Construction Law Blog

Enforcement of New York Arbitration Awards

Posted on Wed, Jul, 01, 2015

 

An arbitrator has ruled in your favor. What do you do now? In a perfect world, the other side would just pay you and be done with it, but we all know that this world is less than perfect, and you may find yourself having to enforce your arbitration award. Before you can avail yourself of the enforcement techniques that are provided by New York law, you’re going to have to follow some formalities. The followingelements may be necessary for have your arbitration award 'confirmed' and seek collections.

  1. THE ARBITRATION AWARD MUST BE CONFIRMED BY THE COURT

 At the end of the arbitration, the arbitrator issues a written decision and delivers a copy to each party. At this point, the arbitration award does not have the same effect as a judgment issued by a court and cannot be enforced in the same manner, but it can become a judgment. In order to do that, you must first have the award confirmed by a court.[1]

Whenever you ask a court to step into a dispute involving an arbitration, you have to file a type of suit called a special proceeding. The court will schedule a hearing on your request and, unless circumstances warrant a court’s refusing to confirm the award, the court will issue a judgment confirming the award. (Without going too far into it, a court might refuse to confirm an award if the other party is in bankruptcy,[2] if the terms of the award are illegal,[3] or if the arbitrator committed some form of misconduct such as refusing to hear relevant witnesses or evidence.[4]) Assuming that the court confirms the arbitration award, the court will issue a judgment.

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A word of caution is in order: New York law requires that an application to confirm an award be made within one year of the arbitrator’s delivery of the award to the parties.[5] A failure to seek confirmation is one of the grounds for denying a petition to confirm an award,[6] so you would do well to seek legal counsel regarding confirming and enforcing the award promptly after receiving it.

       2. THE JUDGMENT CONFIRMING THE ARBITRATION AWARD MUST BE FILED

Once the award has been confirmed and a judgment issued, the judgment must be entered,[7] which is done by filing it with the county clerk in the county where the judgment was issued. Other documents which must be filed with the county clerk as part of this process are copies of the arbitration agreement, the arbitration award, and each paper that was served by the parties in connection with the special proceeding or motion to confirm the award (these are called the “judgment-roll”).[8] This filing puts your judgment on record and allows you to begin enforcement proceedings.

      3. THE JUDGMENT CREDITOR LOCATES AND FREEZES THE JUDGEMENT DEBTOR'S ASSETS

Now that your arbitration award has been converted into a judgment, you can take advantage of the numerous enforcement techniques that are available under New York’s Civil Practice Law and Rules. At this point, you have become a judgment creditor, and the person who owes you has become a judgment debtor. Your enforcement effort has three steps: identifying assets that belong to the judgment debtor; freezing those assets; and getting them turned over to you.

Possibly the most important factor in enforcing your award is locating assets that might satisfy the judgment. To do this, the Civil Practice Law and Rules allow a court or a judgment creditor’s attorney to issue subpoenas requiring judgment debtors and others in possession of a judgment debtor’s assets, such as banks, to be questioned under oath, to produce documents, or to produce information.[9] Typically, your attorney issues information subpoenas to the judgment debtor and any banks at which you have reason to believe the judgment debtor has accounts; the judgment debtor and banks are required to respond with information regarding the judgment debtor and its assets. Another way for your attorney to attempt to locate the judgment debtor’s property is to question him under oath. If the judgment debtor refuses to respond to your information subpoena or appear to be questioned, you may be able to ask the court to fine and arrest the judgment debtor for contempt.[10]

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To prevent the judgment debtor from hiding or doing away with assets once you locate them, the Civil Practice Law and Rules allow a court or a judgment creditor’s attorney to issue restraining notices. Once a restraining notice has been served on a judgment debtor—or anyone in possession of the judgment debtor’s assets, such as a bank—that person is forbidden to move those assets unless directed to do so by a sheriff or court order until the judgment is satisfied.[11]

Once assets have been located and restrained, the final step is to release those assets into your hands to satisfy the judgment. The judgment creditor may ask the court to order that the judgment creditor or his bank (or other person in possession of his property) give money or property to the judgment creditor to put toward the judgment.[12] The judgment creditor’s attorney can also submit an income execution to the county sheriff to garnish the judgment debtor’s wages until the judgment is satisfied,[13] in which case the sheriff’s office collects periodic payments from the judgment debtor’s wages and forwards them to the judgment creditor’s attorney. Finally, the judgment creditor can place a levy on the judgment debtor’s real estate or personal property (i.e. cars, televisions, etc.) by submitting a property execution to the sheriff’s office[14] and, in some cases, can have the judgment debtor’s property sold to satisfy the judgment.[15]

