Construction Law Blog

Design Professional Liability on Completed Work

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.

 

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.

"... 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.

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 on a particular circumstance.

Construction Risk Management

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.

 

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.

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.

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 on a particular circumstance. Project Image courtesy of [contributor name] / FreeDigitalPhotos.net".

Deconstructing the Construction Contract

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.

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.

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.

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 on a particular circumstance. Contract Signing Image courtesy of Jeroen Van Oostrom / FreeDigitalPhotos.net".

Understanding Construction Risks

 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.

     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.

     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.

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 on a particular circumstance. Project photo courtesy of 9comeback / FreeDigitalPhotos.net".

Toxic Risks in Home Renovations

Renovating Carries Toxic Chemical Risks, but Hazards Can Be Minimized

During any home renovation project, care should be taken to protect the home's residents from any toxic substances that might be removed or installed. Lead, asbestos and other harmful substances lurk in many homes and could cause serious health problems if disturbed. Here's a look at some of the most common hazardous chemicals homeowners are faced with during remodeling and what can be done to reduce those risks.

Asbestos

Homes built in the 1980s or earlier may contain asbestos in tiles, walls, ceilings or pipe insulation. When asbestos is disturbed, its fibers are easily inhaled into the lungs. Even a single exposure to asbestos can cause numerous health problems and cancers including mesothelioma, which can take decades to produce symptoms. In most cases, asbestos shouldn't be handled by amateurs. Instead, professionals should be called to test for asbestos. If any is found, a team of professionals can contain or remove the material according to local regulations.

Lead

Homes built in the 1970s or earlier may contain lead paint, but lead is also present in high levels in some modern renovation materials. Exposure to lead can cause problems throughout the body, including disrupted hormones and a reduced ability for the red blood cells to carry oxygen. The nervous system and bones can also be affected by lead poisoning. When dry lead paint is removed, toxicity can develop after inhalation of the dust. Lead is also present in some modern flooring and PVC wallpapers. To be safe, homeowners should have lead paint removed by a team of professionals and choose new flooring and wallpaper that has been tested for lead by a consumer protection agency.

Volatile Organic Compounds

VOCs include a wide range of organic pollutants, such as those derived from petroleum. In many cases, VOCs are inhaled as they are released by adhesives, pressed woods and paints that off-gas over time. Symptoms of exposure include eye and lung irritation, dizziness, headaches and memory problems. As VOCs are a fairly modern issue, little is known about long-term health effects in humans, but many have been found to cause cancer in lab animals. To avoid toxicity, homeowners should eliminate the use of high-VOC products inside the home as much as possible.

Other Hazardous Chemicals

A variety of other dangerous substances are common in products used for home renovation. In recent years, many flooring products have been found to contain high amounts of phthalate plasticizers that are banned in children's products. Organotin stabilizers, which are potent hormone disruptors, have been found in about two-thirds of PVC floor tiles.  Most wallpaper contains PVC, and about half of these contain toxic substances such as cadmium, tin, chromium and antimony.

To protect the health of occupants and visitors, homeowners should have the structure tested for toxic chemicals before renovation begins. Homeowners can reduce their use of dangerous substances by choosing safe materials, such as bamboo, cork, hardwood and linoleum flooring. By planning carefully and working with care, many of the risks associated with remodeling can be minimized or eliminated altogether.

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

This article was authored by guest blogger Brian Turner, who is a health advocate and blogger. Brian can be reached via email at Brian.Turner752@gmail.com, and his blog posting additional articles on exposure to toxic substances can be found at www.mesothelioma.com/blog/authors/brian.

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.

 

 

Legal Issues for New York Architects

John Caravella, Esq., of The Law Offices of John Caravella, P.C., along with Kimberly A. Steele, Esq., of The Steele Law Firm P.C. will present a day-long seminar to architects in Ronkonkoma, New York on Tuesday December 4, 2012.

The seminar, entitled Legal Issues for New York Architects, will cover wide ranging issues of legal concern to architects practicing in New York, including:

• the rules and regulations on the practice of architecture,
• laws on the new Design Professional Service Corporations,
• rules on unprofessional conduct, including avoiding fraud and signing and sealing of documents,
• understanding and complying with barrier-free requirements,
• design and construction contract law and administration, and
• update on new and pending building code enactments.

