A Default Does Not Mean an Automatic Win: Construction Claims Still Require Proof

A recent New York Supreme Court decision, Doka USA, Ltd. v. Highbury Concrete Inc., provides an important reminder for contractors, subcontractors, suppliers, and equipment rental companies: even when the defendant fails to appear, the plaintiff still must prove its claims with competent documentation.

Doka sought more than $900,000 for allegedly unpaid equipment rentals, materials, and services furnished on four New York construction projects. The defendants did not appear, and Doka moved for a default judgment.

The Court granted judgment on breach of contract claims involving three projects, awarding approximately $558,000, because Doka submitted complete contracts and evidence demonstrating its performance, the defendant’s nonpayment, and the resulting damages.

However, the Court rejected the breach of contract claim on a fourth project because the contract submitted to the Court was incomplete and did not include the terms and conditions necessary to establish the claim.

The Court also denied several additional claims because the supporting documentation was insufficient, including claims under New York’s Prompt Payment Act, account stated, Article 3-A of the Lien Law, quantum meruit, unjust enrichment, replevin, and conversion.

Among other deficiencies, the plaintiff failed to submit invoices demonstrating when they were sent and whether they were disputed, failed to provide sufficient evidence that trust funds had actually been received and diverted, and failed to specifically identify equipment allegedly being wrongfully withheld.

The Court also declined to award attorneys’ fees at that time because the plaintiff failed to submit adequate documentation establishing the amount and reasonableness of the fees incurred.

Construction companies should maintain a complete and organized project record throughout the life of every project. At a minimum, that record should include:

• Fully executed contracts and all incorporated terms and conditions;
• Copies of invoices and proof showing when they were transmitted;
• Payment records and account statements;
• Documentation regarding receipt and use of project funds where trust claims may be asserted;
• Detailed records identifying rented, damaged, missing, or unreturned equipment; and
• Detailed attorney billing records where contractual attorneys’ fees may be recoverable.

A defendant’s default may eliminate the opposition, but it does not eliminate the plaintiff’s burden of proof.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440