There are, of course, exceptions to your ability to freeze and obtain the judgment debtor’s assets. The Civil Practice Law and Rules forbid the restraint of certain types of funds in a judgment debtor’s account, including most kinds of public assistance money and 90% of wages earned in the last sixty days; they prohibit the sheriff’s office from taking more than a certain amount of the judgment debtor’s disposable income through an income execution; and they allow a judgment debtor to claim exemptions for certain property so that it cannot be seized to satisfy a judgment, including the judgment debtor’s own home. Your attorney can discuss these in more detail with you. Basically, the judgment debtor is entitled to have a certain amount to live on, and your enforcement efforts can only reach the surplus.

New York law allows the winner of an arbitration to collect on it in the same manner as a judgment issued in connection with a court case. Although there is no guarantee that the other party will have assets from which the award can be satisfied, New York law provides an array of techniques which, in the hands of an experienced attorney, may help you satisfy that debt.

Your comments and future article topic suggestions are invited in the field below.

John Caravella, construction attorneyThe author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (631) 608–1356 or (516) 462-7051.

     This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.



[1] N.Y. C.P.L.R. 7510.

[2] Taylor v. Brodt, 90 Misc. 2d 793, 396 N.Y.S.2d 143 (Sup. Ct. N.Y. Co. 1977).

[3] Meyers v. Kinney Motors, Inc., 32 A.D.2d 266, 301 N.Y.S.2d 171 (1st Dep’t 1969).

[4] Katz v. Uvegi, 18 Misc. 2d 576, 187 N.Y.S.2d 511 (Sup. Ct. Queens Co. 1959) aff'd, 11 A.D.2d 773, 205 N.Y.S.2d 972 (2nd Dep’t 1960).

[5] N.Y. C.P.L.R. 7510.

[6] Salamon v. Friedman, 11 A.D.3d 700, 783 N.Y.S.2d 651 (2nd Dep’t 2004).

[7] N.Y. C.P.L.R. 7514(a).

[8] N.Y. C.P.L.R. 7514(b).

[9] N.Y. C.P.L.R. 5224.

[10] N.Y. C.P.L.R. 5210.

[11] N.Y. C.P.L.R. § 5222(b).

[12] N.Y. C.P.L.R. 5225.

[13] N.Y. C.P.L.R. 5231.

[14] N.Y. C.P.L.R. 5230.

[15] N.Y. C.P.L.R. §§ 5233, 6236.

Tags: arbitration, construction arbitration, long island arbitration

New Contractor Regulation Effective December 2014

Posted on Tue, Nov, 18, 2014

 

Residential contractors in New York will soon be required to provide certain homeowners with information relating to the benefits and costs of having automatic fire sprinkler systems installed.

The New York Legislature, this past August, passed emendments to the General Business Law and the Executive Law. These amendments will require all contractors in New York constructing single or 2 family homes, fewer than three stories, to provide the owner with written materials, to be prepared by the Office of Fire Prevention and Control.

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If the buyer chooses to have such a system installed, the builder is required to install the fire sprinkler system (at the owner’s expense). These changes appear in a new Article 35-F of the General Business Law, Sections 759 and 759-a, and a new Section 156, subdivision 21 of the Executive Law.

They take effect on December 3, 2014. Although the Office of Fire Prevention and Control has not yet released the materials you will need, you can check back at their Web site at http://www.dhses.ny.gov/ofpc/ for those materials to be released in advance of the effective date of the law. The full text of the law, Chapter 201 of the Laws of 2014, is available at http://public.leginfo.state.ny.us/frmload.cgi?MENU-40526013.

Your comments and future article topic suggestions are invited in the field below.

John Caravella, construction attorney The author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (516) 462-7051.

     This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice.

Tags: Long Island Contractors, Construction, Pending Legislation, New York Construction Law, Long Island Builders, contractor regulation, Construction Specifications, regulations

John Caravella awarded 2014 Leadership in Law Award

Posted on Sat, Nov, 08, 2014

 

UNIONDALE, NEW YORK (Nov. 8, 2014) – LIConstructionLaw.com attorney John Caravella was recently named 2014 Leadership in Law Award winner in its sole practitioner category as decided by nominating members of the Long Island business community.

