Court Finds Estoppel Not Applicable to Delay Claim Against Town

In Laws Constr. Corp. v. Town of Patterson (2nd Dept. January 2016), the plaintiff submitted the lowest bid to the Town of Patterson (the “Town”) for a construction project.  Construction was delayed and the Town Supervisor released a statement in response to being asked whether the Town would reimburse the bidders for increased costs due to the delay.  Although given the option to withdraw, the plaintiff left its bid in place with the Town.  The plaintiff and the Town entered into a contract based upon the units of work needed to be completed for the project, with a clause providing for how a modification to the contract could be made.

Upon completion of the project, the plaintiff submitted its’ 15th requisition (the prior 14 requisitions were paid) to the Town, seeking reimbursement for the increased costs of labor and materials which incurred as a result of the delay, but the Town refused to pay it.  Soon thereafter, the plaintiff filed a breach of contract claim against the Town alleging that the Town was estopped from denying the payment.

The Court held that estoppel is not generally applied to a municipal defendant, except where “exceptional circumstances” exist involving the “wrongful or negligent conduct [of the defendant]…or its misleading nonfeasance, which induces a party relying thereon to change his position to its detriment.”  The plaintiff claimed that exceptional circumstances existed due to the Town Supervisor’s statement regarding reimbursement of costs incurred from the delay, and that the plaintiff relied on that statement to its detriment.  The Court found that the statement did not establish an agreement to pay for subsequent costs incurred, and that the plaintiff’s claim that an “oral representation by an agent of the Town” which was contrary to the terms of the subsequent written contract was without merit.

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