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Author: Thomas H. Welby

Unjustified Mechanic’s Lien Cannot Support Defamation Claim

Written by Thomas H. Welby on . Posted in Attorneys' Column.

Mechanic’s liens, if available, can be useful tools for unpaid contractors, subcontractors and suppliers to get paid for their work. Like any tool, it is subject to abuse; such as by the filing of an unwarranted, or exaggerated, lien.  While there is a statutory remedy in those cases where the lien is shown to be willfully exaggerated, such remedy is only available where the lienor actually seeks to foreclose on the lien in court.

Where there is no lien foreclosure action, what is a contractor-lienee, aggrieved by the filing of an allegedly exaggerated lien, to do? In the recent case of Centrifugal Associates Group LLC v Newell Contracting, Inc., a court showed us what cannot be done: extend liability for the claimed misuse of a mechanic’s lien to the principal of the subcontractor-lienor on a theory of defamation.

Background

Centrifugal Associates Group LLC, was hired by the Durst Organization to serve as the general contractor on a construction project on 26th Avenue in Queens. Centrifugal, in turn, hired Newell Contracting, Inc. as a subcontractor to perform certain mechanical work. Newell performed work under the contract and claimed that it wasn’t being paid. On September 17, 2018, Newell filed a mechanic’s lien against Durst’s property in the amount of $320,000, claiming that it was owed that amount by Centrifugal, as GC. Newell, however, never sought to foreclose the lien.  Centrifugal disputed the debt.

On November 26, 2018, Centrifugal commenced a lawsuit against Newell and its president, Krzysztof Bielak. Centrifugal’s claims against Newell were for the claimed breach of the subcontract, for which Centrifugal sought damages in excess of $8 million. As to Bielak, Centrifugal claimed that his statements made in the mechanic’s liens were false because no money was owed to Newell, and that Bielak caused the mechanic’s lien to be filed solely to cause harm to Centrifugal (and that the resulting harm was the removal of Centrifugal from Durst’s approved contractors list).

Both Newell and Bielak failed to answer the complaint, and Centrifugal sought a default judgment against both. Newell did not oppose the motion, but Bielak did—and also cross moved to dismiss the claims against him. In support of his motion, Bielak argued that he could not be held liable for acts undertaken in his corporate capacity and, regardless, the statements made in a mechanic’s lien are not actionable as defamation, as a matter of law.

Decision

The court first dispatched Bielak’s corporate capacity argument, citing to well established case law providing that an individual can be personally liable for a tort committed in a corporate capacity (as opposed to a breach of contract, which would not support personal liability). However, the court was more receptive to Bielak’s argument that he did not commit defamation as a result of filing the mechanic’s lien. New York recognizes certain privileged situations where a person can undertake what may otherwise be considered defamation with impunity. One such privilege involves statements made in the course of a judicial proceeding. As a mechanic’s lien is pertinent to a lien foreclosure action, the court held, the statements could not be considered defamation, as a matter of law. In that regard, the court granted Bielak’s motion and dismissed the defamation claim against him.

Comment

As can be seen from the court’s holding in Centrifugal, the remedies against a lienor whose lien is exaggerated are limited, outside of the foreclosure context. However, as the court tangentially referenced, those remedies are not nonexistent and may include claims for fraud, disparagement of title, interference with contract, interference with prospective business advantage, extortion, malicious prosecution and malicious abuse of process. Accordingly, although Centrifugal stands for the proposition that a lienor’s principal cannot be held liable on a defamation theory, there is other recourse available to the target of the improper mechanic’s lien—even if the lienor refrains from foreclosing. In that regard, contractors should take away the importance of always being accurate and truthful when filing a mechanic’s lien.

Subcontractor Subject to Claim to Enforce Private Bid

Written by Thomas H. Welby on . Posted in Attorneys' Column.

Prime contractors are generally aware that by statute, bids submitted on public works projects are, absent narrow circumstances, firm and must be honored. Accordingly, upon being notified that its bid was the lowest bid (and upon being awarded the project), the low bidding contractor must enter into a contract with the municipality for the project. The form of contract is usually included in the bid form documents. So, if the contractor sees something objectionable in the contract, it can simply decline to submit a bid (but not negotiate the terms).

Bids on private jobs, on the other hand, are not necessarily firm. One tool that can be used to make a private bid firm is the quasi-contractual theory of promissory estoppel, which provides that a party who is the recipient of a promise and relies on that promise to its detriment can sue for damages arising out of a breach of that promise. In the recent case of Andrew R. Mancini Associates, Inc. v. Murphy Excavating Corp., an appellate court held that there were questions of fact as to whether a bid submitted to a general contractor by a subcontractor was firm—and whether the subcontractor could be held liable for the difference between its bid and the higher cost actually incurred by the general contractor to retain a different subcontractor after the original subcontractor refused to enter into a contract upon its bid.

Background

In December of 2016, in preparing to submit its own bid to serve as the general contractor on a reconstruction project, Andrew R. Mancini Associates solicited bids from subcontractors to perform, amongst other tasks, the excavation and landscaping scopes of work. Murphy Excavating Corp. submitted a bid to Mancini for such work, and Mancini confirmed both Murphy’s price and the scopes of work to be performed. Murphy was aware that its bid was being incorporated into Mancini’s own bid to the project’s owner.

The following month, Mancini informed Murphy that Mancini had been awarded the project, and both parties began to negotiate the form of the subcontract. Ultimately, these negotiations broke down over what Murphy characterized as “unreasonable” terms in Mancini’s proposed subcontract, and Murphy refused to enter into an agreement with Mancini. In light of Murphy’s refusal, Mancini procured the required services from another subcontractor, but at a higher cost. Mancini sued Murphy on the theory of promissory estoppel to recoup the difference between Murphy’s bid price and the higher price it ultimately paid for the work. Murphy moved for summary judgment, asking the court to dismiss the claim.