This is the second time in two years John Caravella has received recognition from the Long Island business community, having previously been named to its “Ones to Watch in Long Island Law” listing in 2012.

Caravella was one of 32 attorneys across various practice areas selected this year by the Long Island business community for recognition in its Leadership in Law Award, which ‘is dedicated to those individuals whose leadership, both in the legal profession and in the community, have had a positive impact on Long Island.’

“To be recognized by the Long Island business community in this way is a high honor, and I will continue working to maintain and build upon this recognition,” said Caravella. “I am extremely proud to have earned the trust and confidence of my construction industry clientele, who are the Long Island business community.”

The Leadership in Law Awards will be presented Thursday November 13, 2014, at the Crest Hollow Country Club, Woodbury New York. For further information on attending call the Long Island Business News at 631-737-1700.

Your comments and future article topic suggestions are invited in the field below.

John Caravella, construction attorney The author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (516) 462-7051.

This is a general information article and should not be construed as legal advice or legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for specific advice on their concern.

Tags: Construction Litigation, Construction Networking, New York Construction Law, Leadership in Law Award

Punitive Damages Claims in New York Construction Contract Disputes

Posted on Tue, Oct, 14, 2014

     One topic that came up in my practice recently was a contractor's potential exposure to liability for punitive damages under New York law. As the name suggests, punitive damages are awarded above and beyond their contract or property damages, 'where the wrong done was aggravated by circumstances of violence, oppression, malice, fraud, ... on the part of the defendant, and are intended to address the plaintiff's mental anguish or other aggravation, to punish the defendant for its behavior.' Black's Law Dictionary 390 (6th Ed. 1991).

     Such additional damages may be awarded by New York courts against a party as a form of civil punishment or to make an example as to public policy considerations for conduct that is found to be especially wrongful. In other words, if you fail to pay a subcontractor and the subcontractor sues you, the subcontractor will be entitled to the money owed. If your conduct meets certain criteria, you might also face liability for an additional award, above and beyond what is owed, just to punish you. The purpose of this type of damage award is to deter particularly bad conduct.

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     Although you need to consult an attorney to determine whether you may be exposed to liability for punitive damages in any specific situation, some general rules appear in the court decisions. First, punitive damages are generally not available in the realm of a construction contract dispute. Although failing to perform contract requirements will cause liability, it usually will not be enough, in and of itself, to susbstantiate a claim for punitive damages (although the underlying contract obligation remains uneffected).

     Additional conduct must additionally occur which is deemed especially bad, such as committing fraud, misrepresentation, or some other type of wrong—what is called a “tort” in legal circles. New York’s highest court, the Court of Appeals, affirmed some time back that a party who only wants to get what he or she is owed under a contract does not have a tort claim, and, without such a claim, a party cannot obtain punitive damages.[1]

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     With respect to the construction business, plaintiffs in several cases have attempted to obtain punitive damages against a contractor, only to fail because the contractor’s conduct was not wrongful enough to justify punitive damages. In Schneer v. Bellantoni, the court declined to award punitive damages against a contractor even though he was not licensed as the building code required,[2] and, in Heller v. Louis Provenzano, Inc., the court refused to award punitive damages against a contractor that had failed to obey safety regulations when building.[3] Without getting into how morally good or bad these failures are, it seems clear that they are, if anything, careless rather than specifically calculated to do harm, and so punitive damages were not available in those situations.

     Second, even if a party acts wrongfully, punitive damages are not available for misconduct that only affects a private individual. The Court of Appeals has said that a private party seeking punitive damages has to show not only that the person they are suing acted wrongfully “but also that such conduct was part of a pattern of similar conduct directed at the public generally.”[4] Conduct that is the regular practice of a party, as opposed to isolated conduct that was only directed at one individual, is needed for punitive damages to be available.[5] On this theme, at least one court has found that claims against a construction contractor for defective and incomplete work are enough to maintain a claim for punitive damages under the state’s consumer protection statute,[6] but the courts have held that this statute, too, requires a showing that the wrongful conduct was directed at the public rather than just one individual consumer.[7] In practice, this means that you would normally not be liable for punitive damages for one isolated mistake; however, the application of the state’s consumer protection statute to construction contract disputes suggests that conduct that is directed at consumers such as residential homeowners may be monitored by the courts more strictly.

