Preview
INDEX NO. 616472/2023
NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023
EXHIBIT G
INDEX NO. 616472/2023
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AMERICAN ARBITRATION ASSOCIATION
NEW YORK REGIONAL OFFICE
eee eee ene eee eee eee
PERSI CONTRACTING CORP.,
Claimant,
STATEMENT OF CLAIM
-against-
EXXE CORP. and RAJAN PATIWANA,
Respondents.
eee eee
INTRODUCTION
1 This is a proceeding for breach of contract, unjust enrichment, and fraud relating
to a construction project to build a Taco Bell restaurant at 90 Jericho Turnpike in Floral Park,
Nassau County (the “Project”). Respondent EXXE Corp. (“EXXE”) through its principal Rajan
Patiwana (“Patiwana”), approached Claimant Persi Contracting Corp. (“Claimant” or “Persi’’)
through its principal Michael Persichilli (“Persichilli”) and asked that Persi provide construction and
management services in connection with the Project. The parties entered into an agreement related to the
Project (the “Contract’”), and work commenced in or about November 2020.
2. Through the course of the Project, Patiwana and Perichilli would periodically meet to go
over the progress of the Project and Persi’s expenses related to same (including payments to
subcontractors, payments for materials, labor costs, and other expenses). At these meetings, Patiwana
made payments to Persi, and did so on at least nine (9) separate occasions. At no point during these
meetings or otherwise did EXXE or Patiwana express any dissatisfaction regarding Persi’s performance
in connection with the Project.
3 In the spring of 2022, the Project was substantially complete. But Patiwana refused to
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make any more payments to Persi. Indeed, for several months, Patiwana stopped all communications
with Persichilli.
4 However, the architect on the Project continued to communicate with Persi and directed
Persi to continue work. Indeed, the architect asked Persi for an estimate of the time to complete
the Project, which Persi provided.
5 Then on July 26, 2022, EXXE abruptly sent a termination letter purporting to terminate
Persi’s involvement in the Project, attaching a laundry list of supposed issues regarding Persi’s
performance.
6. As detailed herein, these issues are merely a pretext for EXXE to seek to have
the surety company that issued a bond in connection with the Project pay the cost of completion,
or otherwise enable EXXE to evade the hundreds of thousands of dollars it owes to Persi, based
upon documented payments to subcontractors and expenses for permits, materials, labor, and
other costs Persi incurred in connection with the Project.
7 EXXE cannot be permitted to belatedly and fraudulently fabricate “issues” with
Persi’s performance in order to avoid paying the amounts EXXE owes to Persi in connection
with the Project. Rather, EXXE and its principal Patiwana must be required to pay Persi’s
documented expenses — as EXXE and Patiwana did for the first 18 months of the Project.
8 Persi thus brings the present arbitration pursuant to the terms of the Contract.
PARTIES
9. Persi is a New York corporation with its principal place of business at 804 Jericho
Turnpike, Floral Park, New York 11040.
10. EXXE is a New York corporation with its principal place of business at 35 Bristol
Drive, Manhasset, New York 11030.
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11. Patiwana is an individual residing in Nassau County.
12. Non-party Bartlett, Amoruso & Reece Architects, P.C. (“BAR”) served as the
Architect (the “Architect”) in connection with the Project (after BAR replaced the Architect
originally named in the Contract, Bohler Engineering). BAR is a professional corporation with
its principal place of business at 190 Motor Parkway, Suite 201, Hauppauge, New York 11788.
JURISDICTION AND VENUE
13. This matter is subject to arbitration pursuant to the American Arbitration
Association (“AAA”) Construction Industry Arbitration Rules pursuant to Article 6.2 and
Section 15.4 of the Contract.
14. Pursuant to Article 6.2 of the Contract, the arbitration is to take place in the
AAA office located in the County of New York, State of New York.
FACTUAL BACKGROUND
A. The Taco Bell Construction Project
15. In October 2020, Patiwana approached Persichilli regarding the Project to
construct a Taco Bell store at 90 Jericho Turnpike in Floral Park in Nassau County, New York.
16. According to Patiwana, EXXE had purchased a franchise license from Taco
Bell. EXXE desired to build the Taco Bell store on property EXXE was leasing from BHP
Realty LLC (the “Landlord”).
17. Patiwana described that the Project would involve demolition of the existing
structure and constructing the exterior of a new Taco Bell store. Patiwana explained that EXXE
would be responsible for completing the interior of the store, including appliances, furniture,
signage, and all requirements pursuant to EXXE’s franchise agreement with Taco Bell. Persi
would be responsible for the demolition, construction of the exterior, and other items as agreed
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to by the parties.
18. Persi would also function effectively as a construction manager, supervising the
work of certain subcontractors performing work in connection with the Project.
B. The Contract
19. In connection with the Project, EXXE and Persi entered into an AIA Document
A101-2017 Standard Form of Agreement Between Owner and Contractor (the “Standard Form
of Agreement”). Attached to the Standard Form of Agreement is an AIA Document A101-2017
Exhibit A regarding Insurance and Bonds (“Exhibit A”), an AIA Document A201-2017 General
Conditions of the Contract for Construction (the “General Conditions”), a Rider to the Contract
(the “Rider”), and ten (10) pages of drawings (the “Drawings”).
20. The Standard Form of Agreement, Exhibit A, General Conditions, Rider, and
Drawings shall collectively be referred to as the “Contract.”
21. In the Contract, “Owner “ is defined as EXXE, and “Contractor” is defined as
Persi.
22. The Contract, specifically Section 1.1.3 of the General Conditions, defines the
“Work” to be performed pursuant to the Contract as “the construction and services required by
the Contract Documents.”
23. The Contract, specifically Section 1.1.3 of the General Conditions, defines the
“Drawings” as “the graphic and pictorial portions of the Contract Documents showing the
design, location and dimensions of the Work, generally including plans, elevations, sections,
details, schedules, and diagrams.”
24. Consistent with the discussions between Patiwana and Persichilli, the Drawings
only depicted construction of the exterior of the Taco Bell store. Specifically, the Drawings
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attached to the Contract were as follows
S0.0 Cover Sheet
$1.0 Anchor Bolt Plan
$2.0 Wall Framing Plan
$2.1 Schedules & Details
$3.0 Roof Framing Plan
S4.0 Exterior Elevations
84.1 Exterior Elevations
$5.0 Wall Sections
9 $5.1 Wall Sections
10. S.5.2 Wall Sections
25. Article 3.3.1 of the Standard Form provided that the anticipated Substantial
Completion Date was June 15, 2021. However, that same provision stated as follows:
Notwithstanding, Contractor shall be entitled to a reasonable extension of time to
achieve Substantial Completion of the Work in the event of delays resulting from
weather, Covid-19 or other delays as set forth in the Rider at Paragraphs 21-23.
The parties agree that time is not of the essence with respect to this date.
(emphasis added). This provision that time was not of the essence with respect to the Project is
not typical, indeed is highly unusual, and makes clear that extensions of time for Substantial
Completion were contemplated and were to be reasonable and liberally provided.
26. In addition, pursuant to Sections 21, 22, and 23 of the Rider, Persi is entitled to
reasonable extensions of time to achieve Substantial Completion based upon, respectively,
Weather Delays, Covid-19 Delays, and Other Delays. “Other Delays” as defined as delays
outside the reasonable control of Persi, including but not limited to delay in delivery of materials,
failure of suppliers, and weather.