Decision

The trial court denied Murphy’s motion, and the appellate court affirmed the trial court’s decision. In doing so, the appellate court cited to well established case law holding that a claim for promissory estoppel is stated when a plaintiff alleges that a defendant made a clear and unambiguous promise, that the plaintiff relied upon that promise to its detriment, and that the plaintiff was harmed as a result of the breach of the promise. Relying upon that case law, the appellate court affirmed the trial court’s finding that there were questions of fact as to whether Murphy’s promise was unambiguous, and whether Mancini’s proposed contract was reasonable. The court also cited to case law providing that what occurred during the failed negotiation of the subcontract—which could determine whether the promise was actually breached—is similarly an issue of fact for a jury.

Comment

The ramifications of submitting a bid as a prime contractor in the public works context are well known. In the private context, however, the effects are less well settled. Under some circumstances, courts have indicated willingness to use the doctrine of promissory estoppel to make those bids firm. Courts have also indicated that where the circumstances are not clear, such as in Murphy Excavating, the parties will have to proceed through expensive discovery to an (even more) expensive trial. In order to avoid such vagaries, contractors submitting private bids would be well advised to indicate clearly what conditions those bids are subject to, and under what terms and conditions the bid will—or will not—be honored. Better yet, contractors can make the form of the subcontract part of their bid packages so that such an argument over the exact terms of that subcontract can be had before the bid, and not after.

Key Elements of a Health and Safety Program for Demolition Operations

Written by Thomas H. Welby on . Posted in Safety Policy.

In Miami, a condominium building being demolished collapsed suddenly, and a construction worker had his leg severed when he was struck by a “boulder” the size of “the front end of an SUV.”

In New Jersey, a construction worker was trapped and killed, when the last remaining wall of a building under demolition collapsed on top of him.

In Philadelphia, OSHA attributed the unexpected collapse of a four-story building that killed six, and injured fourteen, to the removal of structural supports early in the demolition.  The contractor was charged with third-degree murder and involuntary manslaughter.

In Connecticut, a contractor was hit with almost $200,000 in penalties, when OSHA found it had failed to brace the building’s walls while removing flooring on the upper levels of a building being demolished, had exposed workers to falls of up to 36 feet due to unguarded wall openings, and had taken inadequate measures to protect employees from lead.

Building demolition is not for the careless or the unskilled.  Its perils include collapses, falls, dust, hazardous materials, and dangerous levels of noise.

Before undertaking any demolition operations, you must, first, become thoroughly familiar with subpart T of 29 C.F.R. 1926, “Demolition” (and train your employees correspondingly).

Additional OSHA construction standards that must be integrated into your health and safety program and training for demolition include all or the applicable parts of the following:

  • Subpart D, Occupational health and environmental controls (especially the section on lead);
  • Subpart E, Personal protective and lifesaving equipment (especially the sections on head, hearing, eye and face, and respiratory protection);
  • Subpart J, Welding and cutting (especially the section on gas welding and cutting);
  • Subpart K, Electrical (especially the sections on wiring methods and components (temporary power), general requirements for safe work practices, and lockout and tagging of circuits);
  • Subpart L, Scaffolds (general requirements);
  • Subpart M, Fall protection (duty to have fall protection, systems criteria and practices, and training requirements);
  • Subpart P, Excavations (scope, application and definitions; specific requirements, and requirements for protective systems);
  • Subpart Z (Toxic and hazardous substances (in particular, asbestos); and
  • Subpart CC (Cranes and derricks in construction).

Another key resource is “Safety and Health Program Requirements for Demolition Operations,” ANSI/ASSP A10.6-2006 (R2016) which, while lacking the legal force of OSHA standards, is still authoritative.  (Available for purchase and download on the American Society of Safety Professionals website.) 

By far the most frequently cited OSHA violation relating to demolition is failure to comply with § 1926.850(a), which mandates that, before employees may be permitted to begin demolition operations:

. . . an engineering survey shall be made, by a competent person, of the structure to determine the condition of the framing, floors, and walls, and possibility of unplanned collapse of any portion of the structure.  Any adjacent structure where employees may be exposed shall also be similarly checked.  The employer shall have in writing evidence that such a survey has been performed.

The required pre-demolition survey must also ascertain the presence and location of lead, asbestos, and other hazardous substances.

Rounding out OSHA’s “Top 5” citation items relating to demolition are inadequate fall protection, the improper shoring or bracing of walls, insufficient inspections of stairways and ladders, and the failure to test for, and remove, hazardous materials.

If “any type of hazardous chemicals, gases, explosives, flammable materials, or similarly dangerous substances” has been used on the property, or is suspected of being present, testing and purging must precede demolition.  All utility service lines must be shut off, capped, or otherwise controlled, and the service providers notified.  If any utilities are to be maintained during demolition, the lines must be temporarily relocated and protected.

Another key preparatory step is the erection of an overhead shed or canopy, to provide safe ingress into the structure to be demolished, and protection from falling objects. Any multistory building must be protected for a minimum of 8 feet from the perimeter.  Canopies must be at least two feet wider than the building entrance, and capable of sustaining a load of 150 pounds per square foot.

Employees on walking/working surfaces must be protected by covers, guardrail systems capable of withstanding a force of at least 200 lbs., or personal fall arrest systems against falls through holes six feet or more above lower levels.  There must also be installed covers to protect against objects falling through holes.

Wall openings must be protected to a height of 42 inches, wherever there exists the danger of employees falling through them.

Floor openings not used as material drops must be covered with material substantial enough to support the weight of any foreseeable load, the covering to be secured to prevent accidental movement.