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     On the other hand, there are some circumstances when one isolated act can still affect the public enough to justify an award of punitive damages. To illustrate, in H. Novinson & Co., Inc. v. City of New York,[8] the City of New York was found to have grounds for seeking punitive damages against a contractor who had billed for work that had not been performed. In that instance, public moneys were expended because of the contractor’s false billing, and the tax base—and the public—were harmed. The lesson to take from cases like this is that New York contractors must be extra scrupulous when working on public improvements because the public has an interest in those projects, so the public interest angle of a claim for punitive damages may be easier to satisfy.

     Ultimately, in the punitive damages cases, the courts seems to have distinguished between careless or unintentional conduct, which does not support an award of punitive damages, and conduct which was calculated to cause harm and which was directed either at members of the public in general or at public funds. The rule remains, however, that private contract disputes are generally not a proper case to seek punitive damages.

     Your comments and future article topic suggestions are invited in the field below.

      John Caravella, construction attorneyThe author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (631) 608–1356 or (516) 462-7051.
     This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

[1] New York Univ. v. Cont'l Ins. Co., 87 N.Y.2d 308, 316 (1995).

[2] 250 A.D.2d 666, 672 N.Y.S.2d 756 (2nd Dep’t 1998).

[3] 303 A.D.2d 20, 25, 756 N.Y.S.2d 26, 31 (1st Dep’t 2003).

[4] Rocanova v. Equitable Life Assur. Soc. of U.S., 83 N.Y.2d 603, 613 (1994).

[5] Walker v. Sheldon, 10 N.Y.2d 401, 406 (1961).

[6] Ma v. Peters Const. Grp., Inc., 30 Misc. 3d 1202(A), 958 N.Y.S.2d 646 (Sup. Ct. Queens Co. 2010).

[7] C=Holdings B.V. v. Asiarim Corp., 12 CIV. 928 RJS, 2013 WL 6987165 (S.D.N.Y. Dec. 16, 2013).

[8] 53 A.D.2d 831, 385 N.Y.S.2d 317, 318 (1st Dep’t 1976).
 

 

 


Tags: Construction Litigation, Construction Contract, Long Island Contractors, Contractor Liability, construction contract terms, Architect Liability, New York Construction Law, construction contract law, Private Construction, construction risk evaluation, subcontractor agreements, subcontractor, Long Island Builders, construction risk management

Homeowner Court Ruling Serves as a Reminder to New York Contractors

Posted on Thu, May, 15, 2014

A recent ruling issued by the Supreme Court, County of Nassau, serves as a reminder to New York contractors performing residential work of the importance and necessity in having a home improvement license if you need legal action to pursue payment on the project.

In this homeowner victory, represented by The Law Offices of John Caravella, P.C. in a matter entitled Holistic Homes ,LLC v. Alan B. Greenfield and Hudson City Savings Bank, the court found unconvincing the various excuses presented in its attempt to portray itself as anything other than a home improvement contractor pursuant to the Nassau County Administrative Code.

The matter concerned work performed on the owner's property to remedy damage caused by Hurricane Sandy. When a dispute as to payment arose, the contractor filed its lien on the owner's property and commenced legal action to seek recovery on its lien.

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When challenged on the status of its license, the contractor then attempted to explain that it was not on the project as a contractor, rather based on some alleged personal form, as "fraternal brother", which failed to be persuasive nor did it relieve the contractor's statutory licensing requirement. The Court was further reluctant to excuse the statutory licensing requirement when the work performed was emergency repair work as made necessary across Long Island resulting from Hurricane Sandy.

Subsequently through litigation, the contractor admitted that it was not licensed as a home improvement contractor in Nassau County.

Without having a valid Nassau County Home Improvement Contractor's License, contractor's complaint for damages was dismissed and the lien vacated.

"Thus, a contractor who does not possess a license required by local law may not enforce a home improvement contract. This is true irrespective of whether the suit sounds in breach of contract or quantum meruit (Al-Sullami v Broskie, 40 AD3d 102[2d Dept. 2007]) or a claim made in the context of a lien foreclosure (Ellis v Gold, 204 AD2 261 [2d Dept. 1994] or an arbitration. Al-Sullami v. Broskie, supra.

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Not even the necessity of prompt remedial efforts needed in the immediate aftermath of Hurricane Sandy is enough for the strict requirement for a licensure to seek legal action on any claims for payment.