27. Article 4.1 of the Standard Form, entitled “Contract Sum,” provides that the
Contract Sum for Contractor’s performance of the Contract shall be $600,000, subject to
additions and deductions as provided in the Contract Documents.
28. Both parties understood that the Contract Sum was not fully inclusive of the
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entire cost to complete construction of the Taco Bell restaurant. Indeed, other estimates provided
to EXXE for the Project were 1.5 to 2 times the Contract Sum.
29. Pursuant to Article 4.1, the Contract Sum is to be paid in 5 Progress Payments
of $120,000 each as follows:
Payment 1: Upon commencement of the Work
Payment 2: Upon completion of 25% of the Work
Payment 3: Upon completion of 50% of the Work
Payment 4: Upon completion of 75% of the Work
Payment 5: Upon completion of the Work
30. Pursuant to Section 9.4.2 of the General Conditions, each Progress Payment was
to be accompanied by a Certificate for Payment by the Architect which constituted the
Architect’s representation to the Owner (EXXE) that “to the best of the Architect’s knowledge,
information and belief, the Work has progressed to the point indicated, the quality of the Work is
in accordance with the Contract Documents, and the Contractor is entitled to payment in the
amount certified.”
31. As detailed below, notwithstanding Article 4.1, Section 9.4.2, and other
provisions of the Contract, the course of conduct of the parties was that Persi would periodically
present to EXXE a schedule of payments to subcontractors and other expenses related to the
Project, and EXXE would make payments to Persi pursuant to that schedule.
32. Pursuant to Section 3.7 of the General Conditions, EXXE was required to
“secure and pay for the building permit as well as for other permits, fees, licenses, and
inspections by government agencies necessary for proper executions and completion of the
Work.”
33. Pursuant to Section 14 of the Rider, EXXE agreed to pay any filing fees due and
payable in connection with the Project, pursuant to Section 16 of the Rider, EXXE agreed to
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obtain and pay for any inspections required in connection with the Project, and pursuant to
Section 18 of the Rider, EXXE agreed to obtain and pay for any permits required in connection
with the Project. All of these amounts were additional to, and not included in the Contract Sum.
34. Pursuant to Section 29 of the Rider, it is an Event of Default and Persi may
terminate the Contract if, inter alia, EXXE “(i) fails to use its best efforts to cooperate with
Contractor [Persi], the Architect, Engineer or an expediter in facilitating the Work or obtaining
Permit(s); (j) fails to comply with, or breaches, violates or defaults under any representation,
warranty or covenant under the Contract Documents; or (k) fails to comply with, or breaches,
violates, or defaults under any other term or condition of the Contract Documents.”
35. The Contract is subject to mandatory arbitration. Specifically, Article 6.2 of the
Standard Form, entitled “Binding Dispute Resolution,” provides as follows:
“Any controversy arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration administered by the American Arbitration
Association (the “AAA”) by a single arbitrator under its Construction Industry
Arbitration Rules, and judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitration shall take place at
an office of AAA located in the County of New York, State of New York. The
arbitrator shall award to the prevailing party, if any, as determined by the
arbitrator, all of its costs and fees. “Costs and fees” mean all reasonable pre-
award expenses of the arbitration, including, but not limited to, the arbitrator’s
fees, administrative fees, travel expenses, out-of-pocket expenses such as copying
and telephone, transcription costs, witness fees, and attorneys’ fees. Except as
may be required by law, neither of the parties nor the arbitrator may disclose the
existence, content, or results of any arbitration hereunder without the prior written
consent of the parties.”
36. Section 15.4 of the General Conditions similar provides for mandatory
arbitration of disputes arising out of or relating to the Contract. Specifically, Section 15.4 of
the General Conditions provides that
“Tf the parties have selected arbitration as the method for binding dispute resolution in the
Agreement, any Claim subject to, but not resolved by, mediation shall be subject to
arbitration which, unless the parties mutually agree otherwise, shall be administered by
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the American Arbitration Association in accordance with its Construction Industry
Arbitration Rules in effect on the date of the Agreement.”
C. The Modification
37. On November 2, 2022, the parties executed a Modification of Contract (the
“Modification’”).
38. The Modification changed the Architect from Bohler Engineering to BAR.
39. In addition, the Modification contained the following provision as Section 4:
Additional Plans. The attached plans (“Title Sheet T1.0”) are hereby added to the existing
plans incorporated into the Original Contract. Therefore, any reference to the Drawings,
Specifications and/or Plans of the project in the Contract Documents, including but not
limited to, Articles 1 and 9 of the Form A101, shall include both the original plans attached
to the Original Contract as well as Title Sheet T1.0 attached hereto.
40. The only plan attached to the Modification was a single sheet entitled Title Sheet
T1.0, entitled Taco Bell Drive Thru Restaurant Explorer Medium40.
41. EXXE subsequently claimed that an additional 69 pages of drawings were
purportedly also attached to the Modification (the “Additional Drawings”).
42, Notably, the Title Sheet T1.0 in the Additional Drawings does not match the Title
Sheet T1.0 attached to the Modification. Specifically, the Title Sheet T1.0 in the Additional
Drawings references Revisions “D” dated May 2019 that are nowhere referenced in the Title Sheet
T1.0 attached to the Modification.
43, In addition to the Revisions “D” dated May 2019, there are Revisions “B” dated
December 2016, and Revisions “C” dated March 2017. Notably, all of these revisions predate the
Project by several years. It is thus questionable whether these plans even apply to the Project, and
not some other Taco Bell store.
44, As the additional 69 pages were not attached to the Modification, they are not part
of the Modification.
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45. What is more, the discrepancy between the Title Sheet T1.0 attached to the
Modification and the Title Sheet T1.0 attached to the Additional Drawings, as well as the
discrepancy regarding the date of these plans, demonstrates that it is questionable whether these
plans even in fact relate to the Taco Bell store to be constructed at 90 Jericho Turnpike in Floral
Park, or in fact relate to another Taco Bell store.
D. Construction of The Taco Bell Store
46. Demolition of the existing structure at 90 Jericho Turnpike commenced in
November of 2020.
47. Due to the severity of the weather, construction could not continue during the
winter of 2021.
48. The concrete foundation was poured in March of 2021.
49. In order to help expedite the construction process, Fullerton Building Systems
(“Fullerton”) was retained to construct the exterior of the Taco Bell store by means of a
prefabricated shell. It was anticipated that the use of a prefabricated shell would reduce the
construction time by at least two (2) months.
50. The exterior of the Taco Bell restaurant was completed by spring, 2021.
51. Notwithstanding the fact that it was EXXE and not Persi that was responsible for
construction of the interior of the Taco Bell store, at EXXE’s request, Persi hired certain
subcontractors to work on the interior construction, with the agreement that EXXE would pay
these subcontractors. Specifically, for example, Persi retained subcontractors to install the
plumbing, refrigeration, fire systems, tile, mop sink, baby changing table, doors and locks.
52. In addition, also at EXXE’s specific request, Persi hired subcontractors to perform
other work that was likewise not on the plans, such as asphalt work, curb, dry well, sidewalk and
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site work, tree removal, and fencing.