Access ways to the building interior must be kept closed at all times, excepting designated stairways, passageways and ladders.  These must be periodically inspected, and maintained in a clean safe condition.  Where a stairwell is being used in a multistory building, it must be well-lit, and completely and substantially covered over at a point not less than two floors below where work is being performed.  Access to the floor where demolition is in progress shall be via a separate, protected, and well-lit passageway.

Where chutes are employed, openings must be protected by a guardrail 42” above the floor, and gaps between the chute and the edge of openings in the floors solidly covered over.  Except at ground level, chute openings must be kept closed when not in use.  Nothing may be dropped to any point lying outside the structure’s exterior walls, unless the area is effectively protected.  A toeboard or bumper, at least 4” thick and 6” high, must be securely installed at each chute opening at which material will be deposited into chutes by wheelbarrows or mechanical equipment.

Where debris is to be dropped through holes in the floor without the use of chutes, the area onto which material is to be dropped must be completely enclosed, with barricades not less than 42 inches high, and not less than 6 feet back from the projected edge in the opening above.  Signs warning of the hazard of falling materials must be posted at each level.  Debris must not be removed from the lower area, until debris handling above has come to a halt.

At or near the discharge end of each chute, a substantial gate must be installed, and monitored by a competent employee

Except for work such as cutting holes through which to drop materials, the demolition of exterior walls and floor construction shall proceed downward from the top of the structure, work on each story to be completed, before work on the next floor below begins.

Where floor arches are being removed, the area directly below must be barricaded against access, and employees kept out of it.  Notwithstanding the closing-off of the lower level, it’s still necessary to verify that no one is present there, before the arch removal proceeds.

As demolition proceeds, “continuing inspections by a competent person shall be made to detect hazards resulting from weakened or deteriorated floors, or walls, or loosened material.  No employee shall be permitted to work where such hazards exist until they are corrected by shoring, bracing, or other effective means.”

In addition to all OSHA requirements, demolition work in New York City is subject to all requirements under the City Council’s 2017 enactments requiring a “primary construction superintendent” and “site safety plan,” and OSHA training and Site Safety Training cards for employees.

The foregoing is not a complete list of elements that need to be in your planning and safety program for demolition operations, but it covers much of the ground.

Contractor Liable to Sub for Failing to Protect Sub’s Claim Against Owner

Written by Thomas H. Welby on . Posted in Attorneys' Column.

A subcontractor has no direct contractual relationship with a project owner; that relationship is between the general contractor and the owner.  Accordingly, the sub cannot sue the owner directly, even if it sustains monetary damages caused by the owner.  Consequently, in response to this lack of contractual privity, the sub and the GC may enter into a liquidating, or pass-through, agreement, where the sub assigns its claim to the GC. The GC, in turn, prosecutes the sub’s passed-through claim against the owner, and then gives the sub any recovery.

Generally, a liquidating agreement is designed to limit, or liquidate, the GC’s liability to the sub to the amount the GC recovers from the owner. However, in order for the GC to limit that liability, it must pursue the sub’s claim in good faith. In the recent decision in the case of Rad and D’Aprile, Inc. v. Arnell Construction Corp., which was rendered by the trial court after remand from the appellate court decision discussed in the May, 2018, Attorneys’ Column, the court found that the GC had breached its duty of good faith and fair dealing under its liquidating agreement and, therefore, was directly liable to the sub for claims that ought to have been pursued against the owner.

Background

In June of 2001, the New York City Department of Sanitation entered into a contract with Arnell Construction Corp., as GC, to construct two new sanitation garages in Brooklyn. Arnell’s contract with the City required that any claims against the City be brought within six months of the City’s issuance of the certificate of substantial completion. In August of 2001, Arnell subcontracted with Rad & D’Aprile, Inc., for Rad to perform masonry work on the project.

In August of 2010, pursuant to a liquidating agreement it had entered into with Rad, Arnell filed a notice of claim with the City seeking damages on behalf of Rad for additional costs that Rad incurred due to various delays caused by the City. In December of 2010, Arnell sued the City on those claims.  The City moved to dismiss the lawsuit on the ground that it was untimely under the six-month limitations period provided for in Arnell’s contract. In May of 2012, the court dismissed Arnell’s lawsuit, finding that the City had notified Arnell in December of 2007 that the project was substantially complete, and that any lawsuit had to be commenced no later than June of 2008. Arnell filed an appeal and also moved to reargue the motion. Unbeknownst to Rad, while the appeal and motion to reargue were pending, Arnell settled with the City for $3,638,495.69. None of the settlement money was apportioned on account of Rad’s claim, but Arnell nonetheless released Rad’s claim in the settlement.

After that lawsuit was dismissed (and the secret settlement consummated), Rad sued Arnell directly for the same damages, alleging that Arnell had a duty to make a good-faith, diligent effort to prosecute Rad’s claim against the City, and that Arnell breached that duty by failing to commence the lawsuit against the City within the applicable six-month limitations period. Arnell moved to dismiss this claim but the trial court denied the motion, finding that the claim, as stated, was sufficient because Rad set forth facts which, if proven, would establish that Arnell had a duty of good faith and fair dealing independent of the subcontract, and that Arnell breached that duty by failing to commence the underlying action before the six-month limitations period expired. After the trial court’s order was upheld on appeal, Rad moved for summary judgment on its breach of the covenant of good faith and fair dealing claim, asserting that the facts of the undisclosed settlement, coupled with Arnell’s waiver of Rad’s claim in exchange for a recovery limited to its own claims, established that Arnell breached the covenant and should be held directly liable to Rad.

Decision

The trial court granted summary judgment to Rad, finding that the liquidating agreement was an express agreement for Arnell to be responsible for delays caused by the City, and that Arnell’s self-serving actions in failing to inform Rad of the settlement, and in releasing Rad’s claim in order to obtain payment on the contract-balance portions of its own claim, established that Arnell, in fact, breached the covenant of good faith and fair dealing, and that Arnell could not raise an issue of fact as to whether it diligently presented Rad’s claim sufficient to defeat summary judgment.