New York contractors are reminded of the importance to regularly ensure that their licenses, contracts, and insurance coverages are properly tailored to serve the needs of your business and project types.

In addition to litigating construction issues, this office routinely provides review and consultation services to contractors to ensure their contracts, business practices as well as their required licenses and insurance policies are in proper working order or identify areas of potential exposure which could be better managed.

Your comments and future article topic suggestions are invited in the field below.

John Caravella construction lawyerThe author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Offices of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (516) 462-7051. 

This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

Tags: Construction Litigation, New York Construction Liens, New York Contractor Liens, lien foreclosure, contractor regulation, Licensing

Subcontractor Challenges under the New York Lien Law

Posted on Mon, Sep, 09, 2013

The adage that you can not get blood from a stone may have its place in the rationale of New York Lien Law. Not that you will find this term included in any of the sections of the law, but this concept of reality is reflected in the hierarchy, structure, and availability of funds in the occurrence of a construction dispute.

With the understanding that an owner should not be required to pay for the same work twice, the owner's maximum liability or financial obligation on the project is the amount owed to the general contractor, or the 'Lien Fund.' For the contractor seeking payment this is not a tremendous burden, as the contractor most likely has a contract directly with the owner, and has its monthly administration files available to establish any amounts that may be owed.

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But the same can not be said for the subcontractor, who typically will not have a contract directly with the owner, nor does it have access to all of the contract administration between owner and contractor. Being further down the chain of construction and without direct contact to the owner causes additional challenges to the subcontractor or supplier in seeking to enforce their New York lien rights.

  • Challenge 1:  Must be a 'Lien Fund' of available funds to claim against

Of the money due and owing to the contractor by the owner, there must be some portion still available to satisfy the claims of any subcontractor or supplier. The New York Lien Law definition of Lien Fund is available here

"[The] critical issue is whether there are funds due and owing from the owner to the general contractor." DiVeronica Bros. Inc. v. Basset, 213 A.D.2d 936

  • Challenge 2:  Burden of proving existence of Lien Fund belongs to subcontractor

It falls on the subcontractor, or any party seeking to enforce their lien, to prove that money was due, or thereafter became due, from the owner to the contractor at the time the lien is filed, the lien would be void as there is no fund to which the lien can attach.

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A 2011 decision of the New York Appellate Court confirms the uphill burden placed on those down-chain from the owner. For a subcontractor in New York seeking to enforce its lien, establishing that there remained a balance owing is insufficient to establish a lien fund. JMP Plumbing and Heating Corp. v. 317 East 34th Street, LLC, 89 A.D.3d 593, 933 N.Y.S.2d 252 (1st Dep't 2011).

"A subcontractor's lien can only be satisfied out of funds 'due and owing from the owner to the general contractor.....[Subcontractor(s) bear] the initial burden of showing that funds were, in fact, due and owing.'

A subcontractor's failure or inability to prove the amount due and owing to the general contractor can be a bar to the subcontractor's ability to collect on its lien. The existence of a remaining balance due subcontractor does not establish that the owner is obligated to pay those funds, especially where the owner may also be asserting a claim against the general contractor.

Each subsequent tier of contractors, subcontractors, and suppliers has its own 'Lien Fund' available for recovery of its claims (and only to the extent a 'Lien Fund' exists). A Lien can only attach to the funds owed to the party directly above the claiming party. Philan Dept. of Borden Co. v. Foster-Lipkins Corp.

For the New York Subcontractor, you must not only have a Lien Fund available for you to claim against, but you also have to be able to establish those amounts as Due and Owing as beyond just an open balance. Additional research is required to confirm that the owner has no valid reasons for any non payment to the contractor.

Your comments and future article topic suggestions are invited in the field below.

John Caravella construction lawyerThe author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (516) 462-7051.

This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

Tags: New York Lien Law, Long Island Contractors, New York Construction Law, construction risks, Private Construction, subcontractor agreements, Defective Liens, New York Construction Liens, New York Contractor Liens, Homeowner lien dispute, subcontractor, lien rights, lien foreclosure, burden of proof, lien fund, lien trust fund

Design Professional Liability on Completed Work

Posted on Mon, Feb, 11, 2013

For New York Architects, Landscape Architects, Engineers, and Land Surveyors, exposure to liability on their completed projects may extend long beyond the completion of the project itself. Exactly how long design professionals can be 'on the hook' for claims has been a bit of a moving target in New York, with changes and proposed additional changes to this timeframe.

