Utility Interference Work in New York

Imagine you are a contractor that has decided to pursue work with the city. You are lucky enough to secure a lucrative contract to upgrade the city’s infrastructure, but you discover that certain other infrastructure owned by a private utility must be relocated to complete your work. Now imagine that the private utility refuses to relocate its infrastructure and refuses to enter into a contract to allow you to relocate the utility’s interfering infrastructure. The utility’s lack of cooperation is likely to cause significant and costly delays on your job with the city. What can you do?

In Perfetto Contracting Co., Inc. v. The Brooklyn Union Gas Co., a New York trial court recently addressed this scenario. Plaintiff Perfetto Contracting Co., Inc. (“Contractor”) contracted with the New York City Department of Design and Construction (the “City”) to perform certain street milling, trench restoration, and sidewalk installation work. In the lawsuit, the Contractor sought compensation from a private utility, Brooklyn Union Gas (“BUG”), for work the Contractor performed to locate, protect, maintain, relocate, adjust, alter, reconstruct and provide clearance for BUG’s utilities (“utility interference work”), without any written or oral agreement with BUG.

In its complaint, Contractor alleged that it was forced to perform the utility interference work without an agreement in order to avoid delays to the City project. Contractor demanded payment from BUG based upon theories of unjust enrichment, breach of contract, negligence and account stated.

In its summary judgment motion, BUG alleged that it had no duty to pay Contractor for the utility interference work because, among other reasons, BUG had no privity of contract with the Contractor.  Indeed, BUG never authorized the utility interference work at all.

Contractor alleged that despite the absence of a direct contractual relationship with BUG, it was entitled to payment based upon the duties imposed on utilities by common law and the NYC Administrative Code. Although Contractor did not reference the NYC Administrative Code in its pleading, it relied upon several provisions of the Code in its opposition to BUG’s motion, including Section 19-143(b) entitled “Excavation for Public Works,” which addresses the specific obligations placed upon public services corporations to remove, protect and replace their pipes, mains, conduits and fixtures.

Citing Diamond Asphalt Corp. v. Sander, 92 N.Y.2d 244, 249 (1998), which interpreted Administrative Code § 19-143(b), the court determined:

“it is undisputed that private utility companies serving the City and its residents have a practical and historic statutory and common law obligation to pay all costs associated with protecting their facilities during street repair projects, those obligations include, the removal, protections and relocation of their utility equipment . . . This unique obligation is a precondition to the privilege to use City streets for the purpose of installing and maintaining utility equipment.”

The Court found that BUG did not have the option to do nothing when its infrastructure interfered with City projects. The Court further noted that a contractor on a City project may recover for utility interference work directly from the utility and need not rely on the City to obtain payment on its behalf.  The Court found that Contractor could adequately establish the elements of an unjust enrichment or quasi contract claim because BUG assumed an obligation to pay the Contractor when it failed to perform the work itself or arrange for the work to be performed on its behalf.

For more information on utility interference, contact James “Jim” Lotito.

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