Construction Law Blog

Is Green Construction Making You Sick?

     The recent arrival of the green construction movement has ushered in a host of new concepts in both construction and design. Although the ideals of green construction are well intentioned, in practice, numerous safety and liability concerns come along with these trends. Some sources have even questioned whether sustainable practices and occupational safety can coexist.

     “There’s an assumption that green construction is safer and healthier, but that perception is not always true,” said Matt Gillen, Deputy Director of the NIOSH (National Institute of Occupational Safety and Health) Office of Construction Safety and Health. He also pointed out that green construction does not always equal sustainability, either. True sustainability is broader and should include safety and health.  Unfortunately, green construction doesn’t always include these elements, as quoted by Laura Walter in Green Construction and Safety Don't Always Go Hand in Hand.

     In seeking to close this gap, there is a movement to revise the definition of sustainability and to have occupational safety considerations included as part of what it means to build green. The development of LEED credits to address various safety issues may well be what the green construction movement needs to continue its development.

     Many property insurers are unsure how to properly manage risks posed by new green construction methods (See, Green Construction Wave Brings Green Liability). Seeking to address these safety issues through NIOSH’s vision is to “have occupational safety and health recognized as a fundamental dimension of true sustainability,” said Gillen. This could entail developing LEED pilot credits to address safety issues, adding safety and health language to existing credits or developing new safety credits.

     This discussion also comes amid recent concerns that instead of being healthier, green construction materials and methods may actually be contributing to health problems. The EPA (Environmental Protection Agency) has established numerous programs to properly address aspects of green construction and to ensure the health, safety and welfare of people working or living in green construction projects.

     For example, by tightly sealing spaces (a measures taken by contractors to achieve high levels of energy efficiency), builders could inadvertently wind up creating problems with indoor air quality, moisture and fresh air ventilation.  Likewise, "an improperly sized and installed high efficiency (air) unit is not efficient" said Todd Witt, HVAC Expert, as quoted by David Worthington in Could a Green Home make You Sick?.

     Additional considerations when building a green home include:

• Demanding documentation of your home’s Manual J Load Calculation and Manual D duct design.

• Demanding fresh air ventilation and returns/jumper ducts in every bedroom.
• Demanding a static pressure test, interior pressure testing, and air balancing.

• Having the depth and density of your attic insulation inspected and having attic rulers installed throughout your attic.

• Eliminating traditionally vented crawlspaces and replace them with closed crawlspace construction.
  
  Your comments are invited in the field below.

      The author, John Caravella Esq., is a construction attorney and former 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.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.

 

Essential Provisions for Subcontractor Agreements

 

     When it comes to subcontractor agreements, there are numerous types of agreements that might be used and the fine print in these agreements can be crucial. Some documents, such as the American Institute of Architects (AIA) 401 and the Associated General Contractors of America (AGC) Form 640 serve as standard forms of agreement. However, subcontract agreements may also be drafted by contractors, subcontractors or architects. Regardless of the format or author of the agreement, the following typical and general provisions should be included in most subcontracts to avoid litigation over what the parties meant or intended.

     Although boilerplate terms in an agreement are often referred to as insignificant or meaningless, they are actually far from insignificant. The bulk of boilerplate terms may consist of general matters and do not discuss project specifics, however, they often also include numerous terms which impact the subcontractor.

     One such significant term hidden within a boilerplate may be an ‘incorporation by reference.’  This is a clause which seeks to bind the subcontractor to the general contractor in the same way that the general contractor is bound to the project owner.  Therefore, it is wise for any subcontractor to also review the terms of the general contractor’s agreement with the owner, as the subcontractor’s working conditions may be governed from beyond their own agreement. Such important issues as retainage, certification of completed work, notice requirements, delay damages, termination, arbitration and other terms could then flow down from the general contractors prime contract with the owner.

     But all contract terms are not created equal, and even a valid ‘incorporation by reference’ provision will not automatically make the subcontractor bound to all the terms of the prime contract. For example, where a subcontract simply states that the terms of the prime contract are incorporated, with no other mention as to specific portions of the prime contract, only those provisions of the prime contract which specifically relate to the scope, quality or manner of performance of the work by the subcontractor are incorporated and binding upon the subcontractor.

     Unless specifically stated, however, prime contract terms relating to dispute forum selection (whether a dispute would go to litigation or arbitration), no damage for delay or waiver of damages are all limited to the scope of the prime contract only. For a subcontractor to be compelled to arbitrate any construction dispute, the subcontractor must have that term either expressly stated in their subcontract or the incorporation by reference must be specifically stated. Otherwise, the prime contract will not be binding upon the subcontractor.

