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Mayor Adams to lift the NYC COVID-19 Vaccine Mandate effective November, 2022

Written by Thomas S. Tripodianos on . Posted in Legal Alerts.

“We’re removing the requirement to be vaccinated and to participate in sports and extracurricular activities. We’re removing that requirement for our schoolchildren,” Adams said. “We will also provide additional flexibility to business by lifting the private-sector mandate on Nov. 1. This puts the choice in the hands of New York businesses.”

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

General Contractor Granted Dismissal of Unjust Enrichment Claim as Not Legally Cognizable

Written by Austin S. Brown on . Posted in Legal Alerts.

Under well settled New York law, if a valid and enforceable contract governing a dispute exists, then a claim for unjust enrichment does not lie. However, just because a piece of paper was signed, such does not necessarily mean that a contract was truly formed—and formation is often a heavily fact intensive issue. Accordingly, it is vitally important that the lawsuit be properly plead to give the contractor the ability to pursue an unjust enrichment claim if there are formational issues affecting the viability of the contract, or in the event that quantum meruit damages are more appropriate1. This issue was recently discussed in the case of Senator Construction Group Inc. V. T.G. Nickel & Associates, LLC and MP Owner LLC, where a general contractor’s motion to dismiss was granted against its subcontractor on this principle.  

Here, subcontractor Senator entered into a contract with general contractor TG Nickel to perform masonry work at a construction project in Brooklyn. When TG Nickel stopped paying Senator, Senator sued to foreclose a mechanic’s lien, and under both breach of contract and unjust enrichment theories. TG Nickel moved to dismiss Senator’s unjust enrichment claim, arguing it was barred by documentary evidence (the controlling contract) that was acknowledged by Senator in the complaint.  

In its opposition to the motion, Senator argued that its unjust enrichment claim was permissible even though it had already admitted that the contract was valid and enforceable as procedural law allows claims to be asserted alternatively or hypothetically. Accordingly, argued Senator, it should be entitled to assert such claim if the contract sued upon was ultimately held to be void. However, the Court held that parties effectively conceded that the unjust enrichment claim was not viable because they acknowledged that the contract’s validity was not at issue. By making such a concession, Senator barred its own form of alternative relief—before discovery was even had to flesh out the facts. 

Especially at the pleadings stage, lawyers rely on the facts given to them by their client. However, this creates two major problems: 1) the lay client may not know what facts are legally relevant; and 2) there are often material facts unknown even to the client before discovery is conducted. In that regard, if there is even a hint of a contract formation or validity issue, then such a concession should not be made at the pleadings stage. The more appropriate route is to proceed to discovery, and then choose the form of relief that is more appropriate based on the facts and circumstances of the particular case as they develop. That way, if the contractor’s unjust enrichment claim is not a viable one, it can be abandoned.

It is absolutely vital for all owners, developers, contractors, and others to understand the pitfalls involved in litigation, including that the facts as alleged may or may not be true. Even so, such does not mean a cognizable legal theory does not exist. Accordingly, it is important to preserve your rights to proceed under alternative theories of recovery. Reliable legal advice from experienced construction litigators can help avoid these potential pitfalls. 

1For example, if damages are exceedingly hard to prove “standing on the contract,” then damages in quantum meruit may be an excellent strategic alternative.

If you would like more information regarding this topic please contact Austin S. Brown at abrown@wbgllp.com or call (914) 607-6435

Construction Industry Wage Theft Bill Becomes Law

Written by Thomas S. Tripodianos on . Posted in Legal Alerts.

Governor Hochul signed the Construction Industry Wage Theft bill (The labor law is amended by adding a new section 198-e) into law on Labor Day.

The law which affects contracts entered into on or after January 4, 2022, makes general contractors (including a  construction manager, general or prime contractor, joint venture, or any combination thereof) jointly responsible -limited to three years-for wage theft violations committed by subcontractors. An individual or a representative could file a lawsuit against the employer-subcontractor and the general contractor.  Additionally, the attorney general may bring an action to collect unpaid wages and penalties on behalf of employees.

Generally, employees and subcontractors cannot waive a contractor’s liability for unpaid wages, benefits, wage supplements, and other remedies, including attorneys’ fees and costs incurred by an employee pursuing unpaid wages.  There is, however, an exception for unions that may waive the requirement through collective bargaining.

