Metropolitan Steel Industries, Inc. v. Fidelity & Deposit Co. of Maryland 68 A.D.2d 935

In an action by a subcontractor to recover under a labor and material payment bond, the parties cross-appeal from a judgment of the Supreme Court, Kings County, entered February 22, 1977, which awarded judgment to plaintiff, but limited its recovery to the balance due under an alleged settlement agreement. Judgment affirmed, with one bill of costs to the defendant. Plaintiff Metropolitan Steel Industries, Inc. was a subcontractor for Carbar Construction Corporation and V.C. Vitanza & Son (hereinafter Carbar-Vitanza), joint venturers in the construction of a new student center at Kingsborough Community College. The defendant Fidelity & Deposit Company of Maryland was the surety on a labor and material payment bond posted in connection therewith. Because of various disputes which arose between plaintiff and Carbar-Vitanza during the course of performance of the subcontract, they entered into a written settlement agreement in which the contract price for plaintiffs work was significantly reduced. When Carbar-Vitanza failed to make complete payment thereunder, plaintiff commenced this action against the surety to recover the balance due under the original subcontract. Plaintiff contends that the settlement agreement was merely an "executory accord”, which, when not performed, revived the original agreement (see Goldbard v Empire State Mut. Life Ins. Co., 5 AD2d 230; Moers v Moers, 229 NY 294). We disagree. A review of the evidence in this case reveals that the settlement agreement was reached because of the plaintiffs failure to fully perform its duties under the original subcontract. In recognition of this deficiency, the parties negotiated and agreed upon a new, lower contract price. The accommodation which they thus arranged constituted a new and superseding agreement which settled what would have otherwise been a disputed claim. As such, the agreement discharged the earlier obligation and became substituted therefor. Accordingly, Trial Term properly limited plaintiffs recovery to the amount owing under the settlement agreement. Suozzi, J. P., O’Connor, Lazer and Gulotta, JJ., concur.