99 A.D.2d 330 | N.Y. App. Div. | 1984
The facts are well set out in the opinion of the Court of Claims (117 Misc 2d 435) and will be briefly stated here. Claimant commenced this action to recover damages for the alleged breach of two highway construction contracts. These contracts were for the construction of portions of Interstate Route 88. As part of the interstate highway system, this project was to be 90% Federally financed. A lawsuit to permanently enjoin construction of this highway because of the alleged failure to prepare and file an environmental impact statement as required by the National Environmental Policy Act (US Code, tit 42, § 4321 et seq. [NEPA]) was brought in Federal District Court on May 24, 1972. Nonetheless, the Federal Highway Administration granted “plans, specifications and estimates” (PSE) approval of the contracts on July 5, 1972 and August 16, 1972, and the State Comptroller granted approval of the contracts on September 6, 1972 and October 16, 1972. Thereafter, work commenced, but on November 14,1973, a preliminary injunction prohibiting the State’s receipt and disbursement of Federal funds for the project was issued by Federal District Court. Work was suspended by the State on December 27, 1973, and on March 11, 1974, with work on the contracts not more than one half completed, the State terminated the subject contracts by deleting the remaining work. The State relet the remaining work under the former contracts after the Federal court’s preliminary injunction was vacated. Construction was completed by a firm other than claimant.
After this action was commenced, the parties sought partial summary judgment. The Court of Claims denied the State’s motion and granted claimant’s cross motion “to the extent that the [State’s] defenses predicated on the contracts’ ‘Executory Clause’ and the ‘Alterations and Omissions’ clause be stricken as insufficient”. Thus, the State was held liable on all causes of action which were the subject of claimant’s cross motion and a trial was ordered on the issue of damages.
It appears that the parties have settled all claims except those relating to claimant’s demands for anticipated
As noted by the Court of Claims, executory clauses such as those in issue are commonplace in State contracts and are intended “as a shield against the imprudent use of taxpayers’ dollars and not as a sword to divorce the State, for purposes of its own convenience, from a contract fairly entered into and honestly performed” (117 Misc 2d 435, 437, supra). It has been established that an executory clause will be enforced only where it is established that in the course of ordinary budgeting procedures, funds were not available (see Starling Realty Corp. v State of New York, 286 NY 272, 277-278). Furthermore, because the State is bound by the same rules of honesty and justice as individuals when contracting (see 55 NY Jur, State of New York, § 183, p 715), any unavailability of funds must not have been the result of an improper act or omission by the State (see Cameron-Hawn Realty Co. v City of Albany, 207 NY 377, 382; 5 Williston, Contracts [3d ed], § 677, pp 224-233).
Our review of the record and pertinent law requires us to confirm the analysis and conclusion of the Court of Claims that funds were available to complete the contracts on the date of termination because ordinary budgetary procedures had been followed and moneys had been earmarked for the project. We need only emphasize that the Federal commitment was not rendered void ab initio by the mere showing that NEPA had been violated (see Sierra Club v Hennessy, 695 F2d 643, 649). Even if, however, the funds were unavailable, we would be in agreement with the Court of Claims’ conclusion that the executory clauses
The order and judgments should be affirmed, with costs.
Kane, J. P., Mikoll, Yesawich, Jr., and Harvey, JJ., concur.
Order and judgments affirmed, with costs.
In fact, the only courts which did not require an environmental impact statement under NEPA were faced with cases in which PSE approval was granted prior to January 1, 1970 (see Monroe County Conservation Council v Volpe, 472 F2d 693, 699, n 4).