Despite much construction litigation, New York courts who govern Long Island construction law are agreed that an unlicensed home improvement contractor cannot recover against consumers. That has not, however, stopped unlicensed contractors from arguing exceptions to that rule. A recent court victory by John Caravella, Esq. confirms that courts remain unwilling to accept excuses from unlicensed contractors.
In Orefice v. Guma Development, homeowners sued an unlicensed contractor for defective construction. Notably, the local municipal code requires that any person doing business as a contractor be licensed by the municipality. A corporation does not require its own license if a licensed contractor is employed by the firm as a supervisor.
The Supreme Court, New York County, recently clarified the impact of contractual language specifying litigation as the forum for resolution in the subcontract, and impact of New York’s Prompt Payment, providing for arbitration of disputes where it applies.
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).
Are contractors responsible for the impacts of their work on neighboring residents? Oftentimes, they are. This is especially true in densely populated urban areas where literally hundreds of people could be affected by a project only fifty feet away. Some of the principles in these cases are outlined below.
Perhaps the most common construction-related dispute is the refusal of a party to make payment to its contractors or subcontractors. While litigation is the traditional avenue for resolving such disputes, methods of alternative dispute resolution such as arbitration and mediation are enjoying growing importance in the field of construction law.
Traditionally, New York Construction Law sets separate rules of engagement for public projects (where the owner is a public entity) and those that are private construction projects (where the owner is a private individual or corporation). Given these two distinct camps, it has been easy to classify a project as either a public project or a private one. For contractors, subcontractors and suppliers, knowing which rules of engagement pertain to them is essential to avoid making costly mistakes.
In a nutshell, the “economic loss rule” is a rule that courts use to prevent a plaintiff from against a defendant for a tort (usually negligence) when the essence of the claim is for failure to live up to the terms of a contract.
Many contractors and subcontractors go about their work feeling protected from claims for damages because their agreements contain certain exclusions. Some of these agreements will even have language stating ‘Not responsible for [X, Y, and Z]’. But the ruling handed down February 14, 2012, by the Supreme Court, Nassau County serves as a reminder that contractual indemnity provisions are more of a privilege than a right, and are not subject to enforcement automatically.
Given the large number and variety of documents required to administer a construction project today (plans, specifications, contracts, etc.), the likelihood of discrepancies arising between these different sources is almost unavoidable.
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.
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