As to the extent of the claim, Arnell argued that as none of the monies recovered were on account of Rad’s claim, it could not be held liable to Rad under the liquidating agreement. The court dismissed such argument, finding that the fact that no money was recovered on Rad’s claim, together with Arnell’s failure to dispute that it would have received a substantially higher settlement on Rad’s (and its own) claim if it had been timely presented, was evidence that Arnell failed to take proper steps to preserve Rad’s claim. Accordingly, the court held that Rad’s recovery against Arnell could not be limited to the monies actually recovered from the City by Arnell, and that Rad was entitled to a trial on the issue of damages—a trial where it was free to introduce evidence of all damages that it incurred resulting from Arnell’s breach of the liquidating agreement.

Comment

Liquidating agreements are an effective way to address the problem of a sub’s lack of a contractual relationship with a GC by having that GC essentially admit the validity of the sub’s claims, confess liability on those claims, and then prosecute those claims on behalf of the sub with the promise that the recovery would be passed along to the aggrieved sub. The benefit to a sub is that claims which would otherwise be barred because of the lack of privity of contract with the owner can be adjudicated. The benefit to the GC is that its liability is limited to the amount it ultimately recovers on the liquidated claims. However, as we saw from the first Rad decision, in order to enjoy the protection of that limitation of liability, the GC must be diligent in prosecuting the sub’s liquidated claims. Further, as we saw from the second Rad decision, where it is established that a GC was not diligent in prosecuting its sub’s claims, the sub is not limited in the amount of damages it is entitled to prove to what ended up being recovered from the owner. Accordingly, GCs and prime contractors would be well advised to take their responsibilities under a liquidating agreement seriously or else be prepared to be held responsible for the entirety of the sub’s claims.

Contractor’s Delay Claim Survives Despite Failure to Provide Notice Required Under Contract

Written by Thomas H. Welby on . Posted in Attorneys' Column.

Contractual notice provisions are one of the biggest landmines that contractors face since the failure to strictly comply with such provisions can preclude recovery on otherwise valid claims. Further, notice provisions vary greatly from contract to contract. Additionally, contractors, being a practical lot, often focus on working to minimize or resolve the situation that led to the claim in the first place, sometimes to the detriment of complying with such notice requirements.

In the recent case of R-J Taylor General Contracting, Inc., v Fairport Central School District, an appellate court permitted a delay claim to survive despite the contractor’s clear failure to make its required notices under the contract.

Background

R-J Taylor General Contracting entered into two identical contracts with the Fairport Central School District for work at various schools within the district. These contracts included no-damages-for-delay provisions, and also provided specific time periods under which R-J Taylor had to notify the School District of any claims under the contract. R-J Taylor’s scope of work included, amongst other things, the removal of unsuitable soil. As to this work, R-J Taylor was to provide a unit price for such work undertaken above or below a set quantity.

During the course of its work, R-J Taylor exceeded the set quantity for soil removal. The School District refused to pay for the additional removal work, and R-J Taylor commenced a lawsuit to recover the amounts owed. In that lawsuit, R-J Taylor also sought damages related to the School District’s “unforeseeably excessive number of changes and corrections to the original contract documents.” It was agreed that these claims (one on each contract) actually sought damages for delay.

The School District moved for summary judgment dismissing R-J Taylor’s delay claims, arguing that they were barred by the no-damages-for-delay provisions. The School District also argued that regardless of the contractual bar, R-J Taylor failed to provide the requisite notice under the contracts.

Decision

The motion court denied the School District’s motion for summary judgment, and the appellate court affirmed the lower court’s holding. In doing so, the appellate court cited to well settled case law that no-damages-for-delay clauses are generally enforceable, but that exceptions exist where: (1) the delays are caused by the owner's bad faith or its willful, malicious, or grossly negligent conduct, (2) there are uncontemplated delays, (3) the delays are so unreasonable that they constitute an intentional abandonment of the contract by the owner, and (4) the delays result from the owner's breach of a fundamental obligation of the contract. Both courts held that there were questions of fact at to whether R-J Taylor could establish that one of the exceptions to a no-damages-for-delay provision existed.

As to the failure to comply with the contractual notice provisions, the appellate court held that such a failure generally constitutes a waiver of such claims. However, in light of the no-damages-for-delay provisions of the contracts, the delay claims were held to be outside of the contracts. As such, the delay claims were not subject to the notice provisions contained within the contracts, and were permitted to survive.

Comment

While R-J Taylor’s delay claim, as an extra-contractual claim, was permitted to survive notwithstanding the contractor’s failure to comply with the contractual notice provisions, contractors should not take this as holding that they need not comply with those notice provisions. Rather, the fact that the appellate court described the claim as one seeking relief wholly outside of the contract should serve as a warning that such situations are the rare exception, rather than the general rule. Clearly, had the notice provision in the contract read that notice had to be provided for “all claims”, and not just “all claims under the contract”, the outcome would have been different, and R-J Taylor’s delay claims would have met their end. The prudent course of action would have been for R-J Taylor to have provided its notices in accordance with the contracts, thus saving it from having to make an argument at to why its failure needed to be excused.

Divided OSH Review Commission Reverses Affirmance of General Duty Clause Citation Following Heat Stroke Fatality

Written by Thomas H. Welby on . Posted in Safety Policy.

