)	Quantum meruit claim and judgment for Aniero.	Cited to clarify that the appellate court does not address the merits of the quantum meruit judgment.

Court's Reasoning and Analysis

The court analyzed the District Court’s determination that the Completion Agreement was invalid because a specific express condition precedent—the SCA's written consent to the assignment of the Carlin contract to Aniero—was not satisfied. The court found that the District Court's interpretation was correct and that the contract's invalidity followed logically from the absence of this condition. The court also rejected Aetna's argument that ambiguity in the contract precluded summary judgment, affirming that the legal conclusion on the contract's validity was appropriate at this procedural stage. Because the Completion Agreement was invalid, related claims premised on its validity, including the SCA's counterclaim and Aetna's claims against General, were properly dismissed. The court did not address the merits of the quantum meruit claim, as it was not challenged except conditionally by Aetna. Finally, the court dismissed Aniero's cross-appeal as moot since the Completion Agreement was held invalid.

Holding and Implications

Affirmed the District Court's judgment holding the Completion Agreement invalid due to an unsatisfied express condition precedent.

Dismissed Aniero's cross-appeal as moot.

The direct effect of this decision is that the Completion Agreement is null and void, the SCA's counterclaim premised on that agreement is dismissed, and the performance bond issued by General is also invalidated. No new precedent was established; the ruling affirms the application of established contract principles regarding express conditions precedent.

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The AETNA CASUALTY AND SURETY CO., Plaintiff-Defendant-Appellant-Cross-Appellee, v. ANIERO CONCRETE CO., INC., Plaintiff-Appellee — Cross-Appellant, General Accident Insurance Company of America, Defendant-Counter-Claimant-Appellee, New York City School Construction Authority, Defendant-Counter-Claimant-Cross-Appellee, Kreisler Borg Florman General Construction Company, Acrom Construction Ser

PER CURIAM.

This case, brought in the United States District Court for the Southern District of New York (Charles S. Haight, Jr., Judge) under the Court's diversity jurisdiction, arises out of efforts to renovate the Morris High School in Bronx, New York. The District Court held that a contract to complete the renovation — the "Completion Agreement" memorialized on March 18, 1994 by The Aetna Casualty and Surety Company ("Aetna") and Aniero Concrete Company, Inc. ("Aniero") — was invalid due to an unsatisfied condition precedent. On appeal, Aetna disputes the District Court's conclusion. We affirm.

In 1992, the New York City School Construction Authority ("SCA") contracted with the P.J. Carlin Construction Company ("Carlin") to perform the Morris High School renovation. The SCA's arrangement with Carlin subsequently collapsed, leading Aetna, Carlin's surety, to solicit bids for completing the work. See Aniero Concrete Co. v. N.Y. City Constr. Auth., 1997 WL 3268 (S.D.N.Y. Jan. 3, 1997). Aetna accepted Aniero's bid, and the two parties memorialized the Completion Agreement. See id. at *1. After "mobiliz[ing]" on the job site, Aniero claims to have discovered that it had been "given an inaccurate and misleading description of the work completed by Carlin." Id. at *1.

In December 1994, Aniero commenced this action, asserting tort and contract claims against, inter alia, Aetna and the SCA. Aetna subsequently filed an action against General Accident Insurance Company of America ("General"), Aniero's surety, in New York state court; that action was removed to federal court and consolidated with Aniero's action. On March 24, 1997, the SCA filed a counterclaim against Aniero and a cross-claim against Aetna. Further background facts, as well as the history of this litigation's motion practice, are set forth in detail in the District Court's Memorandum Opinions and Orders dated January 3, 1997, see Id.; February 27, 1997, Aniero Concrete Co. v. N.Y. City Constr. Auth., 1997 WL 83308 (S.D.N.Y. Feb. 27, 1997); and March 30, 1998, see Aniero Concrete Co. v. N.Y. City Constr. Auth., 1998 WL 148324 (S.D.N.Y. 1998) (" Aniero Summary Judgment").

In due course, on March 30, 1998, the District Court issued a Memorandum Opinion and Order addressing, inter alia, the parties' motions for summary judgment. Aniero Summary Judgment,. The Court concluded that the Completion Agreement was invalid due to an unsatisfied express condition precedent — the SCA's written consent to the assignment of the Carlin contract to Aniero. Id. Accordingly, the SCA's counterclaim against Aniero was dismissed because it was premised on the validity of the Completion Agreement. Id. Moreover, the Completion Agreement having been declared invalid, the District Court held that "the performance bond issued by General as security for the Completion Agreement is also a nullity." Id. The District Court thus dismissed Aetna's claims against General. Id. The Court further noted that Aniero and General had agreed not to press their claims if the Completion Agreement were held invalid; the Court, therefore, regarded as moot any motions seeking the dismissal of Aniero's or General's actions, as well as General's own cross-motion for summary judgment in its favor. Id. On May 19, 1998, the District Court denied Aetna's motion for reconsideration.

In its Memorandum Opinion and Order of March 30, 1998, the District Court also granted Aniero leave to amend its pleadings to include a quantum meruit claim against Aetna. Aniero shortly asserted such a claim. Following a bench trial, the District Court entered a judgment in Aniero's favor on the quantum meruit claim in the amount of over $3.5 million. See Aniero Concrete Co. v. Aetna Cas. Sur. Co., No. 94 Civ. 9111 (S.D.N.Y. Feb. 3, 2004) (final judgment); see also Aniero Concrete Co. v. Aetna Cas. Sur. Co., 301 F.Supp.2d 302 (S.D.N.Y. 2004). Because Aetna does not challenge the quantum meruit judgment except to ask that it be vacated if we conclude that there was a valid contract, and because we reach no such conclusion, we intimate no view as to the merits of the Court's determination of Aetna's liability to Aniero in quantum meruit.

On appeal, Aetna argues that the District Court incorrectly interpreted the Completion Agreement and that, in any event, the Completion Agreement was so ambiguous as to preclude summary judgment. Aniero cross-appeals, seeking to reinstate its claims if we reverse the District Court's judgment and hold that the Completion Agreement was valid.

For substantially the reasons stated in the District Court's Memorandum and Order of March 30, 1998, we affirm. We therefore need not reach the question raised by Aniero's protective cross-appeal, and we dismiss the cross-appeal as moot.