53. Further, EXXE required, and Persi performed, certain roof upgrades not provided.
for on the plans, such a steelwork on the roof, secondary roof drains, spray foam insulation, a
temporary roof during construction, and upgrade from a 15 year roof to a 20 year roof.
54, All if this work was performed at the specific behest and direction of EXXE.
55. By late spring 2022, the exterior and interior of the Taco Bell restaurant were
substantially complete. In addition, a significant amount of site work, including paving and curbs,
was complete. Further, the electrical, plumbing, appliances, and air conditioning were installed.
56. Throughout the course of the construction of the Project, Persi would maintain a
running spreadsheet of its expenses and other financial outlays in connection with the Project,
including payments for permits, payments to subcontractors, payments for materials, and labor
costs.
57. Periodically, Persichilli of Persi would review this spreadsheet with Patiwana of
EXXE, and would request a payment based upon same.
58. EXXE and/or Patiwana made nine (9) separate payments pursuant to this course
of conduct between the parties. Specifically, EXXE and/or Patiwana made the following payments
on the following dates:
Date Payment Amount Check Number
11/15/2020 $35,000.00 1035!
01/17/21 $35,000.00 1037?
02/28/21 $80,000.00 10403
' This check states in the memo line “Demo 90 Jericho Tpke.”
> This check states in the memo lime “2™! payment (70,000)”
> This check states in the memo line “electrical, plumbing, etc.”
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06/16/21 $75,000.00 52404
06/16/21 $63,525.29 5241°
09/09/21 $84,447.03 2518°
09/09/21 $50,000.00 25197
09/09/21 $50,000.00 25208
12/3/21 $80,000.00 5261°
59. None of these payments were in the amount of $120,000, nor were any of them
accompanied by a Certificate for Payment by the Architect. This course of conduct demonstrates
that both parties deviated from Article 4.1 of the Contract, Section 9.4.2 of the General
Conditions, and any of the other provisions of the Contract related to Progress Payments.
Instead, the parties engaged in a course of conduct pursuant to which EXXE and/or Patiwana
paid Persi pursuant to Persi’s documented expenses, including payments to subcontractors, labor
and materials related to the Project.
60. What is more, EXXE and Patiwana continued to represent that they would pay
Persi the amounts owed to Persi. Indeed, as recently as April 21, 2022, Rick Bartlett of BAR
stated in writing that “Rajan [Patiwana] has stated that all of the financial issues will be
resolved.”
61. Yet notwithstanding this representation, no payments have been made to Persi
4 This check was issued from Patiwana individually rather than EXXE, and states in the memo line “90
Jericho Invoice #1.”
5 This check was issued from Patiwana individually rather than EXXE, and states in the memo line “90
Jericho Invoice #2.”
° This check states in the memo line “90 Jericho dated 9/7/21 invoices — 1.”
7 This check states in the memo line “90 Jericho dated 9/7/21 invoices — 2.”
* This check states in the memo line “90 Jericho dated 9/7/21 invoices — 3.”
° This check was issued from Patiwana individually rather than EXXE, and the memo line is illegible.
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since December 2021.
E. Delays Caused By EXXE
62. EXXE caused a significant number of delays in connection with the Project.
63. First, EXXE, specifically its principal Patiwana, as well as BAR, were repeatedly
unresponsive to inquiries by Persi related to the Project. Persi asked a number of questions related
to the Project, such as (i) regarding the required ceiling plans for the Taco Bell restaurant; (ii)
regarding the required tile layout for the Taco Bell restaurant; (ili) regarding light fixtures; (iv)
regarding the roof coping; (v) regarding cameras, and alarms; and (vi) regarding water, gas and
electric hook ups. For several months, EXXE and Patiwana provided no responses to any of these
issues, as well as numerous others.
64. BAR acknowledged in e-mail and other correspondence that (i) Patiwana was
unresponsive to e-mail and other correspondence; and (ii) there were issues as to who would be
Persi’s primary point of contact on the Project, and that this lack of communication caused delays.
65. Second, EXXE was repeatedly late in providing essential materials. As noted,
EXXE was the party in contact with Taco Bell, including regarding the requirements of the
franchise, and it was EXXE that was responsible for ordering and installing the equipment required
to open the Taco Bell store. EXXE was late in ordering and obtaining the necessary equipment.
Specifically, EXXE was late in ordering and obtaining, among other items; (i) glass for the drive-
through window, (ii) floor tile; (iii) fencing; (iv) air conditioners; (v) furniture; (vi) signage; and
(vii) ice machines This also delayed the Project several months.
66. Third, EXXE also failed to obtain and pay for the licenses, permits, and
inspections required in connection with the Project. As noted, pursuant to Section 3.7 of the
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General Conditions, EXXE was required to “secure and pay for the building permit as well as
for other permits, fees, licenses, and inspections by government agencies necessary for proper
executions and completion of the Work.” The specific licenses and permits that EXXE failed to
obtain and pay for include:
(i) Village of Floral Park mechanical, sewer and fence permit fees
(ii) Village of Floral Park plumbing permit
(iii) Village of Floral Park amended application fee
(iv) Nassau County Department of Health Certificate
(v) Nassau County Sewer Fee
(vi) Village of Floral Park Department of Buildings Fee
(vii) New York State Department of Transportation Fee
(viii) Fire inspection
(ix) Concrete testing
(x) Fire alarm
67. EXXE’s failure to comply with its contractual obligations with respect to
licenses, permits and inspections resulted in further delays.
68. Indeed, the required Highway Work Permit from the New York Department of
Transportation (“DOT”) was only obtained on February 28, 2022.
F. The Remaining Work Required To Complete The Project
69. Notwithstanding EXXE’s delays and failures to pay, work on the Project is
substantially complete. The exterior and interior of the Taco Bell restaurant were substantially
complete as of May 2022. In addition, a significant amount of site work, including paving and
curbs, is complete. Further, the electrical, plumbing, appliances, and air conditioning were
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installed.
70. Persi has repeatedly communicated to EXXE its willingness to complete any
alleged outstanding tasks in connection with the Project. For several months, the parties worked
to negotiate a resolution whereby Persi would be reimbursed its outstanding out of pocket costs,
and Persi would complete any alleged remaining tasks expeditiously, in approximately eight (8)
weeks.
71 EXXE repeatedly stalled during these negotiations, and would never agree to a
resolution.
72 Instead, as detailed below, on July 26, 2022 EXXE served a purported termination
notice.
G. The Alleged Termination Notic
723. Notwithstanding that Persi was weeks away from completing the remaining tasks
in connection with the Project, and the parties were negotiating the terms of that completion, on
July 26, 2022, EXXE abruptly sent a letter to Persi stating that EXXE was terminating the Contract
pursuant to Section 14.2.2 (the “Termination Notice”).!°
74. Notably, over the almost eighteen (18) month duration of the Project, EXXE had
never previously communicated any dissatisfaction with Persi’s performance or otherwise
'© Pursuant to Section 14.2.1 of the General Conditions, Owner may terminate the Contract if Contractor:
1 Repeatedly refuses or fails to supply enough properly skilled workers or proper
materials;
2. Fails to make payment to Subcontractors or suppliers in accordance with the
respective agreements between Contractor and the Subcontractor or suppliers;
3 Repeatedly disregards applicable laws, statutes, ordinances, codes, rules, regulations,
or lawful orders ofa public authority; or
4 Otherwise is guilty of substantial breach of a provision of the Contract Documents.
None of these conditions were satisfied here.