A 2-1 decision by the OSH Review Commission recently reversed an Administrative Law Judge decision that had affirmed an OSHA citation alleging a violation of the General Duty Clause (“GDC”), based on employee exposure to working on a commercial roof in direct sunlight.  The citation followed the death, due to heat stroke, of a 60-year-old temporary worker, supplied by a staffing agency, who had multiple pre-existing conditions.   The case, while obviously a sad one, is instructive on several levels.  One is that the OSH Review Commission (in reversing the ALJ decision) rightly cautioned against reasoning backward, from an unfortunate outcome, to conclude that there must have existed a hazard “likely” to cause death or serious physical injury.

A second lesson from Secretary v. A. H. Sturgill Roofing, Inc., is that the ALJs and the OSH Review Commission do not “rubber stamp” citations.  In Sturgill Roofing, in addition to the initial ALJ decision, each of the three commissioners took the trouble to write a separate opinion on the appeal, and while there were conflicting viewpoints, all of the opinions (55 single-spaced pages in all) reflect solid legal scholarship, and an obvious determination to apply the OSH Act correctly.  The facts in your particular case may be hopeless, or the economics of litigating your citation may be unfavorable.  You should not, however, base a decision to forego contesting a doubtful citation on a perception that, as an employer, you will not receive a fair hearing.

The Sturgill Roofing case is also cautionary, in that while common sense might call into question whether 60-year-olds with multiple health conditions should be working on roofs in direct sunlight, care must be taken to observe the mandates of the Age Discrimination in Employment Act (ADEA) and the Americans with Disability Act (ADA).

The employer in Sturgill Roofing had an 11-member crew removing a rubber membrane and Styrofoam roof of a bank building on an August day in Ohio.  Three crew members performing this work, including “M.R.,” had been supplied by a temporary staffing agency.  It was M.R.’s first day on the job, and he was 60 years of age, with health issues, including congestive heart failure and Hepatitis C.

The temperature when the workday began at 6:30 A.M. was 72 degrees Fahrenheit, with 84% relative humidity.  M.R., who had been questioned within the limitations imposed by the ADEA and ADA (essentially, “can you do the job?”) was given the task of standing near the edge of the roof, and pushing off the edge, into a dumpster below, cut-up pieces of roofing material brought to him in carts by other workers.  It was undisputed that the workers were all encouraged to utilize access to ice, water, rest, and shade.

At about 11:40 A.M., by which time the temperature and humidity had risen to 82 F. and 51%, M.R. was seen to “walk clumsy,” and collapsed.  He was taken to hospital, where his core temperature was found to be 105.4 F.  He died of complications from heat stroke three weeks later.

Following an inspection, OSHA cited the employer for a violation of the GDC (and a related, failure-to-train item).  Both citation items were contested, and affirmed following a trial before an Administrative Law Judge.

The elements of a violation of the GDC are (1) a hazardous condition or activity in the workplace; (2) that the hazard be one recognized by the employer, or in the industry; (3) that the hazard was causing or likely to cause death, or serious physical harm; and (4) the existence of a feasible and effective means to eliminate, or materially reduce, the hazard.  As with any violation, the Secretary must also prove that the employer knew, or with the exercise of reasonable diligence could have known, of the violative condition.

 On review, a 2-1 majority of the Commission voted to vacate both citation items, finding (with respect to the GDC violation) that the Secretary had failed to prove at least two elements (the existence of a hazard, and a feasible means of abatement).

The majority found fault with the ALJ’s reliance on a National Weather Service Heat Advisory chart.  The chart indicates levels of caution when temperatures are accompanied by “prolonged exposure” or “strenuous activity” (but fails to define these terms, which were not otherwise established at the trial).  In addition, conditions on the day of M.R.’s collapse were generally only in the “caution” range for perhaps two hours, but (without sufficient grounds in the record) the government’s expert opined that 7.5 degrees should be added to the heat index, to reflect likely conditions on the roof.  The ALJ, going even further, added 15 degrees (because the work was being done in direct sunlight).  The Commission found the expert’s testimony deserving of little weight, and that the ALJ had set forth no basis to add 15 degrees for full-sun conditions.  The Commission concluded that, since absolute safety surpasses the OSH Act’s requirements, conditions in the “caution” range, for part of the morning, did not rise to the level of a hazard, within the meaning of the GDC.

The ALJ also improperly “reasoned backward,” the Commission majority found, in essentially concluding that, since a 60-year old man with multiple health issues was hospitalized and ultimately died from heat stroke, the hazard was established.

In her separate, concurring opinion, Commission Chairman MacDougall proposed that “excessive heat” is a risk inherent in the performance of outdoor work, and one that only presents a possibility for harm.  Whereas, to qualify as a “significant risk” in violation of the GDC, the hazard must be more likely than not to cause death or serious harm.

Chairman MacDougall disapproved, also, of the vague, “sliding scale” of how much heat on the roof might qualify as “excessive,” the Secretary’s expert witness at trial having spoken of a heat-related risk that could “lead to heat exhaustion for a younger person up to heat stroke for an older person,” and the ALJ having tacked 15 degrees onto the ambient temperature.  The alleged hazard, the chairman observed, was a poorly-defined “moving target,” far too attenuated and broad to establish a breach of the GDC.

The majority stressed also that the employer had lacked both actual and constructive knowledge of those aspects of M.R.’s physical condition that might have made him especially vulnerable to heat stroke.  Sturgill Roofing did not know M.R.’s age or his health status and was, indeed, forbidden by the ADEA and the ADA from seeking that information (although limited health-related inquiries are allowed, if job-related, and consistent with business necessity).  At least one federal Court of Appeals case has held that compliance with the General Duty Clause “cannot be used as justification for conducting medical inquiries that screen out an individual because of a disability,” the standard for proving the “business necessity” defense under the ADA being “quite high.”

Finally, Chairman MacDougall observed in her concurring opinion, an employer’s obligation under the GDC extends not “to any employee,” but to his own employees only, and analyzing personal risk factors (such as a single employee’s age, or underlying health conditions) magnifies the concept of a recognized hazard for all employees to mandate recognition and provision for employee-specific hazards.

