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.
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.
Many homeowners who consult with me regarding construction disputes are not only financially damaged but emotionally distressed, and understandably so. Our homes are not only our biggest financial investments but our sanctuaries, and misconduct by unscrupulous contractors that damages those sanctuaries makes us feel that we have no place of safety and, in some instances, makes us worry that we may be homeless altogether. Thus, the question is often posed to me whether homeowners can collect damages for emotional distress that results from construction contract disputes, in addition to their economic damages.
Like the strings of a marionette puppet, after the completion of a New York construction project, there are various legal theories that serve as ties between the builder and the owner. For the builder, the sooner these lingering ties can be removed the less exposure they face for claims of defects. For the owners, the longer they are able to establish these connections, the longer they may have legal recourse against the builder for defects.
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).
Changes are an unavoidable aspect of construction. Although thorough effort and coordination are required in preparing the original project contract, specifications and construction drawings, there will still be changes. This is why owners are provided the right to make changes to the work under a typical contract changes clause.
However, the ability for owner requested changes, even if provided in the contract, are not without limitations, restrictions, and consequences. After all, what purpose would any of the project documents, contracts and drawings serve if they were subject to constant change? What good would the contract serve if the owner could make any change(s) without consequence?
Can homeowners be held responsible for injuries that may occur to contractors while work is being done on their property? Many homeowners love new home face-lifts, but did they ever think what a dangerous home improvement job consisted of? Well, what happens if a contractor is injured while working? Who is responsible for their medical costs?
With respect to homeowner liability for contractor injuries in New York, homeowners of one or two family dwellings are exempt from liability from any contractor injuries suffered while work was performed on their property under labor law § 240 & § 241, unless he or she has directed or controlled the work being performed.
Under New York State Law §§ 240 and 241 a homeowner can be found liable for any resulting contractor injuries only if their contractor can show the homeowner provided specific instruction as to how work is to be performed or the homeowner provided certain tools or equipment to be used.
Although, incidental homeowner interactions are not sufficient to invoke homeowner liability for injuries, a showing of directing the actual work performance is necessary.
Much construction litigation arises from disputes over Scaffold Law liability. Simply, the Scaffold Law makes certain contractors and project owners liable for injuries to workers on construction sites. The Scaffold Law has been criticized for the burdens it imposes on contractors and owners and for allowing workers to collect even if they have ignored safety rules.
Owners of New York based construction businesses are more likely to be mindful of construction law issues relating to contract performance and defective work. Many however are unaware they are also under increasing risks of liability in compliance with newly enacted requirements under New York Employment and Labor Laws.
For contractors and subcontractors in New York, Mechanic’s Lien Waivers are a part of life, but the potential risks to the contractor in waiving more than intended or understanding of the terms are not always as common. Owners (and often their lender) require that the project be kept lien free through progression of the work to final completion.