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indicated any reason or basis for termination.
75. Attached to the Termination Notice was a July 25, 2022 letter from the Architect,
stating that the Architect had conducted an inspection of the Project site and certifying that Persi
was allegedly in substantial breach.
76. The Architect cited the following purported grounds for termination
There were several periods of time throughout the project where there was
no activity on site that extended several days or weeks, and the Contractor
failed to properly staff the project with materials and/or construction staff.
iL The Contractor has not completed the project during an acceptable amount
of time, and the duration of construction is excessive, even with
consideration of materials availability, and shipping delays. These delays
have caused Owner significant financial losses.
iii The Contractor has failed to meet verbal timeframe commitments provided
to the owner.
IV. The Contractor has not provided a schedule for project completion despite
several requests for same.
Roof installation is not as per project documents or as requested by Owner.
Vi. Several other installations are not in compliance with project documents and
requirements.
77 Almost all of these items concern the timeframe for the Project. As discussed
above, the Contract notes that time is not of the essence in connection with the Project, and that
Persi is entitled to reasonable extensions of time to achieve Substantial Completion based upon,
among other things, Weather Delays, Covid-19 Delays, and Other Delays.
78. Further, as also noted, the delays were largely, if not completely the responsibility
of EXXE, as EXXE repeatedly failed to respond to requests for information, delayed in ordering
essential material, equipment and supplies, failed to obtain and pay for required licenses, permits
and inspections, and otherwise delayed and interfered with Persi’s ability to perform the work.
79. In addition, as noted, Persi stated that it was willing to complete any outstanding
work in approximately eight (8) weeks.
80. The allegations in the termination Notice were and are completely unfounded
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unsubstantiated.
81. Persi requested that AFM Inspections & Engineering, PLLC (“AFM”) inspect the
Project site and respond to the July 25, 2022 letter from BAR.
82. AFM was previously engaged to provide special inspections in connection with
the Project and, as such, was personally involved and bore personal witness to the progress of the
Project. In addition, AFM is located and works in close proximity to the Project site.
83. AFM concluded as follows:
Contrary to BAR’s claim, the Project was properly staffed and there were no
extended periods of inactivity at the site.
Any delays were due to EXXE’s failure to obtain permits, EXXE’s failure to
obtain required equipment, COVID-19 related delays, EXXE/ Patiwana’s
unresponsiveness, or holds on the work at the behest of EXXE/Patiwana.
Contrary to BAR’s contention, the Project was substantially complete
(including the site work, building shell, electrical, roof, interior, appliances,
and HVAC), and the items listed in BAR’s July 25, 2022 were either not in
fact incomplete or were minor “punchlist” type items of work.
The Project could be completed in approximately eight (8) weeks.
The termination letter is a fraudulent claim by EXXE in an effort to try and
pull the surety bond and have the surety pay to complete the Project.
84. Put simply, AFM concluded the Termination Notice was baseless and a fraudulent
effort to make a demand for completion under the surety bond.
85. Notably, the Landlord has repeatedly expressed to Persi its intent and desire to
take over the Project. The Landlord has a relationship with Taco Bell, and wants to take over the
Project along with EXXE and squeeze Persi out.
86. Persi thus has reason to believe that the Termination Letter, in addition to being a
fraudulent effort to pull the surety bond, is a subterfuge to allow EXXE and its Landlord to
misappropriate and take over construction of the Project at the surety’s (and Persi’s) expense.
H. EXXE’S Breaches of the Contract
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87. In addition to serving a baseless Termination Notice, EXXE has committed
several additional breaches of the Contract. EXXE’s breaches include, without limitation, the
following:
88. Pursuant to Section 14 of the Rider, EXXE agreed to pay any filing fees due and
payable in connection with the Project, pursuant to Section 16 of the Rider, EXXE agreed to
obtain and pay for any inspections required in connection with the Project, and pursuant to
Section 18 of the Rider, EXXE agreed to obtain and pay for any permits required in connection
with the Project.
89. EXXE has failed to obtain the inspections or pay these fees and expenses in
connection with the Project, which amounts have been paid by Persi. EXXE owes Persi
$33,924.00 for such filing fees, permits, inspections, and related professionals. Invoices
supporting these amounts have previously been provided.
90. EXXE also owes Persi $47,027.68 under the Contract.
91. EXXE also owes Persi $294,198.81 which Persi paid to other subcontractors at
the specific request and insistence of EXXE for work beyond the scope of the Project, and for
other expenses, such as for trailer and container rental. EXXE represented that “all of the
financial issues will be resolved,” but notwithstanding EXXE and BAR’s representations, the
significant amounts owed to Persi have been outstanding for months. Invoices supporting these
amounts have previously been provided.
92. EXXE also breached Section 2.3.5 (“The Owner shall also furnish any other
information or services under the owner’s control and relevant to the Contractor’s performance
of the Work with reasonable promptness after receiving the Contractor’s written request for
such information or services.”). On numerous occasions, Persi requested information from
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EXXE or requested calls or meetings to discuss the Project, but EXXE and Patiwana were
unresponsive, sometimes for weeks or months.
93. EXXE also breached Sections 10 and 29 of the Rider, in that, inter alia, EXXE
(i) has failed to “use its best efforts to cooperate with Contractor in connection with
Contractor’s performance of the Work or the application for the Permit(s) hereunder;” and (ii)
has failed “to use its best efforts to cooperate with Contractor, the Architect, Engineer, or an
expediter in facilitating the Work or obtaining Permit(s).” In addition to EXXE’s general
unresponsiveness, EXXE failed to provide information necessary for obtaining required permits
and licenses, which further delayed the Project. As just one example, EXXE delayed at least a
year in providing information and assistance required to obtain a required permit from the DOT,
which permit was also required to obtain water and gas permits.
94. EXXE and Patiwana also breached the agreement between the parties to
reimburse Persi’s payments to subcontractors, payments for permits, payments for materials,
labor costs, and other outlays, as exemplified and established by their course of conduct over
the course of at least eighteen (18) months during which EXXE and Patiwana would
periodically meet to review the Project and Persi’s expenses in connection with same, and
EXXE would pay those expenses.
COUNT I: BREACH OF CONTRACT
95. Claimant repeats and realleges the preceding paragraphs as if they were fully
set forth herein.
96. EXXE and Persi entered into the Contract, which is valid and binding.
97. Persi has performed its obligations under the Contract.
98. As detailed above, EXXE has breached the Contract.
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99. Further, EXXE and Patiwana also breached the agreement between the parties
established by, inter alia, their course of conduct that EXXE and Patiwana would pay Persi’s
expenses in connection with the Project.
100. As a proximate result of EXXE’s and Patiwana’s breaches, Persi has suffered
damages in an amount to be determined in the arbitration of this matter, but believed to be at
least $400,000.
COUNT Il: UNJUST ENRICHMENT
101. Claimant repeats and realleges the preceding paragraphs as if they were fully set
forth herein.