M.R.’s case stirs pity, as his ailments seem to have been results of long-term alcohol and drug abuse and he could only have been on that roof out of dire economic necessity.  Even so, however, the employer was given a fair hearing and,  ultimately, a decision that fairly interpreted the governing law. If your company is cited under the OSH Act following a fatality, you should not assume that the citation will necessarily be upheld, merely because an employee died.  It is exposing employees to hazards covered by the OSH Act, not the severity of any injury as may result, that governs.  Even where there has been a death or serious injury, with competent legal advice you may be able to successfully contest all or some of the citation items, or negotiate for fewer/less serious citation items, and a reduction in the monetary penalties assessed.

Worker Safety in an Industry on the Brink of a Technological Transformation

Written by Thomas H. Welby on . Posted in Safety Policy.

Since World War II, productivity gains in construction have lagged far behind those in American industry, generally.  Construction has generally not fared well, either, in attracting “Millennials” (the youngest of whom are now in their mid-20s) to work in the industry, and one of the industry’s greatest problems at the moment is a persistent shortage of skilled labor.

Construction also continues to be near the top — up there with mining and logging — as one of the most perilous occupations.

While we can’t predict exactly where the industry is headed over the next few decades, we know for sure that there are major technological advances, already in varying stages of making themselves felt, that will grow, probably very quickly, in their impact on the industry.  While disruption is always part of the story when vast technological changes affect an industry or economic sector, for the most part we can be optimistic that, within years, current trends will produce opportunities for widespread innovation, higher-quality construction, big cost savings — and substantial reductions in construction injuries and fatalities.

Of all of the burgeoning new technologies, construction insiders expect that VDC tech (virtual reality, augmented reality, artificial intelligence, building information modeling) is likely to have the greatest overall impact as to how projects are designed and constructed.  BIM has already arrived as a potent force, so much so that, in the near future, with the aid of AI-led design, building design will be less about drawing than about refining algorithms to successfully incorporate a potentially vast set of project requirements.  AI will do much of the conceptual heavy lifting — at a cost that will no doubt drop, with improvements in the technology over time — in determining (or presenting choices) as to how the project can be built to best fulfill its intended use, within the constraints of size, budget, and the site’s peculiar environmental, regulatory, and engineering characteristics.

While the construction-safety impact of BIM might not be great in the near term, there will likely be an appreciable impact, as the process will lead to the more accurate integration of building systems in project design, and a concomitant reduction of field changes — that, often, being on-the-fly improvisations, present increased risks of injuries to employees.  Eventually, modes of design will  no doubt be evaluated using AI to promote safety considerations, both in construction and in the use of the finished product, and those parameters will find their way into the AI algorithms that tie together all of the design considerations.

Augmented reality is another technology that is finding a place on construction sites, in a growing variety of applications.  “Augmented reality” means an interactive experience of a real-world environment, in which existing objects are "augmented" by computer-generated visual, auditory, or other perceptual information.  Its use in construction is still in the early stages, but will probably expand greatly combination with drone technology and artificial intelligence.  One way in which these technologies is already being used together to enhance project safety is that visual images from drones (plus cameras and sensors placed around the jobsite) can instantaneously be processed, with information selected by AI being made available to field supervisors and the rank-and-file via headsets, cellphones, and tablets.  Building defects, hazards, and employees failing to observe safety standards can more readily be identified, and AI can be utilized to select and report problems, and swiftly recommend remedial measures.

Detecting and disciplining safety infractions is essential to minimizing jobsite injuries (and OSHA citations).  A great many injuries and deaths in construction occur when workers have a momentary lapse in concentration, or cut corners, and fail to tie off, or go down into an unshored trench “for just a couple of minutes,” or overestimate the difference between the bucket lift and an energized high-voltage line.

Drone technology, those nifty flying robots with high-resolution cameras, are in widespread (and rapidly-expanding) use on construction sites.  They should prove to be a godsend in avoiding both injuries and OSHA citations, as the employer no longer has his internal enforcement eggs in the basket of a foreman walking the job once or twice a day, and peering up to see if everyone has his lanyard connected far above him.

Drones can now be deployed to survey, continuously, more or less the entire worksite.  They enable supervisors to not only keep an eye on employers to ensure that they’re observing safety rules, but to detect pretty much the gamut of OSHA violations as can be observed by a Compliance Officer happening to drive by.  The mere presence of drones (but only if coupled with some firmness in disciplining safety infractions) is a powerful deterrent to inattention, or “just this once” disobedience of safety rules, on the part of construction employees.

Robotics is another tech field already making a big impact on construction operations.  One use is that robots are part of the mix in integrated systems using rovers, drones, AI, LiDAR (which uses pulsed laser light and sensors to measure distances precisely) to survey jobsites, assess progress, and identify and report errors.

Robots are currently being used, among other uses on a constantly-growing list of applications, to guide equipment in excavating construction sites, move materials around the site, lay bricks at ten times the speed of a human mason, and even to tie rebar.

While, to be sure, there are concerns that the deployment of robots on construction sites will reduce employment opportunities, there are indications that robots will often be used to supplement human workers, and will work in tandem with them, often performing heavier, repetitive and hazardous tasks.  That, of course, will spare construction workers many injuries, as well as wear and tear on their bodies, and potentially extend their working lives.  Having robots to perform the heavy lifting may also increase female participation in the construction workforce.

Offsite building and the growth of modular construction is another trend that is re-shaping the industry, with significant implications for worker safety.

Naturally, to the extent that construction takes place indoors, and in a factory environment (rather than outdoors and twenty or thirty stories aloft) risks from falls, weather-related conditions, vehicular traffic, conditions that vary from site to site (e.g., the presence of high-voltage lines overhead) and chaotic conditions on a constantly-changing outdoor jobsite are reduced appreciably.

