Three Manhattanville construction contractors are engaging in a legal battle over an alleged breach of contract that led to cost overruns.
According to court documents, E.E. Cruz & Co. and Nicholson Construction Company, subcontractors for the Manhattanville expansion, are suing Lend Lease Construction, a general contractor for the expansion, for $23.6 million in the New York State Supreme Court.
E.E. Cruz and Nicholson formed a joint venture to accept Lend Lease's contract.
The complaint, filed March 5, accuses Lend Lease of “bad faith, willful, malicious, recklessly indifferent or grossly negligent conduct,” alleging the company breached contractual obligations in eight areas, including late payments and having design errors and omissions.
As part of the companies’ $121 million contract, Lend Lease provided blueprints, plans, and schedules for the work E.E. Cruz and Nicholson were assigned to do. But according to the joint venture’s complaint, the plans contained numerous errors, defects, and inaccuracies which required the company to spend an extra $49 million to cover additional costs of materials and labor.
The projects E.E. Cruz and Nicholson were assigned included excavating the slurry wall for the campus, constructing drilling shafts, removing underground petroleum storage tanks, and disposing of contaminated soil.
The complaint said that Lend Lease failed to properly equip the construction site and inform the subcontractor about site conditions. For example, the plaintiffs said that the contractors did not provide accurate groundwater levels, which caused a series of slurry-wall-excavation failures that cost an extra $2.2 million. The complaint also said that Lend Lease did not let the subcontractors access a part of the construction site, which pushed back the companies’ construction schedule.
The $23.6 million in damages demanded by E.E. Cruz and Nicholson include $7.9 million for contract inconsistencies, $8.2 million for the combined extra work caused by inaccurate plans and information, $1.9 million for “protest work,” $1 million in construction disruptions, $4 million for drilling work unaccounted for in the original contract, and $621,000 in interest for late payments.
In April 2012, the New York Times reported that Lend Lease admitted to overbilling clients by a total of $19 million, after a three-year FBI investigation into the company’s practices.
Lend Lease, E.E. Cruz, Nicholson, and the University all declined to comment.