102. As an expected and intended result of their conscious wrongdoing as set forth in
this Statement of Claim, Respondents EXXE and Patiwana have been unjustly enriched to the
direct expense and detriment of Claimant Persi.
103. Under the circumstances, it would be inequitable for Respondents EXXE and
Preview
INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 EXHIBIT G INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 AMERICAN ARBITRATION ASSOCIATION NEW YORK REGIONAL OFFICE eee eee ene eee eee eee PERSI CONTRACTING CORP., Claimant, STATEMENT OF CLAIM -against- EXXE CORP. and RAJAN PATIWANA, Respondents. eee eee INTRODUCTION 1 This is a proceeding for breach of contract, unjust enrichment, and fraud relating to a construction project to build a Taco Bell restaurant at 90 Jericho Turnpike in Floral Park, Nassau County (the “Project”). Respondent EXXE Corp. (“EXXE”) through its principal Rajan Patiwana (“Patiwana”), approached Claimant Persi Contracting Corp. (“Claimant” or “Persi’’) through its principal Michael Persichilli (“Persichilli”) and asked that Persi provide construction and management services in connection with the Project. The parties entered into an agreement related to the Project (the “Contract’”), and work commenced in or about November 2020. 2. Through the course of the Project, Patiwana and Perichilli would periodically meet to go over the progress of the Project and Persi’s expenses related to same (including payments to subcontractors, payments for materials, labor costs, and other expenses). At these meetings, Patiwana made payments to Persi, and did so on at least nine (9) separate occasions. At no point during these meetings or otherwise did EXXE or Patiwana express any dissatisfaction regarding Persi’s performance in connection with the Project. 3 In the spring of 2022, the Project was substantially complete. But Patiwana refused to 3052005v1 FILED: NASSAU COUNTY CLERK 1272772023 12:44 PM INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 make any more payments to Persi. Indeed, for several months, Patiwana stopped all communications with Persichilli. 4 However, the architect on the Project continued to communicate with Persi and directed Persi to continue work. Indeed, the architect asked Persi for an estimate of the time to complete the Project, which Persi provided. 5 Then on July 26, 2022, EXXE abruptly sent a termination letter purporting to terminate Persi’s involvement in the Project, attaching a laundry list of supposed issues regarding Persi’s performance. 6. As detailed herein, these issues are merely a pretext for EXXE to seek to have the surety company that issued a bond in connection with the Project pay the cost of completion, or otherwise enable EXXE to evade the hundreds of thousands of dollars it owes to Persi, based upon documented payments to subcontractors and expenses for permits, materials, labor, and other costs Persi incurred in connection with the Project. 7 EXXE cannot be permitted to belatedly and fraudulently fabricate “issues” with Persi’s performance in order to avoid paying the amounts EXXE owes to Persi in connection with the Project. Rather, EXXE and its principal Patiwana must be required to pay Persi’s documented expenses — as EXXE and Patiwana did for the first 18 months of the Project. 8 Persi thus brings the present arbitration pursuant to the terms of the Contract. PARTIES 9. Persi is a New York corporation with its principal place of business at 804 Jericho Turnpike, Floral Park, New York 11040. 10. EXXE is a New York corporation with its principal place of business at 35 Bristol Drive, Manhasset, New York 11030. 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 11. Patiwana is an individual residing in Nassau County. 12. Non-party Bartlett, Amoruso & Reece Architects, P.C. (“BAR”) served as the Architect (the “Architect”) in connection with the Project (after BAR replaced the Architect originally named in the Contract, Bohler Engineering). BAR is a professional corporation with its principal place of business at 190 Motor Parkway, Suite 201, Hauppauge, New York 11788. JURISDICTION AND VENUE 13. This matter is subject to arbitration pursuant to the American Arbitration Association (“AAA”) Construction Industry Arbitration Rules pursuant to Article 6.2 and Section 15.4 of the Contract. 14. Pursuant to Article 6.2 of the Contract, the arbitration is to take place in the AAA office located in the County of New York, State of New York. FACTUAL BACKGROUND A. The Taco Bell Construction Project 15. In October 2020, Patiwana approached Persichilli regarding the Project to construct a Taco Bell store at 90 Jericho Turnpike in Floral Park in Nassau County, New York. 16. According to Patiwana, EXXE had purchased a franchise license from Taco Bell. EXXE desired to build the Taco Bell store on property EXXE was leasing from BHP Realty LLC (the “Landlord”). 17. Patiwana described that the Project would involve demolition of the existing structure and constructing the exterior of a new Taco Bell store. Patiwana explained that EXXE would be responsible for completing the interior of the store, including appliances, furniture, signage, and all requirements pursuant to EXXE’s franchise agreement with Taco Bell. Persi would be responsible for the demolition, construction of the exterior, and other items as agreed 3 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 to by the parties. 18. Persi would also function effectively as a construction manager, supervising the work of certain subcontractors performing work in connection with the Project. B. The Contract 19. In connection with the Project, EXXE and Persi entered into an AIA Document A101-2017 Standard Form of Agreement Between Owner and Contractor (the “Standard Form of Agreement”). Attached to the Standard Form of Agreement is an AIA Document A101-2017 Exhibit A regarding Insurance and Bonds (“Exhibit A”), an AIA Document A201-2017 General Conditions of the Contract for Construction (the “General Conditions”), a Rider to the Contract (the “Rider”), and ten (10) pages of drawings (the “Drawings”). 20. The Standard Form of Agreement, Exhibit A, General Conditions, Rider, and Drawings shall collectively be referred to as the “Contract.” 21. In the Contract, “Owner “ is defined as EXXE, and “Contractor” is defined as Persi. 22. The Contract, specifically Section 1.1.3 of the General Conditions, defines the “Work” to be performed pursuant to the Contract as “the construction and services required by the Contract Documents.” 23. The Contract, specifically Section 1.1.3 of the General Conditions, defines the “Drawings” as “the graphic and pictorial portions of the Contract Documents showing the design, location and dimensions of the Work, generally including plans, elevations, sections, details, schedules, and diagrams.” 24. Consistent with the discussions between Patiwana and Persichilli, the Drawings only depicted construction of the exterior of the Taco Bell store. Specifically, the Drawings 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 attached to the Contract were as follows S0.0 Cover Sheet $1.0 Anchor Bolt Plan $2.0 Wall Framing Plan $2.1 Schedules & Details $3.0 Roof Framing Plan S4.0 Exterior Elevations 84.1 Exterior Elevations $5.0 Wall Sections 9 $5.1 Wall Sections 10. S.5.2 Wall Sections 25. Article 3.3.1 of the Standard Form provided that the anticipated Substantial Completion Date was June 15, 2021. However, that same provision stated as follows: Notwithstanding, Contractor shall be entitled to a reasonable extension of time to achieve Substantial Completion of the Work in the event of delays resulting from weather, Covid-19 or other delays as set forth in the Rider at Paragraphs 21-23. The parties agree that time is not of the essence with respect to this date. (emphasis added). This provision that time was not of the essence with respect to the Project is not typical, indeed is highly unusual, and makes clear that extensions of time for Substantial Completion were contemplated and were to be reasonable and liberally provided. 26. In addition, pursuant to Sections 21, 22, and 23 of the Rider, Persi is entitled to reasonable extensions of time to achieve Substantial Completion based upon, respectively, Weather Delays, Covid-19 Delays, and Other Delays. “Other Delays” as defined as delays outside the reasonable control of Persi, including but not limited to delay in delivery of materials, failure of suppliers, and weather. 