Also excluded from the act are certain classes of residential construction projects.

General Business law is also amended by adding a new section 756-f to provide that a contractor may request certified payrolls to apprise the contractor of a subcontractor’s payment status in paying wages and making any applicable fringe or other benefit payments  or contributions.  In addition, the contractor may ask that the subcontractor provide   (a) the names of all workers of such subcontractor on the project, including the names of all those designated as independent contractors;  (b)  when applicable, the name of the contractor’s subcontractor with whom such subcontractor is under contract; (c)  the anticipated contract start date; (d) the scheduled duration of work; (e) when applicable,  local unions with whom such subcontractor is a signatory contractor; and (f) the name, address and phone number of a contact for such subcontractor.  The subcontractor’s failure to timely comply with a request for information shall be a basis for a contractor to withhold payments owed to a  subcontractor at any tier.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

Public Authorities Law Bars Contractor’s Claim

Written by WB&G on . Posted in Legal Alerts.

Statutes of limitation set time periods by which a lawsuit must be commenced. Generally, under New York’s statute of limitations, a breach of contract claim must be brought within six years from the date upon which the cause of action accrued. Contractors should be aware that their contract may substantially reduce the period within which to bring an action. Likewise, local and state laws may similarly reduce the period to bring an action where the defendant is a municipality or a public benefit corporation.     

In Arnell Construction Corporation v. New York City School Construction Authority, an appellate court recently  addressed this issue. In Arnell, the Plaintiff was awarded a contract with the New York City School Construction Authority (“SCA”)  to renovate an existing building and construct a three-story addition. While work was ongoing, Arnell submitted a requisition to the SCA. Shortly thereafter, on or about August 5, 2015, Arnell filed a Notice of Claim with the SCA, setting forth a claim in the amount of $451,000.00 for damages, costs and expense for additional work. Thereafter, on or about September 14, 2015, Arnell filed a Second Notice of Claim for damages in the amount of $809,394.23 in connection with unforeseeable delays. Although the Notices of Claim were not resolved, Arnell continued work on the project until a Certificate of Substantial Completion was issued in October of 2016. During this time, Arnell appears to have taken no further steps to commence any legal action. On January 17, 2018, Arnell filed a Summons and Complaint seeking $1,260,394.23.

The SCA quickly moved to dismiss the claim based on a one-year statute of limitations. Public Authorities Law § 1744, perhaps unbeknownst to Arnell, states that any action “other than the one for personal injury, death, property damage or tort…shall have been commenced within one year after the happening of the event upon which the claim is based”. The lower court initially denied the SCA’s motion, finding that it failed to meet its burden to show that the Arnell’s claims for monetary damages were time barred. The appellate court disagreed and held that Arnell’s claims were barred by the applicable statute of limitations, and that Arnell had provided no evidence that the statute of limitations was tolled or that an exception applied. Thus, Arnell’s claims were dismissed.

Courts do not have discretion to extend the statute of limitations periods. Contractors, subcontractors, suppliers and materialmen far too often lose out on their right to bring a lawsuit by waiting too long to commence the lawsuit. Acting quickly when disputes arise can make the difference between full recovery and a complete loss (not to mention avoiding responsibility for attorney’s fees and litigation costs).

Because there are a number of different deadlines to file notices of claim and/or commence the lawsuit, you should contact an attorney to review the highly technical and rigidly enforced accrual dates (when the time to bring an action starts) and notice of claim requirements (how to notify a municipality). Contractors have to be mindful of two periods of limitations: the Notice of Claim deadlines and the Statutes of Limitations. It is necessary to comply with both, otherwise your claim will be lost.

If you would like more information regarding this topic please contact Robert W. Bannon II at rbannon@wbgllp.com or call (914) 607-6455

Breach of Contract Claims Must be Supported by A Contractual Relationship

Written by WB&G on . Posted in Legal Alerts.

Generally, a direct contractual relationship – privity – is required between a plaintiff and a defendant in order to maintain a lawsuit for breach of contract. However, is a relationship in which one party deals directly with another and exercises control over the other sufficient to allege the functional equivalent of privity such that a breach of contract lawsuit could be maintained? A recent New York appellate court decision provided a resounding answer – No.