Yet another technology in limited use now in construction, but with vast potential for the future, is 3D printing.  Soon, it may become possible to “print” onsite much of the material going into a structure under construction.  Early successes on residential and smaller-scale projects are being built upon, to bring about onsite printing of progressively more, and larger, building elements.

The full range of safety implications of 3D printing may be hard to foretell, but since the transportation, storage, hoisting, and installation of building elements are all hazardous operations, printing materials closer to where they are to be installed has some promise of yielding appreciable safety advantages.

As tech transforms the construction workplace, there are grounds to hope that “Generation Z” workers, born after 1995, will be attracted to the industry in greater numbers than their older “Millennial” brethren.  “Generation Z” are looking for careers with good pay and advancement opportunities, and many are wary of incurring crushing debt for college, such debt being a major cause of pessimism amongst Millennials.

While Millennials as a group are certainly more tech-savvy than most of us Baby Boomers, Generation Z are even more so and, as tech transforms the construction workplace, there is potential for many younger workers to want to be a part of the industry.

Construction, after decades of stagnation in terms of productivity, technological advancement, and safety engineering, is about to make giant leaps forward.  It’s a great time to be a “tech geek” with a serious interest in construction.

Contractor Loses Delay Claim for Delay Occurring Prior to Approval of Contract by State Comptroller

Written by Thomas H. Welby on . Posted in Attorneys' Column.

Section 112 of New York’s State Finance Law provides that no contract with the State which exceeds $50,000.00 is considered effective prior to its approval by the State Comptroller. This statute was enacted to prevent state employees from making improvident or extravagant contracts and from creating liabilities for which there was no appropriation. Section 112 has been held to apply to a wide variety of contracts, including construction contracts.

In the recent case of C&L Electric, Inc. v City University of New York, an appellate court used Section 112 of the State Finance Law to deny a contractor a recovery on that portion of a delay claim which pre-dated the State Comptroller’s approval and filing of the contract.

Background

In 2001, C&L Electric, Inc., was notified that it was the successful bidder on a project to install a fire alarm system throughout four buildings of the City University of New York’s1 New York City Technical College in Brooklyn. C&L went to work on the project at some time after May 3, 2002, the date on which C&L sent a notice to CUNY complaining of the long delay in awarding the contract. In 2007, C&L submitted a request for an extension of time from April 4, 2004 to December 31, 2007, citing, amongst other delays, the delay in the start of the project. This extension of time was approved, but with the caveat that CUNY was still evaluating the delay claim change order. Ultimately, C&L’s contract was terminated by CUNY for reasons unrelated to the delay claim, and C&L sued on its delay claim, among others.

Decision

The State moved for summary judgment dismissing C&L’s lawsuit on various grounds. As to the delay claim, the State argued that it was barred by the “no damages for delay” clause in the contract. The lower court denied the motion, finding that there were questions that had to be resolved by a jury as to whether the facts of this matter fit into one of the four categories where damages are permitted even in the face of a “no damages for delay” clause (delays resulting from bad faith or grossly negligent conduct on the part of the owner; uncontemplated delays; delays so unreasonable that they amount to an abandonment of the contract; and delays resulting from the breach of a fundamental obligation of the contract). The State appealed.

On appeal, the appellate court upheld the lower court’s finding that there was an issue to be resolved by a jury. However, that court modified the lower court’s order to apply Section 112 of the State Finance Law, holding that claims for any delays which arose prior to September 26, 2002, the date on which the contract was approved and filed by the State Comptroller, were subject to dismissal. The appellate court also rejected C&L’s argument that the parties’ course of conduct indicated a waiver of the statutory protection, citing to well established case law holding that “employees of a state agency cannot, through words or a course of conduct, bind the State to a contract that the Comptroller has not approved”.

Comment

As this case demonstrates, no rights exist under a contract which has not been approved by the State Comptroller, as that contract does not legally exist before such approval. While the State here did not make an issue of its obligation to make payment of the base contract balance for work performed prior to the contract’s acceptance date, there is case law that holds that because there is no legally existing contract, the State has no obligation to pay for such work either under a contract or an unjust enrichment theory.

While state agencies are often anxious to get their construction projects under way, and while they typically do not weaponize this statutory provision to disclaim the obligation to pay for work performed in good faith prior to the formal acceptance and filing of the contract, know that in the event that a litigated contract dispute arises this shield is available to the state. A contractor would be well advised to make inquiries with the state agency and the State Comptroller’s office as to the status of the Comptroller’s acceptance of the contract so that they can be sure that they are working under a valid and enforceable agreement.

1 The City University of New York is a part of the State University of New York system and, thus, a State, not a City, entity.

Safety & Health Law Judge: Fall Protection Required When Employees Are Walking Across the Roof

Written by Thomas H. Welby on . Posted in Safety Policy.

Year after year, falls are the #1 cause of fatalities in construction, and fall protection violations are the single largest basis for OSHA citations in the industry.

This month’s lesson underscores that employees must be protected against falls at all times, whenever the danger is present.  In Secretary v. Ontario Exteriors, Inc., a roofer on a job replacing the roof of a two-family residence in the Finger Lakes region, fell from the roof, and suffered permanent, disabling injuries.  His employer’s unusual work rules regarding fall protection while entering and exiting the roof area were found to violate OSHA’s fall protection standard.

The eave of the roof at issue in Ontario Exteriors was about 18 feet above ground level, and the pitch of the roof was 9 in 12 (vertical to horizontal).  The roof had unprotected sides, and lacked guardrails and a safety net.