     Any time multiple documents are used to define the entire agreement, there is a chance of conflicting terms in the agreements. For example, where a subcontract clearly and properly incorporates the prime contract terms for a specified requirement, but the prime contract happens to be silent on that requirement, it is the subcontract that will be controlling for that term in New York.  This is distinguishable from the situation where the prime contract is not silent, but expresses a different term than what is provided for in the subcontract with a valid incorporation provision. In this case, terms relating to payment in the subcontract will control so long as they do not interfere or conflict with the terms for the owner’s payments under the prime contract.

     In reviewing this type of contract conflict in Fehlhaber Corp. v. Unicon Management Corp. (1969), the New York court held that the subcontract payment terms would apply over the terms in the prime contract because “the payment terms were not in conflict with the owner’s right to retain installments from the general contractor.”

     The rule in New York, however, is not as clear when the two agreements are not in complete agreement with the incorporated prime contract. In the situation where both the subcontract and the incorporated prime contract both contained arbitration clauses, but the clauses were not the same, the New York courts in Pearl Street Development Corp. v. Conduit & Foundation Corp. held “the courts or arbitrator must decide which clause the parties intended would control the issue.”    

Your comments are invited in the field below.

The author, John Caravella Esq., is a construction attorney and former 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.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.

Legislative Update for the New York Architect

Each year the New York State Legislature enacts dozens of new statutes, which alter various phases of construction. There are currently numerous bills working their way through the legislature, which will impact construction in New York and the professionals who perform the work. The below is an examination of some of the prominent proposed bills:

1. Bill A2984             “An act to amend the executive law, in relation to wind speed limits for light frame wood construction in the counties of Nassau and Suffolk.”
   The purpose of this bill is to provide a wind speed limit of 109 miles per hour for such structures within Nassau and Suffolk counties to withstand external pressure and wind born debris.
   
   This bill reviews the New York area weather archives, going back to 1903, and finding that the current wind standard of 110 miles per hour, as standard in the International Building Code, is more appropriate for other regions of the US, particularly areas in the south.
   
   By reducing this wind and debris requirement, it is anticipated that the costs incurred for such construction of housing in such coastal areas will be significantly reduced.
   
   
2. Bill S03183           “An act to make Indemnification Agreements relating to construction contracts void as against public policy.” As by their nature Indemnification Agreements seek to have one party agree to be primarily liable for damages, which may be caused by the other, thereby causing one party to be held harmless.  These contract provisions are in conflict with the greater public safety considerations that are advanced when parties are responsible for themselves.
   
   Such examples of liability shifting will be prohibited in agreements “relating to the construction, alteration, repair or maintenance of a building, structure, appurtenances and appliances, including moving and excavating.”
   
   
3.  Bill A08473          “An act prohibiting the retention of any payment due and owing a material supplier for a construction project on public works projects.”  This bill seeks to make several modifications to the state finance and general municipal laws, which would remove from retainage any payments due a supplier for supplies and materials incorporated into the project.
   
   Once the contractor or subcontractor has accepted the materials, the supplier has essentially completed their scope of the work. These proposed modifications seek to clarify that concept as well as remove material men from current retainage laws.
   
   
4.  Bill A07090           “An act establishing a prohibition on lawsuits against architects, engineers or construction professionals brought more than ten years after completion.” This proposed bill seeks to reduce the risk of substantial judgments against professionals many years after project completion, and when the professional may no longer be protected by liability insurance. The bill would establish a ten-year time limit (with some exceptions) that a claimant may bring an action for defective design or construction against the architect.
   
   
5. Bill A07734           “An act to establish licensing consequences for architects or engineers who seriously abuse their self-certification privileges.”  This proposed bill seeks to make amendments to the education laws to provide for license suspension for architects or engineers who seriously abuse their self-certifications. The proposed bill does make a clear distinction between the architects who merely violate the rules, from architects who chronically act outside of their certifications. It merely states:
   
   “The professional license of any architect or engineer found to have seriously abused the professional certification program of the City of New York shall be immediately suspended by The Board of Regents.”
   
   
6. Bill A03884           “The engineers’, architects’, landscape architects’ and land surveyors’ good Samaritan act.” This bill seeks to make various changes to the executive law, which would remove these professionals from any specific liability for services rendered at the scene of a declared emergency. The justification for this is to serve the greater public safety, to allow such professionals to render services during an emergency and allow them to fulfill their professional obligations to serve the greater public health, welfare and safety without concern of substantial liability.
   
   
7. Bill A04078           “An act seeking to establish an engineer’s obligation to timely report discovered structural defects.” This bill seeks to make various alterations to the administrative code of New York City and the education law to require “that any defects which may affect a building’s structural ability will have to be reported to the Department of Buildings within five business days of a person’s knowledge of such defects.”
   