How long a design professional can be liable for claims, including claims from third-parties, has been goverened by the Statute of Limitations. Generally this has provided three years for a design professional malpractice action, and six years for a breach of contract claim.

 

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The New York State Court of Appeals in 1995 clarified this in holding that claims against design professionals is time barred three years after completion of construction. Newburgh v. Hugh Stubbins & Associates, 85 NY2d 535.

Subsequently the New York State Legislature passed CPLR 214-d, which allows a third party (any injured person who was not the client of the design professional) to bring forth claims against the design professional within three years of their loss or injury, even if such loss or injury occurs 40 or more years from completion. In fact, this regulation only looked at the length of time from the date of injury and made no reference to when the construction actually was completed.

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"... a design professional ... is goverened by a three year statute of limitations and the cause of action does not accrue until the injury takes place - even if the plaintiff is injured 20, 30, 50, or 100 years after the design professional has completed work on the building or structure."

The effect of this is to cause New York design professionals to be potentially liable for any injuries suffered to third persons on the completed work, even where the architect is not responsible for long term maintenance. Further, often times the design professional may not have been additionally retained to supervise the actual construction itself, and in defending such a claim so many years beyond completion witness memories may fade, or witnesses may no longer be available and can have the effect of forcing New York design professionals to maintain their malpractice insurance coverage indefinitely.

In seeking to address these unintended consequences, in 2011 the New York Senate introduced S4782-2011 seeking to amend the effects of section 214(d) by among other things establish a new ten year statute of repose for professional injury or wrongful death actions brought against professional engineers, architects, landscape architects, land surveyors or construction contractors. This would eliminate the current legal landscape where the design professional has no effective time limit on how long it could remain liable to third parties beyond project completion.

S4782-2011 is still a pending bill in senate subcommittee, and has not yet been enacted into law. Design professionals in New York are encouraged to maintain their records forever, as you could need them in defending against such claims.

Design professionals are also encouraged to reach out to your New York State Senators and Assemblymen to explain the unintended and harsh consequences caused by CPLR 214-d, and urge their support on S4782-2011.

Your comments and future article topic suggestions are invited in the field below.

John Caravella construction lawyerThe author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (516) 462-7051.

This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

Tags: Construction Litigation, design defects, Pending Legislation, Architect Liability, New York Construction Law, land surveyor liability, land surveying malpractice, professional liability, construction risks

Construction Risk Management

Posted on Wed, Dec, 12, 2012

Construction Risk Management

Part 1 of this Article, Understanding Risks in Construction, defines the concept of risk as it pertains to construction, addresses the various forms of risk which can effect a construction project, and methods for evaluation of this risk on a project by project basis.

With an understanding of risk, and its various forms and sources impacting the project, steps can be taken to manage this risk pro-actively. The process of managing these risks in the best interest of the project itself requires more planning and strategy than producing contract terms which look to make certain parties responsible for everything. It is highly beneficial to address contractual risk through improving both contract language clarity and contract administration practices. 

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To allocate risks to those parties who are in the best position to evaluate, control, bear the cost of, or benefit from the assumption of risk is the goal in seeking an allocation of risk in the best interest of the project. This will allow the owner to have a project more likely to reach its completion timely and correctly and within budget through reduced unforeseen expenses.

Contractors can benefit through proper risk allocation as profit margins in todays economic environment are usually quite thin, which can quickly be erased though uncontrollable and unforeseen events. The fewer the uncertainties the less unknown risk contractors are asked to burden, which can allow them to offer more competitive bids.

Design professionals also can benefit through being able to maintain a truly professional relationship with the project team and owner by not being required to assume types and amounts of risk out of proportion to their degree of involvement on the project.

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Examples of risk management in the best interest of the project include the following: 

The allocation of risks and responsibilities are subject to adjustment on a project by project basis based on project specific facts, circumstances, and negotiations between the parties. Consideration should also be given to the other agreements also in existence on the project which may also be impacted, such as the owner-architect and owner-contractor agreements for proper coordination and to prevent conflicting terms.

Your comments and future article topic suggestions are invited in the field below.

John Caravella construction lawyerThe author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (516) 462-7051.

 This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance. Project Image courtesy of [contributor name] / FreeDigitalPhotos.net".

