John J. Kassner & Co. v. City of New York

In 1967, John J. Kassner & Company, Inc. (Kassner) (plaintiff) contracted with the City of New York (city) (defendant) to perform engineering work at a new police headquarters. The city was to pay Kassner $200,000 in percentage installments as Kassner completed its work. Such payments were subject to audit and revision by the city comptroller. In addition, the parties agreed that Kassner had to bring any claim against the city within six months of the date of filing in the comptroller’s office of a certificate of final payment. The parties also agreed that Article 2 of the Civil Practice Law and Rules (CPLR) would not apply to any suit by Kassner against the city regarding the contract. In December 1967, Kassner submitted a statement indicating that Kassner completed its work and requesting final payment of almost $40,000. However, after an audit, the comptroller rejected all but $1,100 of Kassner’s request. Kassner learned of the comptroller’s decision by no later than July 1968. Six years later, in September 1974, Kassner submitted a request for payment of $1,100, which Kassner received on November 8. That same day, a certificate of final payment was filed in the comptroller’s office. In April 1975, Kassner sued the city, seeking payment of the charges that were disallowed by the comptroller. The city, citing CPLR Article 2, asserted the statute of limitations. Per the city, the statute of limitations commenced no later than July 1968, when Kassner knew the amount and nature of its claim. The city further argued, among other things, that the parties intended the contract’s six-month period to shorten, not extend, the statute of limitations. Kassner responded that its suit was timely because its claim did not accrue until the filing of the certificate of final payment with the comptroller’s office. Kassner further contended that the parties did not extend the statute of limitations but instead specified the event that would start the limitations clock. The supreme court ruled in Kassner’s favor and dismissed the city’s statute-of-limitations defense. The appellate division affirmed. The city appealed.