Westinghouse Electric Corp. v. New York City Transit Authority, 82 N.Y.2d 47 (1993)
Unless demonstrably influenced by fraud, bad faith, or palpable error, the determination of an engineer pursuant to a contractual disputes provision is conclusive and binding, precluding judicial relief where the contract vests broad authority in the engineer to decide questions related to the contract’s execution.
Summary
Westinghouse contracted with the New York City Transit Authority (NYCTA) for structural repairs on the Outerbridge Crossing. A dispute arose over additional costs claimed by a subcontractor due to discrepancies in the NYCTA’s plans. The contract mandated that the NYCTA’s engineer would resolve such disputes. The engineer disallowed the claims, finding that the field conditions were reasonably foreseeable. Westinghouse sued, but the court dismissed the action, holding that the engineer’s determination was binding absent fraud, bad faith, or palpable error, none of which were sufficiently proven. The Court of Appeals affirmed, emphasizing the broad authority granted to the engineer under the contract.
Facts
Westinghouse contracted with the Port Authority to perform structural repairs on the Outerbridge Crossing in 1965.
Westinghouse subcontracted the fabrication and installation of expansion dams to Fairmont Fabricators.
Fairmont claimed additional costs because the bridge was “out of square,” meaning the girders were not straight or parallel as depicted in the Port Authority’s plans.
Fairmont, through Westinghouse, submitted claims to the Port Authority for these additional costs.
Procedural History
The Port Authority’s engineer disallowed the claims.
Westinghouse sued for damages.
The trial court granted Westinghouse’s motion to conform the pleadings to the proof, but ultimately dismissed the action.
The Appellate Division affirmed the dismissal.
The Court of Appeals affirmed the Appellate Division’s order.
Issue(s)
Whether the determination of the Port Authority’s engineer, pursuant to the disputes provision of the contract, is conclusive and forecloses Westinghouse’s claims for relief.
Holding
Yes, because the decision of the engineer is conclusive and final unless it was infected by fraud, bad faith or palpable error, and no such infection was pleaded or proven.
Court’s Reasoning
The Court relied on the principle established in Tufano Contr. Cory. v Port of N. Y. Auth., which holds that an engineer’s decision is conclusive unless fraud, bad faith, or palpable error is demonstrated. The Court found that the contract provision in this case granted broad authority to the engineer: “The Engineer shall determine the amount, quality, acceptability and fitness of all parts of the materials and Work, shall interpret the Contract Drawings, Specifications, and any Extra Orders, and shall decide all other questions in connection with the Contract.”
Even though Westinghouse’s motion to conform the pleadings to the proof was granted, the Court found no evidence of fraud, bad faith, or palpable error in the engineer’s decision. The Court stated that the engineer’s conclusion that the “out of square” condition was “what reasonably could be expected” by someone “with any engineering sophistication whatever” was reasonable.
The Court distinguished this case from Tufano, noting that the contract in Tufano expressly withheld questions of law from the engineer, while the contract in this case did not. The Court raised the question of whether judicial review should be under CPLR article 75 and decisional law applicable to arbitration generally or under the Tufano line of cases, but did not reach the issue.