27. Article 4.1 of the Standard Form, entitled “Contract Sum,” provides that the Contract Sum for Contractor’s performance of the Contract shall be $600,000, subject to additions and deductions as provided in the Contract Documents. 28. Both parties understood that the Contract Sum was not fully inclusive of the 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 entire cost to complete construction of the Taco Bell restaurant. Indeed, other estimates provided to EXXE for the Project were 1.5 to 2 times the Contract Sum. 29. Pursuant to Article 4.1, the Contract Sum is to be paid in 5 Progress Payments of $120,000 each as follows: Payment 1: Upon commencement of the Work Payment 2: Upon completion of 25% of the Work Payment 3: Upon completion of 50% of the Work Payment 4: Upon completion of 75% of the Work Payment 5: Upon completion of the Work 30. Pursuant to Section 9.4.2 of the General Conditions, each Progress Payment was to be accompanied by a Certificate for Payment by the Architect which constituted the Architect’s representation to the Owner (EXXE) that “to the best of the Architect’s knowledge, information and belief, the Work has progressed to the point indicated, the quality of the Work is in accordance with the Contract Documents, and the Contractor is entitled to payment in the amount certified.” 31. As detailed below, notwithstanding Article 4.1, Section 9.4.2, and other provisions of the Contract, the course of conduct of the parties was that Persi would periodically present to EXXE a schedule of payments to subcontractors and other expenses related to the Project, and EXXE would make payments to Persi pursuant to that schedule. 32. Pursuant to Section 3.7 of the General Conditions, EXXE was required to “secure and pay for the building permit as well as for other permits, fees, licenses, and inspections by government agencies necessary for proper executions and completion of the Work.” 33. Pursuant to Section 14 of the Rider, EXXE agreed to pay any filing fees due and payable in connection with the Project, pursuant to Section 16 of the Rider, EXXE agreed to 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 obtain and pay for any inspections required in connection with the Project, and pursuant to Section 18 of the Rider, EXXE agreed to obtain and pay for any permits required in connection with the Project. All of these amounts were additional to, and not included in the Contract Sum. 34. Pursuant to Section 29 of the Rider, it is an Event of Default and Persi may terminate the Contract if, inter alia, EXXE “(i) fails to use its best efforts to cooperate with Contractor [Persi], the Architect, Engineer or an expediter in facilitating the Work or obtaining Permit(s); (j) fails to comply with, or breaches, violates or defaults under any representation, warranty or covenant under the Contract Documents; or (k) fails to comply with, or breaches, violates, or defaults under any other term or condition of the Contract Documents.” 35. The Contract is subject to mandatory arbitration. Specifically, Article 6.2 of the Standard Form, entitled “Binding Dispute Resolution,” provides as follows: “Any controversy arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association (the “AAA”) by a single arbitrator under its Construction Industry Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitration shall take place at an office of AAA located in the County of New York, State of New York. The arbitrator shall award to the prevailing party, if any, as determined by the arbitrator, all of its costs and fees. “Costs and fees” mean all reasonable pre- award expenses of the arbitration, including, but not limited to, the arbitrator’s fees, administrative fees, travel expenses, out-of-pocket expenses such as copying and telephone, transcription costs, witness fees, and attorneys’ fees. Except as may be required by law, neither of the parties nor the arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of the parties.” 36. Section 15.4 of the General Conditions similar provides for mandatory arbitration of disputes arising out of or relating to the Contract. Specifically, Section 15.4 of the General Conditions provides that “Tf the parties have selected arbitration as the method for binding dispute resolution in the Agreement, any Claim subject to, but not resolved by, mediation shall be subject to arbitration which, unless the parties mutually agree otherwise, shall be administered by 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 the American Arbitration Association in accordance with its Construction Industry Arbitration Rules in effect on the date of the Agreement.” C. The Modification 37. On November 2, 2022, the parties executed a Modification of Contract (the “Modification’”). 38. The Modification changed the Architect from Bohler Engineering to BAR. 39. In addition, the Modification contained the following provision as Section 4: Additional Plans. The attached plans (“Title Sheet T1.0”) are hereby added to the existing plans incorporated into the Original Contract. Therefore, any reference to the Drawings, Specifications and/or Plans of the project in the Contract Documents, including but not limited to, Articles 1 and 9 of the Form A101, shall include both the original plans attached to the Original Contract as well as Title Sheet T1.0 attached hereto. 40. The only plan attached to the Modification was a single sheet entitled Title Sheet T1.0, entitled Taco Bell Drive Thru Restaurant Explorer Medium40. 41. EXXE subsequently claimed that an additional 69 pages of drawings were purportedly also attached to the Modification (the “Additional Drawings”). 42, Notably, the Title Sheet T1.0 in the Additional Drawings does not match the Title Sheet T1.0 attached to the Modification. Specifically, the Title Sheet T1.0 in the Additional Drawings references Revisions “D” dated May 2019 that are nowhere referenced in the Title Sheet T1.0 attached to the Modification. 43, In addition to the Revisions “D” dated May 2019, there are Revisions “B” dated December 2016, and Revisions “C” dated March 2017. Notably, all of these revisions predate the Project by several years. It is thus questionable whether these plans even apply to the Project, and not some other Taco Bell store. 44, As the additional 69 pages were not attached to the Modification, they are not part of the Modification. 3052005v1 FILED: NASSAU COUNTY CLERK 1272772023 12:44 PM INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 45. What is more, the discrepancy between the Title Sheet T1.0 attached to the Modification and the Title Sheet T1.0 attached to the Additional Drawings, as well as the discrepancy regarding the date of these plans, demonstrates that it is questionable whether these plans even in fact relate to the Taco Bell store to be constructed at 90 Jericho Turnpike in Floral Park, or in fact relate to another Taco Bell store. D. Construction of The Taco Bell Store 46. Demolition of the existing structure at 90 Jericho Turnpike commenced in November of 2020. 47. Due to the severity of the weather, construction could not continue during the winter of 2021. 48. The concrete foundation was poured in March of 2021. 49. In order to help expedite the construction process, Fullerton Building Systems (“Fullerton”) was retained to construct the exterior of the Taco Bell store by means of a prefabricated shell. It was anticipated that the use of a prefabricated shell would reduce the construction time by at least two (2) months. 50. The exterior of the Taco Bell restaurant was completed by spring, 2021. 51. Notwithstanding the fact that it was EXXE and not Persi that was responsible for construction of the interior of the Taco Bell store, at EXXE’s request, Persi hired certain subcontractors to work on the interior construction, with the agreement that EXXE would pay these subcontractors. Specifically, for example, Persi retained subcontractors to install the plumbing, refrigeration, fire systems, tile, mop sink, baby changing table, doors and locks. 52. In addition, also at EXXE’s specific request, Persi hired subcontractors to perform other work that was likewise not on the plans, such as asphalt work, curb, dry well, sidewalk and 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 site work, tree removal, and fencing. 