Davidson Pipe Supply Co. v. Wyoming County Industrial Development Agency, 85 N.Y.2d 281 (1995)
A project developed with the assistance of an industrial development agency is not automatically considered a “public improvement” under State Finance Law § 137, requiring payment bonds for suppliers; the key factor is whether the project primarily benefits a private entity or serves a public purpose.
Summary
Davidson Pipe Supply sued the Wyoming County Industrial Development Agency (WCIDA) and Indeck Energy Resources to recover payment for steel pipe delivered to a project. Indeck, a private company, had an agreement with WCIDA for the development of an energy cogeneration plant, with WCIDA as a temporary owner for tax purposes. Davidson argued that the project was a “public improvement” under State Finance Law § 137, requiring a bond to secure payment for materials. The Court of Appeals held that the project was not a “public improvement” because it primarily benefited Indeck, a private entity, despite WCIDA’s involvement. The court emphasized that the temporary ownership by WCIDA was merely a mechanism for financing and tax benefits, not a genuine allocation of ownership.
Facts
Indeck Energy Resources, a private company, contracted with the Wyoming County Industrial Development Agency (WCIDA) for the development of a cogeneration plant. WCIDA’s role was primarily to provide tax benefits via a sale-leaseback arrangement. Indeck retained all risks and benefits of the project. Indeck hired NEPCO as the general contractor, who then subcontracted with Fels Co., Inc. Davidson Pipe Supply delivered steel pipe to Fels, but was not paid the agreed price of $136,639.32.
Procedural History
Davidson sued WCIDA and Indeck, arguing that the project was a public improvement and that the defendants were liable for failing to obtain a payment bond as required by State Finance Law § 137. The Supreme Court granted summary judgment to Davidson. The Appellate Division reversed, dismissing the complaint. The Court of Appeals granted leave to appeal.
Issue(s)
Whether a construction project developed with the assistance of an industrial development agency, but primarily benefiting a private company, constitutes a