   This bill would also enable the state to suspend the licenses of engineers who fail to timely report such conditions.
   
   
8. Bill A04581           “An act establishing the design professional service corporation” This bill seeks to create a new corporation format, which would allow the formation of a professional corporation with non-professional shareholders. This bill would seek to make several changes to the business corporation law and allow for non-professional shareholders to have a non-majority (less than 25%) ownership interest in the shares of the business.
   
   
9.  Bill A06814           “An act which will require public authorities and public benefit corporations to negotiate with professional firms providing architectural or engineering services in order from the most qualified to the least qualified.” This bill seeks to make various alterations to the Public Authorities Law, allowing these authorities a greater opportunity to negotiate with the most qualified architectural and engineering firms. Such public benefit corporations will be able to receive the services of the most qualified contractor through the establishment of a new mechanism for the procurement of engineering, architectural and surveying services.
   
   Your comments are invited at 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.
   

Move Over ConsensusDOCS310, AIA D503-2011 Has Something Greener

In recognition of the growing number of legal issues created through new sustainable and green construction methods, the American Institute of Architects (AIA) has released its D503-2011, which serves as a way of addressing some of these issues before the next generation of agreements are released in 2017. This guide is available as a free download here.

This D503-2011 provides suggested language and techniques to be used while parties continue to use their 2007 based agreements to cover 2011 sustainability issues. Further, it is anticipated that the language for these issues will be incorporated into the next generation of AIA agreements and serves as a 'preview' of how certain green construction obligations will be delegated.

Some of the green construction issues addressed in this guide include:

 

• Various certification systems
• Incorporation of green construction techniques without need for certification
• Newly defined terms, such as “Sustainable Objective” and “The Sustainability   Plan”
• Implications on the architect for failure to obtain certification status
• Provision for consequential damages
• Substitutions

 

The scope of new and modified language needed to address these green construction issues is wide-ranging and diverse. And like construction itself, a one-size-fits-all approach to these issues may not work for every project at every location. As new legal issues are created through sustainable building practices and materials, the intent of this language is to 'plug the gaps' left through the use of traditional agreements.

The result of several modified clauses, however, is to shift certain LEED (Leadership in Energy & Environmental Design) obligations from the architect to the contractor. Particularly in the area of substitutions, where the contractor shall include a written representation identifying any potential effect the substitution may have on project's ability to achieve a Sustainable Measure or the Sustainable Objective. Further, the architect is expressly entitled to rely on these representations by the contractor.

Another noteworthy change under these agreements is in the area of consequential damages. Although some form of waiver to consequential damages has been standard between the owner and the architect for many years now, these provisions have been revised to also expressly include any consequential damages which may arise from failure of the project to achieve the Sustainable Objective or one or more Sustainable Measures, including unachieved energy savings, unintended operational expenses, lost financial or tax incentives or unachieved gains in worker productivity.

These are only two of the numerous shifts in obligations addressed in the proposed agreements. A thorough review and analysis of any proposed sustainable construction project is called for to ensure that the parties involved have a clear understanding of their rights and responsibilities.

Your comments are invited in the filed 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.

5 Reasons to Consider Arbitration for Your Construction Dispute

In a recent client conference I was asked, “So what is arbitration, anyhow?” In the context of a construction claim or in seeking to prevent a construction claim, there are several significant advantages that arbitration can provide in lieu of litigation. In today’s challenging business environment being aware of the various options available could make a significant impact on your business.

     Briefly stated, arbitration is a private, informal process by which all parties agree, in writing, to submit their dispute to one or more impartial persons authorized to resolve the controversy by rendering a final and binding award.[i] What makes this process unique is the ability, with some advance consideration, to customize and tailor the dispute resolution process to suit your company’s needs.

CUSTOMIZATION – Customization allows you to tailor the dispute resolution process by stating the location of arbitration, the number of arbitrators and even the specific technical qualifications of the arbitrator(s) to best suit the dynamics of your claim.

This is especially important in the construction arena where you are not likely to be appointed a judge who has any specific technical knowledge or appreciation of construction. In arbitration, you can request an arbitrator with the level of construction appreciation you feel appropriate. As stated by Michael Marra, Vice President Construction Division American Arbitration Association, “There is no concern about the arbitration process that a good [contract arbitration] clause cannot fix. People do not always realize they can customize the process to their specific project needs.”

COST SAVINGS - As a process intended to be less formal than litigation, the entire case preparation and information exchange can be streamlined saving both counsel and clients’ time and resources. Further, it is often possible to have an entire dispute brought before the arbitrator in a one-day hearing and possibly without the need for court reporters and fees. This is an accomplishment not often found in litigation. There is, however, some debate in the field whether arbitration is less costly than litigation. Arbitration for larger and more complex claims may not produce the cost savings found in less complicated claims.