In the case of Tutor Perini Building Corp. v. Port Authority of New York and New Jersey, 191 A.D.3d 569, 143 N.Y.S.3d 12 (1st Dept. 2021), Tutor Perini (hereinafter “GC”) contracted with George Washington Bridge Bus Station Development Venture LLC (the “Developer”), the lessee of the George Washington Bridge Bus Station in Manhattan, to perform construction and renovation work. The Developer had previously contracted with The Port Authority of New York and New Jersey, as the Owner of the property (“Owner”). After not being paid for its work, the GC commenced a lawsuit directly against the Owner, alleging breach of contract and unjust enrichment. The GC based its breach of contract claim on the theory that the relationship between the GC and the Owner was the “functional equivalent” of privity based on the repeated interactions between the parties and the Owner’s “almost total control” over the project. The functional equivalent of privity doctrine is generally utilized to enable third-party beneficiaries to assert breach of contract claims directly against parties to a contract to which they are not signatories.

In the present case, the court rejected the attempt to apply the functional equivalent of privity doctrine because it found that the GC’s allegations of direct dealing and the exercise of some control were insufficient as the functional equivalent of privity doctrine (in the context of a breach of contract action) requires the plaintiff to be a third party beneficiary to the contract. The court further held that the application of the functional equivalent of privity doctrine, as applied by the GC, would essentially eliminate the need for privity to bring a breach of contract action. Additionally, it would lead to a significant increase in potential litigation and would unnecessarily complicate future commercial relationships.

In addition to the functional equivalent of privity doctrine argument, the GC also claimed that the Owner and the Developer were essentially a joint venture. However, the court quickly dismissed this argument stating that the GC failed to allege the requisite acts which manifest the intent by the Owner and the Developer to be associated as joint venturers. Further, the lease agreement between the Owner and the Developer explicitly stated that no such joint venture relationship was created. For these reasons, the court also dismissed the GC’s breach of contract claim.

While the court ultimately dismissed the breach of contract claim, it did maintain the GC’s unjust enrichment claim, which was plead in the alternative to the breach of contract claim. This claim stated that the Owner was enriched by the GC’s work at the project and thus the GC should be compensated for the value of work performed. As this claim does not require privity and is based on the court’s ability to provide equitable relief , it was allowed to proceed. The takeaway here should be that when commencing a lawsuit, one should include all potential theories of recovery – particularly where, as here, the right to assert a particular claim against another party is not certain.

If you would like more information regarding this topic please contact Giovanni Care at gcare@wbgllp.com or call (914) 607-6437

Indemnity, Subrogation and Freezing Pipes – A Tale of One Loss and Two Legal Theories (Part Two)

Written by Thomas S. Tripodianos on . Posted in Legal Alerts.

You’ve probably seen indemnity and waiver of subrogation clauses in your contracts but, do you understand what they mean and how they operate?  In this two-part Legal alert, we go through a real-world example.  In the last alert we discussed subrogation.  This time we discuss indemnity.

A party is entitled to full contractual indemnification provided that the intention to indemnify can be clearly implied from the language and purposes of the entire agreement and the surrounding facts and circumstances.

When Insured renovated his residence in 2013, he hired General Contractor. General Contractor, in turn, retained Plumber to perform the plumbing work.  The plumbing work included. a water pipe, located between the exterior wall of the residence and the interior wall of the master bathroom that froze and burst. The pipe was attached to an exterior spigot, also known as a hose bib, that serviced an irrigation system for the 16th-floor terrace of the residence.  General Contractor also hired Drywall Contractor to perform the framing and drywall work, as well as the placement of insulation within the framing.

Insurance Company sued the General Contractor, Plumber, and Drywall Contractor, asserting negligence against all defendants based on their alleged failure to properly install and adequately insulate the plumbing involved in the incident, and breach of contract against them based on their alleged failure to perform the plumbing and construction work for the project in a workmanlike manner and in failing to properly protect the plumbing from freezing temperatures.

General Contractor sued the Drywall Contractor for contractual and common-law indemnification, contribution.