The rope that served as a fall arrest lifeline hooked into a D-ring anchorage point at one end, and was hooked onto the employee’s personal fall arrest harness at the other end.  At the end of each workday, the employees stored their fall arrest rope system (the rope itself with a 6-foot shock cord, and the clasp for hooking onto the roofer’s harness) not close to the eave as is customary, but at the roof’s peak.

On the day of the mishap six Ontario employees were stripping shingles near the roof’s peak.  One of them moved his rope from one D-ring anchorage point to another, but, as was determined afterward, failed to affix it properly.  This employee slipped, slid down the roof, fell 18 feet to the ground, and sustained permanent, disabling injuries, including spinal fractures.  OSHA cited Ontario for a “Serious” violation of the standard applicable to fall protection in residential construction, and the employer contested the citation and proposed penalty.  The matter was litigated under the “Simplified Proceedings” rules, and was tried before an Administrative Law Judge.

Typically, roofers and others working on elevated surfaces have their harness, lanyard, and the rope grab attached to the end of the lanyard on and ready, before climbing a ladder (or ascending on a lift) to the roof eave, or other elevated surface.  Ordinarily, the procedure is that, upon reaching the roof eave or edge of the elevated surface, the worker will attach his rope (that should be attached at the other end to an adequate anchorage point) to his harness immediately upon stepping onto the roof or other elevated surface.

At most residential worksites, the fall protection ropes are left at the roof eave, or hanging over the eave, at the end of the day.  On the site where the injury described took place, management dictated a different procedure.  Ontario’s employees were ordered to store their ropes at the roof’s peak at the end of each shift.

The ropes used were of sufficient length that they could have remained attached to the anchorage point at one end, and coiled at the roof eave at the other end, for the roofers’ use immediately upon reaching the top of the ladder at the beginning of their next shift.  Despite this, it was Ontario’s standard practice, and one enforced by the company’s officers, safety director, and project supers, that roofers be required to climb the ladder to the eave, step off the ladder onto the roof, walk to the roof’s peak, straddle the roof ridge, find the appropriate safety line, and only then hook the clasp onto the safety harness.  This sequence was reversed at the end of each shift.

Thus, although Ontario’s employees were directed not to perform any “roofing work” while moving between the eave and the roof peak without fall protection, their employer imposed a policy that forbade them from being tied off, at least twice each day, while moving between the ladder and roof eave, and the roof peak (where the ropes were required to be stored).

Ontario contended that the safety rationale for its policy was that assertedly it was easier to get on and off the ladder while unhooked; that it was cumbersome to climb the ladder while tied off; that it was too difficult to hook the rope to the harness’s D-ring with just one hand (the other hand being needed to hold onto the ladder) and that the anchorage point, and the attached rope, could not be inspected for security from the top of the ladder.

According to testimony by the injured roofer’s fellow employees, the employer’s true reason (or, perhaps, a reason in addition to those mentioned) for its unorthodox policy requiring not being tied off while moving between the eave and the peak, was that the employer, or possibly some clients, deemed storing the ropes at the eave to be unsightly, or that it posed a risk of damage to the structure’s siding.

At the trial of the contest proceeding, the OSHA Compliance Officer who had conducted the post-accident inspection testified he had never encountered an employer insisting that workers wait to reach the roof’s peak before securing their lanyards.  From his own experience, he testified, attaching the rope to the harness, while at the top of the ladder, takes just seconds.  Alternatively, if he hooked onto the fall arrest system before starting up the ladder, he just moved the rope grab with his left hand as he climbed the ladder.  It is very easy, the C.O. testified, to keep three points of contact, while repeatedly sliding the rope grab, thus achieving fall protection while climbing a ladder.  This, the C.O. maintained, was safer than simply climbing the ladder, stepping onto a roof, approaching and then straddling the ridge, and only then hooking the lanyard onto the harness.

The exemption applicable where all fall protection and anchorage points have been removed at the completion of a job, the C.O. insisted, did not apply in Ontario’s case, as the company was still actively engaged in roofing work, and fall protection was available and functional.

The ALJ affirmed the citation (although he assessed a smaller monetary penalty than the Secretary had recommended).  He rejected the employer’s argument that the employees were not “at work” while moving between the eave and the peak, or performing “roofing activity” before they had tied off to the anchorage points at the roof peak.

Ontario’s employees, the ALJ found, were subject to fall protection requirements at all locations on the worksite where they were exposed to a fall of more than 6 feet.  Exposure was not limited to the time an employee was engaged in a specific roofing activity, as the assigned workplace was the entire roof.  It was not the activity being performed, the ALJ found, that mandated fall protection, but the workers’ exposure to the hazards of falling from an elevated surface.

Ontario’s related  argument — that employees were not yet at work, until they reached the peak and tied off — was also rejected.  During the approximately one minute spent crossing the roof between the eave and the peak, employees were engaged in assigned work duties, and since they were exposed to a fall from a height greater than 6 feet, they were required to have fall protection.  “That it takes only a second for an employee to lose his footing and fall pointedly illustrates the rationale behind the [OSH Review Commission’s] refusal to negate a violation because of the brevity of employee exposure,” the ALJ observed.

The moral of this story goes beyond the teaching that employee exposure can occur whenever employees are “in the course of assigned working duties, personal comfort activities while on the job, or their normal means of ingress-egress to their assigned workplaces.” Nor is it solely that brief duration of exposure to a fall hazard does not negate the violation or its seriousness.

The main lesson here is that falls occur suddenly, and lives can be changed, or lost, in an instant.  If your employees work on elevated surfaces, they need to be protected from falls at all times.  You need to furnish them with adequate equipment.  You also need work rules, but rules are insufficient, unless they are communicated.  So, you need to be persistent in training.  Plus, you can have all the training in the world, but if workers are casual about tying off, and supervisors look the other way, your company is courting disaster — and we don’t mean just a citation, and a $12,000 penalty.  Don’t let that happen.