TIME FRAME - When considering taking an action to the Supreme Court for litigation, it is important to keep in mind the timeframe in which the matter can expect to be concluded. Based on a recent litigation filing from my office, the time between when a matter is assigned an index number to resolution is approximately two years and six months, or 914 days.[ii]

This is much greater than the anticipated timeframe in a corresponding arbitration claim. Based on a recent administrative study by the American Arbitration Association for cases under the AAA Commercial Arbitration Rules, with claims between $75,000.00 and $500,000.00, the median claim was resolved within 297 days of filing.[iii]

 

 

 

LESS FORMAL – It’s fair to say that most people don’t mistake Supreme Court for the Hilton. In fact, many clients have a great deal of apprehension or anxiety regarding the thought of having their dispute brought out in open court. In the context of an arbitration, however, the hearing can be conducted in either your attorney’s conference room, or in any other suitable location, making the process considerably less stressful.

REVOVERY OF FEES AND COSTS - Where properly stated and agreed to in writing, the arbitrator may be free to award the reimbursement of all fees and costs associated with bringing forth the claim to either party, including all filing and attorneys fees. This is an example of how some advance planning and consideration with your attorney can make a future claim more to your businesses’ advantage.

Although arbitration may not be available for every dispute or conflict[i], where available, its numerous possible advantages make it well worth consideration.

Your comments 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.

The Top 5 Avenues of Architect Liability in New York

     Architects in New York can be found liable for damages in various situations, depending on who claims damage, and the basis of the claim itself. 

     For example, where an owner has a direct contract with the architect, the owner could bring forth a simple claim based on the contract or a claim based in a tort action. Such a tort action, based in negligence, is a claim for malpractice.

     Below are the top five avenues of architect liability in New York:

1. Contract Claims          Typical contract based claims against an architect include: failure to complete projects on time, work performed improperly under the architect’s direction, leaking roofs and shrinking woodwork. In the absence of any express language specifying the standard for the architect's performance in a breach of contract claim, the courts apply a negligence standard.
   
        In a negligence standard claim, it must be shown that the architect failed to perform in accordance with the standard of professional care usually exercised by such professionals in the community.
   
   
2. Warranty Claims         New York does not provide a cause of action against architects for breach of an implied warranty. Nor does the work of an architect constitute a product for which strict liability claims could exist. The architect may, however, enter into a contract with terms that provide for the architect's liability if the architect fails to produce specific results as guaranteed in the contract, even if the architect otherwise conforms to the community standard of performance.
   
   
3. Design Liability          New York State law has established that an architect's work will be judged by the standard of ordinary and reasonable skill usually exercised by a licensed professional, unless the parties state otherwise in their contracts.
   
        The more complex and unusual the architect’s design, the more latitude an architect is allowed. This latitude however can be quite narrow. For example, an architect was found liable for damages to the owner for roof repairs, not because the roof was installed incorrectly, but because the design of the roof caused owner significantly increased maintenance and repair costs.
   
        Design liability may also rest with the architect for items that are actually beyond the design of the architect. New York courts have held that an architect will be liable to the owner for any damages incurred as a result of the architect's approval of engineering drawings and a defect therein causes damage to the owner.
   
   
4. Supervision and Inspection         If an architect assumes responsibility for performing site supervision and inspection, he/she is bound to use due care in the performance of such duties. The primary purpose of the inspection requirement is to make it a contract obligation for the architect to provide the owner with assurances that the work is being completed in conformance with plans and specifications.
   
        However, as elaborated in case law from 1866, “the architect must be diligent in inspecting and supervising the work, but is not obligated to discover every defect in a contractor's or subcontractor's work and will not be liable for defects so long as they are not attributable to carelessness, negligence, or inattention on the architect's part.”
   
        Regardless of limitations over means and methods as stated above, failure of the architect to abide by the contract terms of inspection can result in the architect ultimately being liable to the owner. If it can be established that the architect breached this obligation, and this breach was the “proximate cause” of a failure to discover a defect, the architect may be liable to the owner for the cost incurred in correcting the defect.
   
   
5. Certification of Progress Payments             Courts in New York recognize the numerous responsibilities owners look to architects to perform. Just as courts recognize that owners may rely on architects for inspections of work, they also recognize that owners look to architects for certification of progress payments.
   
        Should an architect improperly approve a progress payment, or prematurely release retainage, the architect may be liable to the owner for any damages suffered, as this may decrease the contractor's incentive to complete the work.
   
   Your comments 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.