Here, General Contractor and Plumber executed a Subcontract Agreement Rider containing the following indemnification clause:

1. Indemnity. In consideration of the Contract Agreement, and to the fullest extent permitted by law, the Subcontractor shall defend and shall indemnify, and hold harmless, at Subcontractor’s sole expense, the Contractor, all entities the Contractor is required to indemnify and hold harmless, the Owner of the property, and the officers, directors, agents, employees, successors and assigns of each of them from and against all liability or claimed liability for…any and all property damage or economy damage, including all attorney fees, disbursements and related costs, arising out of or resulting from the Work covered by this Contract Agreement to the extent such Work was performed by or contracted through the Subcontractor or by anyone for whose acts the Subcontractor may be held liable, excluding only liability created by the sole and exclusive negligence of the Indemnified Parties. This indemnity agreement shall survive the completion of the Work specified in the Contract Agreement.

General Contractor maintains that it is entitled to contractual indemnification from Plumber in the form of reimbursement for all defense costs incurred by it in this action pursuant to the indemnification clause. However, General Contractor has not established that the damages in this case originated from, were incident to, or connected to the work performed by Plumber so as to trigger the application of clause.

General Contractor submits the affidavit of professional engineer who states that the water pipe which allegedly burst was intended to be active “only during the irrigation season — approximately from late April to early November” and that it was meant to be winterized for the remaining part of the year so as to “prevent  potential damage due to pipe component freezing”. He opines that the pipe was not winterized and “extremely cold, sub-freezing temperatures during mid-February 2016 caused the stagnant water in the irrigation pipe to freeze and subsequently rupture the pipe leading to the damage.”

Although he also maintains that Plumber was negligent in not warning General Contractor that the pipe could freeze without winterization, General Contractor was aware that the system needed to be winterized on an annual basis. Thus, General Contractor fails to establish, that the damage arose out of or resulted from the work performed by Plumber.

General Contractor also asserts causes of action against Drywall Contractor for contractual indemnification, common-law indemnification and contribution.

General Contractor and Drywall Contractor executed a Subcontract Agreement Rider containing the same indemnification clause as the one executed by General Contractor and Plumber, which requires indemnification in cases where the damages arose out of or resulted from the work performed by Drywall Contractor.

To support its position that it did not cause the flooding, Drywall Contractor claims that General Contractor hired Drywall Contractor to perform the framing and drywall work for the renovation, as well as the installation of Insulation on the perimeter walls of the residence.  The purpose of this insulation installed by Drywall Contractor was to keep cold air from entering the interior space of the residence. That is, the insulation was intended to keep the rooms inside warm, not to keep pipes or outdoor fixtures from freezing.

Drywall Contractor was not involved in the plumbing and was not responsible for insulating any pipes.

In addition, Drywall Contractor points out that both General Contractor’s expert and Plumber’s expert identify the failure to winterize the hose bib and water line as the cause of the incident. Drywall Contractor contends, and it is undisputed that, it had no responsibility to perform the winterization or to notify the Insured or his representative that winterization was necessary.

Drywall Contractor established that the damages at issue did not arise out of or result from the work it performed so as to trigger the application of the indemnification clause.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

Indemnity, Subrogation and Freezing Pipes – A Tale of One Loss and Two Legal Theories (Part One)

Written by Thomas S. Tripodianos on . Posted in Legal Alerts.

You’ve probably seen indemnity and waiver of subrogation clauses in your contracts but, do you understand what they mean and how they operate?  In this two-part Legal alert, we go through a real-world example.  Part one will deal with subrogation.

Subrogation, an equitable doctrine, allows an insurer to stand in the shoes of its insured and seek indemnification from third parties whose wrongdoing has caused a loss for which the insurer is bound to reimburse.

When Insured renovated his residence in 2013, he hired General Contractor. General Contractor, in turn, retained Plumber to perform the plumbing work.  The plumbing work included. a water pipe, located between the exterior wall of the residence and the interior wall of the master bathroom that froze and burst. The pipe was attached to an exterior spigot, also known as a hose bib, that serviced an irrigation system for the 16th-floor terrace of the residence.  General Contractor also hired Drywall Contractor to perform the framing and drywall work, as well as the placement of insulation within the framing.