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Tags: Construction Contract, construction contract terms, construction risks, Construction Contract Drafting, construction risk evaluation, contractors, construction risk management

Deconstructing the Construction Contract

Posted on Mon, Dec, 10, 2012

John Caravella, Esq. of The Law Offices of John Caravella, P.C. will be one of three presenters at the Nassau County Bar Association Construction Law Committee's seminar, next in its series of presentations addressing issues in the field of Construction Law. 

On December 18, 2012, at 12:30 pm, the Construction Law Committee in the Founders Room at the Home of the Association,  will present Deconstructing the Construction Contract.

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This seminar will address the integral provisions of a construction contract including AIA forms, indemnity provisions, delay damages, "no damage for delay" clauses, termination and payment. 

Optional CLE credit will be available.

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Please r.s.v.p. to evelyn.arboleda@rivkin.com if you plan on attending as early as possible.

Your comments and future article topic suggestions are invited in the field below.

John Caravella construction lawyerThe author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (516) 462-7051. 

 

 

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This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance. Contract Signing Image courtesy of Jeroen Van Oostrom / FreeDigitalPhotos.net".

Tags: Construction Contract, construction contract terms, Construction Contract Drafting, construction contract law, construction contract administration

Understanding Construction Risks

Posted on Mon, Dec, 03, 2012

 Understanding Construction Risks

Construction projects are often complex operations, using multiple trades, suppliers, and design professionals all working on the same project. This means that construction, by its very nature, is an inherently risky operation with a wide range of problems that can arise at almost any time in the process. Understanding what these potential risks may be, and incorporating strategies to manage them in advance are the best practices to put in place to minimize their impact so the project can reach its successful completion.

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In general, risk is the element of uncertainty in an undertaking, and the possibility that the actual future returns will deviate from the returns anticipated. In terms of construction, this risk is the exposure to possible unanticipated economic losses.

Risks in construction are typically classified as those associated with the project site itself, associated with the project team members, associated with the project performance, and those associated with external factors.

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When examining the risks associated with the project site itself, consideration and advance planning should be used to consider factors such as site access, obtaining required permits and approvals, existing structures on the project, any underground structures or utilities on the project, archaeological discoveries, discovering hazardous waste or conditions, varying subsurface conditions, security on the project site, worker safety, traffic conditions created by the project, and neighboring adjacent structures and property.

Employing numerous members on the project team, such as engineers, architects, contractors, numerous subcontractors and suppliers also brings forth additional risk to the project. Commonly a large project team can create additional risk through:

  • lack of clear communication
  • lack of proper coordination
  • untimely decision making
  • lack of experience or competence of team members
  • inadequate compensation
  • lack of proper involvement among the team members
  • incompatibility in directions or undertakings by the team members
  • delays in addressing disputes, and
  • staffing or labor levels

The performance on the project can also be placed in risk through various factors. Such factors include:

  • the sufficiency or accuracy of the construction documents
  • unclear, ambiguous, or conflicting contract terminology
  • lack of insurance or lapse of insurance coverage(s)
  • gross underestimation of costs for the project
  • materials furnished by the owner
  • materials furnished by the contractor
  • unrealistic scheduling for the project
  • design changes made after contract execution
  • design changes made after commencement of the project, and
  • delays in payment to the team members

As if the factors on the project site itself were not enough to manage, thought and consideration should also be given to the factors beyond the jobsite that can adversely impact the project. Such external risk factors include:

  • weather delays
  • declaration of war
  • changes in code requirements and/or changes to zoning
  • material shortages
  • lawsuits from third-parties
  • political interference, and
  • union confrontations

In understanding the wide ranging risks that can affect the project, the likelihood of any and all of them impacting the project must be evaluated on a project by project basis. An evaluation of the specific risks being present on the project, the probability of a specific risk occurring, the probable consequence to the project of such a risk occurring, as well as a determination if any of these risks can be insurable needs to be performed.

Part 2 of this article, Managing Risk in Construction Projects, will discuss methods of managing these risks to properly ensure the successful completion of the project.

Your comments and future article topic suggestions are invited in the field below.

John Caravella construction lawyerThe author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (516) 462-7051. 

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This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance. Project photo courtesy of 9comeback / FreeDigitalPhotos.net".

Tags: Construction, construction risks, site risks, project team risks, project performance risks, external construction risks, construction risk evaluation