53. Further, EXXE required, and Persi performed, certain roof upgrades not provided. for on the plans, such a steelwork on the roof, secondary roof drains, spray foam insulation, a temporary roof during construction, and upgrade from a 15 year roof to a 20 year roof. 54, All if this work was performed at the specific behest and direction of EXXE. 55. By late spring 2022, the exterior and interior of the Taco Bell restaurant were substantially complete. In addition, a significant amount of site work, including paving and curbs, was complete. Further, the electrical, plumbing, appliances, and air conditioning were installed. 56. Throughout the course of the construction of the Project, Persi would maintain a running spreadsheet of its expenses and other financial outlays in connection with the Project, including payments for permits, payments to subcontractors, payments for materials, and labor costs. 57. Periodically, Persichilli of Persi would review this spreadsheet with Patiwana of EXXE, and would request a payment based upon same. 58. EXXE and/or Patiwana made nine (9) separate payments pursuant to this course of conduct between the parties. Specifically, EXXE and/or Patiwana made the following payments on the following dates: Date Payment Amount Check Number 11/15/2020 $35,000.00 1035! 01/17/21 $35,000.00 1037? 02/28/21 $80,000.00 10403 ' This check states in the memo line “Demo 90 Jericho Tpke.” > This check states in the memo lime “2™! payment (70,000)” > This check states in the memo line “electrical, plumbing, etc.” 10 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 06/16/21 $75,000.00 52404 06/16/21 $63,525.29 5241° 09/09/21 $84,447.03 2518° 09/09/21 $50,000.00 25197 09/09/21 $50,000.00 25208 12/3/21 $80,000.00 5261° 59. None of these payments were in the amount of $120,000, nor were any of them accompanied by a Certificate for Payment by the Architect. This course of conduct demonstrates that both parties deviated from Article 4.1 of the Contract, Section 9.4.2 of the General Conditions, and any of the other provisions of the Contract related to Progress Payments. Instead, the parties engaged in a course of conduct pursuant to which EXXE and/or Patiwana paid Persi pursuant to Persi’s documented expenses, including payments to subcontractors, labor and materials related to the Project. 60. What is more, EXXE and Patiwana continued to represent that they would pay Persi the amounts owed to Persi. Indeed, as recently as April 21, 2022, Rick Bartlett of BAR stated in writing that “Rajan [Patiwana] has stated that all of the financial issues will be resolved.” 61. Yet notwithstanding this representation, no payments have been made to Persi 4 This check was issued from Patiwana individually rather than EXXE, and states in the memo line “90 Jericho Invoice #1.” 5 This check was issued from Patiwana individually rather than EXXE, and states in the memo line “90 Jericho Invoice #2.” ° This check states in the memo line “90 Jericho dated 9/7/21 invoices — 1.” 7 This check states in the memo line “90 Jericho dated 9/7/21 invoices — 2.” * This check states in the memo line “90 Jericho dated 9/7/21 invoices — 3.” ° This check was issued from Patiwana individually rather than EXXE, and the memo line is illegible. 11 3052005v1 FILED: NASSAU COUNTY CLERK 1272772023 12:44 PM INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 since December 2021. E. Delays Caused By EXXE 62. EXXE caused a significant number of delays in connection with the Project. 63. First, EXXE, specifically its principal Patiwana, as well as BAR, were repeatedly unresponsive to inquiries by Persi related to the Project. Persi asked a number of questions related to the Project, such as (i) regarding the required ceiling plans for the Taco Bell restaurant; (ii) regarding the required tile layout for the Taco Bell restaurant; (ili) regarding light fixtures; (iv) regarding the roof coping; (v) regarding cameras, and alarms; and (vi) regarding water, gas and electric hook ups. For several months, EXXE and Patiwana provided no responses to any of these issues, as well as numerous others. 64. BAR acknowledged in e-mail and other correspondence that (i) Patiwana was unresponsive to e-mail and other correspondence; and (ii) there were issues as to who would be Persi’s primary point of contact on the Project, and that this lack of communication caused delays. 65. Second, EXXE was repeatedly late in providing essential materials. As noted, EXXE was the party in contact with Taco Bell, including regarding the requirements of the franchise, and it was EXXE that was responsible for ordering and installing the equipment required to open the Taco Bell store. EXXE was late in ordering and obtaining the necessary equipment. Specifically, EXXE was late in ordering and obtaining, among other items; (i) glass for the drive- through window, (ii) floor tile; (iii) fencing; (iv) air conditioners; (v) furniture; (vi) signage; and (vii) ice machines This also delayed the Project several months. 66. Third, EXXE also failed to obtain and pay for the licenses, permits, and inspections required in connection with the Project. As noted, pursuant to Section 3.7 of the 12 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 General Conditions, EXXE was required to “secure and pay for the building permit as well as for other permits, fees, licenses, and inspections by government agencies necessary for proper executions and completion of the Work.” The specific licenses and permits that EXXE failed to obtain and pay for include: (i) Village of Floral Park mechanical, sewer and fence permit fees (ii) Village of Floral Park plumbing permit (iii) Village of Floral Park amended application fee (iv) Nassau County Department of Health Certificate (v) Nassau County Sewer Fee (vi) Village of Floral Park Department of Buildings Fee (vii) New York State Department of Transportation Fee (viii) Fire inspection (ix) Concrete testing (x) Fire alarm 67. EXXE’s failure to comply with its contractual obligations with respect to licenses, permits and inspections resulted in further delays. 68. Indeed, the required Highway Work Permit from the New York Department of Transportation (“DOT”) was only obtained on February 28, 2022. F. The Remaining Work Required To Complete The Project 69. Notwithstanding EXXE’s delays and failures to pay, work on the Project is substantially complete. The exterior and interior of the Taco Bell restaurant were substantially complete as of May 2022. In addition, a significant amount of site work, including paving and curbs, is complete. Further, the electrical, plumbing, appliances, and air conditioning were 13 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 installed. 70. Persi has repeatedly communicated to EXXE its willingness to complete any alleged outstanding tasks in connection with the Project. For several months, the parties worked to negotiate a resolution whereby Persi would be reimbursed its outstanding out of pocket costs, and Persi would complete any alleged remaining tasks expeditiously, in approximately eight (8) weeks. 71 EXXE repeatedly stalled during these negotiations, and would never agree to a resolution. 72 Instead, as detailed below, on July 26, 2022 EXXE served a purported termination notice. G. The Alleged Termination Notic 723. Notwithstanding that Persi was weeks away from completing the remaining tasks in connection with the Project, and the parties were negotiating the terms of that completion, on July 26, 2022, EXXE abruptly sent a letter to Persi stating that EXXE was terminating the Contract pursuant to Section 14.2.2 (the “Termination Notice”).!° 74. Notably, over the almost eighteen (18) month duration of the Project, EXXE had never previously communicated any dissatisfaction with Persi’s performance or otherwise '© Pursuant to Section 14.2.1 of the General Conditions, Owner may terminate the Contract if Contractor: 1 Repeatedly refuses or fails to supply enough properly skilled workers or proper materials; 2. Fails to make payment to Subcontractors or suppliers in accordance with the respective agreements between Contractor and the Subcontractor or suppliers; 3 Repeatedly disregards applicable laws, statutes, ordinances, codes, rules, regulations, or lawful orders ofa public authority; or 4 Otherwise is guilty of substantial breach of a provision of the Contract Documents. None of these conditions were satisfied here. 14 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 indicated any reason or basis for termination. 75. Attached to the Termination Notice was a July 25, 2022 letter from the Architect, stating that the Architect had conducted an inspection of the Project site and certifying that Persi was allegedly in substantial breach. 