Insurance Company sued the General Contractor, Plumber, and Drywall Contractor, asserting negligence against all defendants based on their alleged failure to properly install and adequately insulate the plumbing involved in the incident, and breach of contract against them based on their alleged failure to perform the plumbing and construction work for the project in a workmanlike manner and in failing to properly protect the plumbing from freezing temperatures.

General Contractor sued the Drywall Contractor for contractual and common-law indemnification, contribution.

General Contractor argues that the Insurance Company’s claims against it are barred by a waiver of subrogation clause in Insured’s contract with General Contractor (the Insured/General Contractor Agreement). Specifically, General Contractor contends that Insured waived Insurance Company’s right of subrogation against General Contractor by virtue of the following provision in the Insured/General Contractor Agreement:

Unless specifically precluded by the Owner’s property insurance policy, the Owner and Contractor waive all rights against (1) each other and any of their subcontractors, suppliers, agents and employees, each of the other; and (2) the Architect, Architect’s consultants and any of their agents and employees, for damages caused by fire or other causes of loss to the extent covered by property insurance or other insurance applicable to the Work.
 

General Contractor asserts that this waiver is triggered here because Insured’s Insurance Company property insurance policy does not “specifically preclude the waiver”, highlighting the following provision in the policy:

If the insured person has rights to recover all or part of any payment we have made under this policy, those rights are transferred to us. The insured person must do nothing after loss to impair such rights of recovery. At our request, the insured person will bring suit or transfer those rights to us and help us enforce them.

General Contractor argues that since its contract with Insured contains a clear waiver of subrogation provision and the Insurance Company policy does not forbid the waiver, Insurance Company is barred from bringing this action against General Contractor.

In opposition, Insurance Company contends that because the clause is not conditioned upon there being a provision permitting a waiver of subrogation in each of their insurance policies and because Insurance Company did not issue a policy to Insured in which Insurance Company waived its subrogation rights it should be allowed to maintain this subrogation action against General Contractor.

Here, Insured and General Contractor waived “all rights” against each other “for damages caused by fire or other causes…to the extent covered by property insurance,” so long as such waiver is not “specifically preclude[d]” by Insured’s property insurance policy. While the policy of insurance issued by Insurance Company to Insured provides that Insured “ must do nothing after loss” to impair such rights, it does not preclude Insured and General Contractor’s anti-subrogation agreement.

Additionally, the policy “ acknowledge[s] the right of the insured to waive the insurer’s subrogation rights” by allowing Insured to relinquish his claims prior to the loss.

Contrary to Insurance Company’s contention, the fact that the Insurance Company policy does not contain a waiver of subrogation is not fatal under the circumstances because there is no language in the Insured/General Contractor Agreement requiring that the parties’ insurance policies contain such a waiver.

Insurance Company additionally argues that its breach of contract claim against General Contractor is not barred by the waiver of subrogation clause because the waiver does not encompass contractual claims. However, even assuming the waiver applies only to tort-based liability, the breach of contract claim against General Contractor, essentially based upon General Contractor’s alleged negligence in the performance of its contract with Insured, is clearly within the scope of the waiver of subrogation clause and its preclusion of claims arising from a party’s tortious acts

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

HERO ACT Legal Alert Follow-Up

Written by Thomas S. Tripodianos on . Posted in Legal Alerts.

In early May of this year we sent out a Legal Alert advising you of the passage of the New York Health and Essential Rights Act (HERO Act) into law. Section 1 of the Act requires the New York State commissioner of labor, in consultation with the New York State Department of Health, to create and publish a model airborne infectious disease exposure prevention standard for all worksites, by industry, and to establish minimum requirements for preventing exposure to airborne infectious diseases in the workplace. In establishing these minimum requirements, the labor commissioner is charged with developing protocols to address the following topics: (1) employee health screenings; (2) face coverings; (3) personal protective equipment (PPE) required by industry and at the employer’s expense; (4) hand hygiene; (5) cleaning and disinfecting of shared work equipment and surfaces (e.g., hand tools); (6) social distancing protocols; (7) mandatory or precautionary isolation or quarantine orders; (8) engineering controls; (9) assignment of enforcement responsibility of the safety plan and federal, state, and local protocols to one or more supervisory employees; (10) compliance with employee notice requirements; and (11) verbal review of standards, policies and employee rights.