 

This AIA approved seminar offers New York Architects 7.0 HSW contact hours.

Additional information on this seminar as well as forms for registration are available here.

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

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 on a particular circumstance.

New York Professional Land Surveying Law

John Caravella, of The Law Offices of John Caravella, P.C. is to present to Professional Land Surveyors Wednesday November 7, 2012 in White Plains, New York.

 

The seminar, entitled New York Professional Land Surveying Law will cover topics of legal significance to Land Surveyors, including New York Land surveyor Licensing Law, Boundary Law and Order of Precedence, Understanding and Complying with the Surveyor's Right of Entry in New York, Law of Land Surveying Malpractice, Intellectual Property Rights for Surveyors, and Principles of Riparian Boundary Location.

The seminar is approved for 7.0 contact hours/PDHs to New York professional land surveyors 

Additional information on this seminar as well as forms for registration are available here.

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

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.

 

 

 

New York Construction Delays, All Things Being Equal, They're Not

            Everyone knows that time is money, and in particular this is true with New York construction contracts. It is also well known that delays are often part of the construction reality, along with change orders and extras. Delays impact owners, contractors and subcontractors. As the consequence of delays, in the form of increased costs for all parties, and postponed project  completion, can effect numerous parties, it is important to determine the cause for the delay, and whether any party is entitled to recover damages for the delay. Under New York Law, delays are classified in two broad categories, excusable delays and non-excusable delays.

            Excusable Delays       Often protections for contractors are added to New York Construction Contracts, protecting the contractor from liability for any delays or failure to perform, caused by factors beyond the control of the contractor, provided that no fault or negligence on the contractor’s part is present. some Excusable Delays include:

• Acts of God
• Strikes and Labor Disputes
• Owner-Caused
• Sovereign Acts
• Subcontractor’s and Supplier’s Delays

     An excusable type delay provides the contractor generally with an extension in the contract time, and possibly an increase in compensation as may be caused by the delay. Whether additional compensation is due to the contractor, however, is based on whether the excusable delay is determined to be a compensable excusable delay, or a non-compensable excusable delay.

     Acts of god, unusual weather, and labor disputes are examples of non-compensatory excusable delays as they will provide the contractor with additional contract time to complete the work as the only available remedy.

      Owner caused interference, defective design, as well as contract changes and extras are examples of compensable excusable delays, and will provide the contractor with additional project completion time and funds.

            Non-Excusable Delays          Non-Excusable delays are those caused by the contractor himself, and contractor is thereby unable to seek additional contract time or funds for the delays contractor has caused. Failing to timely commence work, poor workmanship, failure to provide proper equipment, and the failure to progress or properly coordinate the work are some examples of non-excusable delays.

            No discussion of New York construction contract delay claims would be complete however without mention of the No Damage for Delay clause. Originally owners sought protection from the financial risks of delay damages, and clauses seeking to remove this as grounds of owner liability were introduced. Often times the contractor would then also incorporate those terms and the same protection would be provided to the contractor from its subcontractors.

            These clauses however do not have uniform praise from attorneys, or even consistent application by the courts. Those in favor of these clauses might say that they provide to the owner a method of achieving financial stability on the project, otherwise owner would not be able to determine with any reasonable certainty the full cost of the construction. Those in opposition to these clauses might state that they serve to artificially inflate costs as contractors who bid competitively on a project containing this term must include a ‘contingency factor’ in its bid to cover delay expenses. Some other contractors may even be unwilling to bid any work under this condition at all.

             Generally in New York, recovery of wide ranging damages may be prevented by the court’s enforcement of such a clause, as long as the parties anticipated the delay at the time of contract signing. If it can be established that a particular delay was beyond the contemplation of the parties at contract signing, New York courts will not enforce this clause. Exceptions to enforcement exist, such as where the owner’s intentional wrongdoing is the cause of the delay, among others.

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

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. 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.

 

 

Construction Warranties in New York, Sometimes Less is More

     Any property owner considering construction work will want reassurance that the work will be done well, and will be free of defects for a specified timeframe. Many contractors even include a warranty clause in their contract. Such Warranties (also called guarantees) require the contractor to correct any defects through additional work on the project over the specified time.