76. The Architect cited the following purported grounds for termination There were several periods of time throughout the project where there was no activity on site that extended several days or weeks, and the Contractor failed to properly staff the project with materials and/or construction staff. iL The Contractor has not completed the project during an acceptable amount of time, and the duration of construction is excessive, even with consideration of materials availability, and shipping delays. These delays have caused Owner significant financial losses. iii The Contractor has failed to meet verbal timeframe commitments provided to the owner. IV. The Contractor has not provided a schedule for project completion despite several requests for same. Roof installation is not as per project documents or as requested by Owner. Vi. Several other installations are not in compliance with project documents and requirements. 77 Almost all of these items concern the timeframe for the Project. As discussed above, the Contract notes that time is not of the essence in connection with the Project, and that Persi is entitled to reasonable extensions of time to achieve Substantial Completion based upon, among other things, Weather Delays, Covid-19 Delays, and Other Delays. 78. Further, as also noted, the delays were largely, if not completely the responsibility of EXXE, as EXXE repeatedly failed to respond to requests for information, delayed in ordering essential material, equipment and supplies, failed to obtain and pay for required licenses, permits and inspections, and otherwise delayed and interfered with Persi’s ability to perform the work. 79. In addition, as noted, Persi stated that it was willing to complete any outstanding work in approximately eight (8) weeks. 80. The allegations in the termination Notice were and are completely unfounded 15 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 unsubstantiated. 81. Persi requested that AFM Inspections & Engineering, PLLC (“AFM”) inspect the Project site and respond to the July 25, 2022 letter from BAR. 82. AFM was previously engaged to provide special inspections in connection with the Project and, as such, was personally involved and bore personal witness to the progress of the Project. In addition, AFM is located and works in close proximity to the Project site. 83. AFM concluded as follows: Contrary to BAR’s claim, the Project was properly staffed and there were no extended periods of inactivity at the site. Any delays were due to EXXE’s failure to obtain permits, EXXE’s failure to obtain required equipment, COVID-19 related delays, EXXE/ Patiwana’s unresponsiveness, or holds on the work at the behest of EXXE/Patiwana. Contrary to BAR’s contention, the Project was substantially complete (including the site work, building shell, electrical, roof, interior, appliances, and HVAC), and the items listed in BAR’s July 25, 2022 were either not in fact incomplete or were minor “punchlist” type items of work. The Project could be completed in approximately eight (8) weeks. The termination letter is a fraudulent claim by EXXE in an effort to try and pull the surety bond and have the surety pay to complete the Project. 84. Put simply, AFM concluded the Termination Notice was baseless and a fraudulent effort to make a demand for completion under the surety bond. 85. Notably, the Landlord has repeatedly expressed to Persi its intent and desire to take over the Project. The Landlord has a relationship with Taco Bell, and wants to take over the Project along with EXXE and squeeze Persi out. 86. Persi thus has reason to believe that the Termination Letter, in addition to being a fraudulent effort to pull the surety bond, is a subterfuge to allow EXXE and its Landlord to misappropriate and take over construction of the Project at the surety’s (and Persi’s) expense. H. EXXE’S Breaches of the Contract 16 3052005v1 FILED: NASSAU COUNTY CLERK 1272772023 12:44 PM INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 87. In addition to serving a baseless Termination Notice, EXXE has committed several additional breaches of the Contract. EXXE’s breaches include, without limitation, the following: 88. Pursuant to Section 14 of the Rider, EXXE agreed to pay any filing fees due and payable in connection with the Project, pursuant to Section 16 of the Rider, EXXE agreed to obtain and pay for any inspections required in connection with the Project, and pursuant to Section 18 of the Rider, EXXE agreed to obtain and pay for any permits required in connection with the Project. 89. EXXE has failed to obtain the inspections or pay these fees and expenses in connection with the Project, which amounts have been paid by Persi. EXXE owes Persi $33,924.00 for such filing fees, permits, inspections, and related professionals. Invoices supporting these amounts have previously been provided. 90. EXXE also owes Persi $47,027.68 under the Contract. 91. EXXE also owes Persi $294,198.81 which Persi paid to other subcontractors at the specific request and insistence of EXXE for work beyond the scope of the Project, and for other expenses, such as for trailer and container rental. EXXE represented that “all of the financial issues will be resolved,” but notwithstanding EXXE and BAR’s representations, the significant amounts owed to Persi have been outstanding for months. Invoices supporting these amounts have previously been provided. 92. EXXE also breached Section 2.3.5 (“The Owner shall also furnish any other information or services under the owner’s control and relevant to the Contractor’s performance of the Work with reasonable promptness after receiving the Contractor’s written request for such information or services.”). On numerous occasions, Persi requested information from 17 3052005v1 FILED: NASSAU COUNTY CLERK 1272772023 12:44 PM INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 EXXE or requested calls or meetings to discuss the Project, but EXXE and Patiwana were unresponsive, sometimes for weeks or months. 93. EXXE also breached Sections 10 and 29 of the Rider, in that, inter alia, EXXE (i) has failed to “use its best efforts to cooperate with Contractor in connection with Contractor’s performance of the Work or the application for the Permit(s) hereunder;” and (ii) has failed “to use its best efforts to cooperate with Contractor, the Architect, Engineer, or an expediter in facilitating the Work or obtaining Permit(s).” In addition to EXXE’s general unresponsiveness, EXXE failed to provide information necessary for obtaining required permits and licenses, which further delayed the Project. As just one example, EXXE delayed at least a year in providing information and assistance required to obtain a required permit from the DOT, which permit was also required to obtain water and gas permits. 94. EXXE and Patiwana also breached the agreement between the parties to reimburse Persi’s payments to subcontractors, payments for permits, payments for materials, labor costs, and other outlays, as exemplified and established by their course of conduct over the course of at least eighteen (18) months during which EXXE and Patiwana would periodically meet to review the Project and Persi’s expenses in connection with same, and EXXE would pay those expenses. COUNT I: BREACH OF CONTRACT 95. Claimant repeats and realleges the preceding paragraphs as if they were fully set forth herein. 96. EXXE and Persi entered into the Contract, which is valid and binding. 97. Persi has performed its obligations under the Contract. 98. As detailed above, EXXE has breached the Contract. 18 3052005v1 INDEX NO. 616472/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 12/27/2023 99. Further, EXXE and Patiwana also breached the agreement between the parties established by, inter alia, their course of conduct that EXXE and Patiwana would pay Persi’s expenses in connection with the Project. 100. As a proximate result of EXXE’s and Patiwana’s breaches, Persi has suffered damages in an amount to be determined in the arbitration of this matter, but believed to be at least $400,000. COUNT Il: UNJUST ENRICHMENT 101. Claimant repeats and realleges the preceding paragraphs as if they were fully set forth herein. 102. As an expected and intended result of their conscious wrongdoing as set forth in this Statement of Claim, Respondents EXXE and Patiwana have been unjustly enriched to the direct expense and detriment of Claimant Persi. 103. Under the circumstances, it would be inequitable for Respondents EXXE and