The Act requires the labor commissioner to publish these industry-specific airborne infectious disease exposure prevention standards in both English and Spanish in addition to other languages depending on predominant languages used in the industry.

On July 6, 2021, the Department of Labor, in consultation with the NYS Department of Health, released a new Airborne Infectious Disease Exposure Prevention Standard , a general Model Airborne Infectious Disease Exposure Prevention Plan, and various industry-specific model plans (including construction) for the prevention of airborne infectious disease.

The HERO Act requires employers to adopt and maintain an airborne infectious disease prevention plan to be implemented when an airborne infectious disease is designated by the New York State Commissioner of Health as a “highly contagious communicable disease that presents a serious risk of harm to the public health.” This plan will not apply to any seasonal or endemic infectious agent or disease, such as the seasonal flu, that has not been designated by the Commissioner as a highly contagious communicable disease that presents a serious risk of harm to the public health.

The airborne infectious disease exposure prevention plans must go into effect when an airborne infectious disease is designated by the New York State Commissioner of Health as a highly contagious communicable disease that presents a serious risk of harm to the public health. Currently, while employers must adopt plans as required by the law, as of the date of this writing no designation has been made and plans are not required to be in effect.

Employers must adopt plans within 30 days of the release of these documents (Thursday, August 5, 2021), and communicate the plan to employees with 30 days after adoption (Saturday, September 4, 2021). Employers must also post the plan at the worksite and incorporate the plan into an employee handbook if the employer has a handbook. In addition, employers must make the plan available for review upon request by an employee, independent contractor, employee representative, collective bargaining representative, the labor commissioner, or the Commissioner of public health.

Section 2 of the Act dealing with the establishment of workplace safety committees applies to employers that employ at least ten employees or have an annual payroll of over $800,000 and a “workers’ compensation experience modification rating of more than 1.2.” and is effective on November 1, 2021. We expect more guidance from the Labor Department regarding these committees over the summer.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440

Pre-construction Services – Lienable, or Not?

Written by Frank Gramarossa on . Posted in Legal Alerts.

Many contractors and other construction professionals are unaware of precisely what the New York State Lien Law provides regarding the types of services for which a mechanic’s lien may be filed. Of course, contractors who perform labor or furnish materials for the improvement of a property are afforded the right to file a lien for any unpaid balances due for such labor or materials. But what about pre-construction services? What if you are providing consulting services to a property owner or developer prior to the proverbial shovels hitting the ground? This issue was analyzed by the Appellate Division, Second Department in the case of Old Post Road Associates, LLC v. LRC Construction, LLC (177 AD3d 658 [2d Dept 2019]).

In Old Post Road, the petitioner was Old Post Road Associates, an owner looking to summarily discharge a mechanic’s lien filed by the respondent, LRC Construction. LRC was hired to do perform pre-construction management services, but was not retained to provide construction management services once the project began.LRC filed a mechanic’s lien on the property, alleging that it was owed approximately $250,000 for unpaid pre-construction management services. Old Post Road Associates filed a petition to summarily discharge the mechanic’s lien, alleging the mechanic’s lien was invalid on its face because the pre-construction services provided could not form the basis of a mechanic’s lien, as a matter of law.The lower court, Supreme Court, Westchester County, denied Old Post Road’s petition, concluding that absent clear case law precluding mechanic’s liens for all of the work described by LRC, the mechanic’s lien was “not entirely invalid on its face.” Old Post Road appealed the decision to the Appellate Division, Second Department.

The Appellate Division upheld the lower court’s ruling, holding that absent clear case law precluding mechanic’s liens for all of the services provided by LRC, the lien could not be adjudged to be invalid on its face, and thus could not be summarily discharged.  In support of its petition, Old Post Road relied on Section 19(6) of the Lien Law, which states, in relevant part, that a lien may be summarily discharged “where it appears from the face of the notice of lien that the claimant has no valid lien by reason of the character of the labor or materials furnished and for which a lien is claimed, … the owner or any other party in interest, may apply … for an order summarily discharging of record the alleged lien.” Thus, to be summarily discharged, the notice of lien must be completely invalid on its face. When there is no defect on the face of a notice of mechanic’s lien, any dispute regarding the validity of the lien must be decided at the lien foreclosure trial.

