Schlier v. City of New York, 15 N.Y.2d 94 (1965)
A party to a contract can waive contractual notice or protest provisions through its conduct, particularly when that conduct demonstrates an intent to follow a procedure other than that specified in the written agreement, and is chargeable with notice of the work progress.
Summary
Schlier sued New York City for the reasonable value of extra work and damages from construction delays. The lower court awarded Schlier damages, but the Appellate Division reversed, citing Schlier’s failure to comply with the contract’s notice and protest provisions for extra work claims and a written waiver for delay damages. The New York Court of Appeals reversed regarding the extra work claim, holding that the City’s conduct could constitute a waiver of the contractual notice requirements, making it a jury question. However, the court upheld the dismissal of the delay damages claim, finding no economic duress.
Facts
Schlier was awarded a plumbing contract for Elmhurst General Hospital in 1952. Delays arose due to changes in construction plans and poor coordination. Bernard Farrell, the Director of Buildings, directed Schlier to hire an engineer to assist with coordination and redesign, with a promise of later compensation. The contract required extra work orders to be in writing and signed by the Commissioner. For disputed work, the contractor had to notify the Commissioner in writing and obtain a determination, protesting within five days if adverse. Schlier presented 91 claims for extra compensation, most of which were settled without strict compliance with the protest provisions. The claim for engineering services was treated similarly initially, but later the City relied on the strict contractual terms for denial.
Procedural History
The Supreme Court awarded Schlier $23,951.88 for the extra work claim and $120,000 for the delay claim. The Appellate Division reversed, dismissing the complaint. Schlier appealed to the New York Court of Appeals.
Issue(s)
1. Whether the City’s conduct constituted a waiver of the contractual requirement that extra work be authorized in writing by the Commissioner and subject to protest provisions, thus entitling Schlier to compensation for extra engineering services.
2. Whether economic duress by the City induced Schlier to sign a waiver of delay claims in exchange for an extension of the completion date and a substantial completion payment.
Holding
1. Yes, because the City’s prior conduct of settling similar claims without requiring strict compliance with the contract’s protest provisions and treating the engineering services claim as a valid extra, subject to approval, created a question of fact for the jury regarding waiver and estoppel.
2. No, because there was no showing that the City did anything more than affirm its previously stated position, and that the City was in no way responsible for the plaintiff’s financial distress.
Court’s Reasoning
The Court reasoned that while the contract required written authorization from the Commissioner for extra work, the City’s conduct suggested an intent to follow a different procedure. Specifically, the City had previously settled similar extra work claims without insisting on strict compliance with the contract’s notice and protest requirements. The court noted, “The procedure which was followed is clear…work was usually done before the issuance of change orders and that such work was either disputed work from the beginning…or where the question was left open for future determination, and change orders were subsequently issued.” The court also emphasized that Farrell, a senior representative of the city, was in charge of work coordination and progress. Since there was no question of collusion or bad faith, the court held that the jury should determine whether the City had waived its right to enforce the contractual requirements. As to the delay damages claim, the court found no evidence of duress because the City merely affirmed its position. The court also noted that the plaintiff waited two years to disaffirm the waiver, which was not a reasonable time.