     Warranties under New York law may be found where they are expressly given, as in the example of the contractor above; but may also be implied through the conduct of the parties, or by operation of the law. For example, if the contractor agreement did not contain any warranty clause, the owner would be able to bring a legal action against the contractor for breach of warranty or contract within six years of project substantial completion under the New York Uniform Commercial Code. Many property owners may be surprised to learn that they may actually be better protected with no warranty provision in the agreement, over one that states coverage for a shorter timeframe.

     Factors such as representations made, either by the contractor or supplier, in any printed materials may create an additional express warranty. Since these tend to be fact specific and will vary from project to project, they can exist on a case by case basis. Further, warranties can also be implied in the law, based either on legislation or the actions of the parties involved. The New York Appellate Division, in the matter of Lange v. Blake, established the existence of an implied warranty where a contractor makes representations of specific knowledge or skill, in their ability to perform the project work.

     When the subject of construction is a new home however, New York law provides an additional ‘Housing Merchant’ warranty that applies to the construction of a new residence. Originally stemming from a 1988 court finding, this was later made part of Article 36-B of the NY General Business Law and provides

• The home will meet or exceed building code requirements;
• In the absence of any defined standard, the home must be constructed with workmanship and materials that meet or exceed locally accepted building practice standards;
• One year from the warranty date the home will be free from defects due to a failure to have been constructed in a skillful manner;
• Two years from the warranty date the plumbing, electrical, heating, cooling and ventilation systems of the home will be free from defects due to a faulty installation; and
• Six years from the warranty date the home will be free of material defects.

     Whether a ‘Housing Merchant’ warranty will apply to any specific property is based on numerous factors, including whether the land is already owned by the owner, or if the builder is selling the lot and new home together. Also the homeowner may be required to provide advance notice to the contractor before being able to bring an action for violation of such warranty. For specific advice on your individual warranty or construction concern it may be wise to seek independent legal opinion. This article is not intended to provide legal advice or opinion.

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. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached via email at  John@LIConstructionLaw.comor (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.

 

Contractors in New York may not be bound by Architect Certifications

Construction contracts in New York often place the architect or engineer in the additional role of an initial impartial decider as to any disputes between the contractor and the owner, in addition to their roles as the design professionals. Such clauses make the architect or engineer an arbitrator for purposes of factual disputes on the project, and are typically valid and enforceable as conclusive and binding upon the parties.

Under such a dispute resolution clause, if the contractor accepts the decision of the architect on its dispute with the owner, the dispute is considered resolved. Where the contractor disagrees with the decision of the architect, however, contractor must provide prompt written notice to the architect and owner as to contractor's disagreement with the decision of the architect, and contractor's continuing performance of its contract work is being performed under protest. Failure of the contractor to issue such a prompt notice of disagreement can serve to bar the contractor in any subsequent efforts to pursue this claim through litigation or arbitration.

Where the construction contract requires certification from the architect to establish sufficient cause for termination of the contractor for cause, however, such certifications may or may not be binding upon the contractor.  The binding authority of certifications for termination from the architect or engineer are only binding to the extent that the architect's agreement for services specifically provides for such binding authority, and the contract between the owner and the contractor vest such authority in the architect. 

Both of the parties to be subject to the decision making of the architect must agree to be bound by the architect, and confirm the factual and legal authorities being provided to the architect for resolution of disputes. Depending on the extent of the architect or engineer's powers under their contract, their decisions on whether sufficient cause exists for contractor's termination for cause may or may not be binding on the contractor.  

Where contracts do provide effective authority to the design professional to issue certifications for termination, such certifications will be binding and enforceable on the contractor as a matter of New York construction law unless the contractor can establish that the certification issued by the architect was issued in bad faith, fraud, or palpable mistake. Adsley Const Co., Inc. v Port Authority of New York and New Jersey, 54 N.Y.2d 876.

New York construction law also allows for the parties to appoint any person, even an employee of one of the parties, to serve as final arbitrator for all factual and legal determinations, including determinations of contract interpretation as final and binding.

"The requirement of explicit and unequivocal agreement when there is to be mutually binding arbitration before a neutral arbitrator obviously takes on even greater significance when resolution of all disputes is to take place before the employee of one contracting party, and bind only the other." Westinghouse Elec. Corp v. New York City Transit Authority, 82 N.Y.2d 47

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

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 (631) 608-1346.

 

 

 

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.