BY TONY FARINA
The local construction company suing the state over its termination as the Canalside contractor in July of 2013 has won a major victory in the Appellate Division of State Supreme Court.
In a unanimous ruling handed down last week, the court reinstated DiPizio Construction’s claim that the president of the state’s Erie Canal Harbor Development Corporation (ECHDC) may have lacked the legal authority to terminate DiPizio from the $20 million replica canal project without authorization in the form of a vote from the Board of Directors, something DiPizio’s lawyers contend never happened.
“The court’s decision calls into question whether the termination by ECHDC President Dee was valid or not,” said Michael Ferdman, the attorney who argued the appeal for the DiPizio firm. “We’re very pleased with this decision, we won.”
Dee had notified DiPizio by letter in May of 2013 that ECHDC intended to remove the company from the job, which it did in July, because it was falling behind construction schedule and not meeting its obligations on materials and with coordinating work with subcontractors.
Ferdman called the termination notice a political document issued to cover up “the bad faith administration of the construction agreement” that forced long delays and drove up “not just DiPizio Construction Co.’s costs, but taxpayers’ costs.”
In addition to construction costs, the state has been paying millions of taxpayer dollars in legal fees to the Phillips Lytle law firm to defend itself against the lawsuit by the local contractor which maintains it has been severely damaged by the negative publicity it received as a result of its termination that was well promulgated by ECHDC at the time which was trying to blame DiPizio for falling behind the schedule laid out by Albany for the replica canal project.
The appellate court ruling in favor of DiPizio sets aside the summary judgment issued by State Supreme Court Justice Timothy Walker in January of 2014 in favor of ECHDC.
Walker had basically decided that the Board of Trustees had ratified the termination (without a vote), ruling they had been notified and had sufficient information from Dee and understood the issues. After that decision, Ferdman took depositions from board members—in a related action– and found “they did not know there were design changes and design errors” by ECHDC and had only heard from Dee that problems and delays were all DiPizio’s fault.
The latest ruling, says Ferdman, means the court decided there are triable issues of what the board understood and calls into question whether the termination by Dee was valid or not.
In its ruling, the Appellate Division said despite ECHDC’s bylaws and the presumption that the board’s president had the authority to enter into and terminate contracts in the ordinary course of business and that no formal vote was required, “there are triable issues of fact whether a formal vote of the Board was required.”
Now that DiPizio’s complaint has been reinstated in front of Walker, Ferdman is hoping the case will eventually go in front of jury that will have the opportunity to hear all the evidence and decide whether the termination of the construction firm with a solid 37-year history of satisfactory work was properly authorized or not.
The costs to taxpayers for the legal battle are soaring, and the construction company is also paying plenty to defend itself and try to recover its reputation through the courts. Veteran court observers suggest the Appellate Division ruling in favor of DiPizio could help boost the possibility of a settlement, but no word yet from ECHDC on the ruling or possible settlement efforts.