The Court analyzed Lien Law § 3, which provides, in pertinent part, that a contractor “who performs labor or furnishes materials for the improvement of real property with the consent or at the request of the owner thereof … shall have a lien for the principal and interest, of the value, or the agreed price, of such labor … or materials upon the real property improved or to be improved.”  The term “improvement” is defined by Lien Law § 2(4), and “includes the demolition, erection, alteration or repair of any structure upon, connected with, or beneath the surface of, any real property and any work done upon such property or materials furnished for its permanent improvement, … and shall also include the drawing by any architect or engineer or surveyor, of any plans or specifications or survey, which are prepared for or used in connection with such improvement.”

In support of the petition, Old Post Road did cite to some case law which would preclude certain services from forming the basis of a mechanic’s lien (i.e., preparing construction budgets).  However, the appellate court found that some of the services provided by LRC, such as “preparing site logistics and access plans” and performing a “constructability review for the project”, could properly form the basis of a lien. In doing so, the court compared those services to the drawing of architectural plans or specifications, which could form the basis of a valid mechanic’s lien.  Therefore, the court held the lien was not wholly invalid on its face, and the case was remanded to the trial court where the dispute regarding the validity of the mechanic’s lien would have to be resolved at the lien foreclosure trial. 

Many contractors and construction managers are unaware of the particulars of the lien law, and more specifically the varied types of services which may properly form the basis of the lien law.  It is important to know and understand your rights prior, during, and after providing services for a construction project, whatever the nature of those services may be.   The failure to properly understand these rights can compromise one’s ability to preserve and enforce those rights, and prejudice one’s ability to be compensated for services properly rendered.  Reliable legal advice from experienced construction counsel can help contractors and construction professionals understand, preserve, and enforce their rights, and guide them through the legal process to achieve the most optimal results. 

If you would like more information regarding this topic please contact Frank Gramarossa at fgramarossa@wbgllp.com or call (914) 607-6465

The Corona Virus Pandemic: Analysis of Force Majeure

Written by Michael E. Greenblatt on . Posted in Legal Alerts.

The invocation of force majeure is an extreme measure, the last time the United States faced large scale force majeure disputes was the terrorist attacks on September 11th, 2001 and Hurricane Katrina in 2005. Contractors will notice that many of the force majeure clauses in their respective contracts contain a “terrorist attack” provision, before 9/11, this was not the status quo. The Pandemic is an event that has such a large scale impact on New York, the United States and the World, that force majeure law will likely change, throughout the World, forever. Whether in a private or public context, there will be billions to trillions of dollars at stake from disputes stemming from force majeure being claimed throughout the World in the years to come.

Assuming your contract contains a force majeure clause in the first place, the burden of proving that force majeure applies to excuse performance is placed on the party claiming that it cannot perform under the contract due to the Pandemic; even worse, under Kel Kim Corp. v. Cent. Markets, Inc., 70 N.Y.2d 900, 902–03, 519 N.E.2d 295, 296–97 (1987), the New York Court of Appeals has held that the contract’s respective force majeure clause can only be invoked to excuse performance if the event is explicitly referenced in the contract’s force majeure clause. Of course, whether a contractor will succeed in invoking force majeure will also depend on whether the respective force majeure clause is narrow or broad.

For example, invocation of force majeure is an extreme measure, so force majeure clauses may be narrow, especially in a public works contract, in the sense that it will highlight specific instances that excuse performance such as extreme weather, an earthquake, war or a terrorist attack, to name  a few. You’d have to review your contract to determine if  sickness, virus, pandemic or any variation thereof will be referenced in your respective force majeure clause.

Conclusion

It is absolutely essential for contractors to review their respective force majeure clauses. Reliable legal advice from experienced construction litigators can help contractors avoid these potential pitfalls and exposure to liability stemming from the Pandemic. As always, Welby, Brady & Greenblatt, LLP remains available to answer questions you may have as the legal landscape evolves during this Pandemic.  

If you would like more information regarding this topic please contact Michael E. Greenblatt at mgreenblatt@wbgllp.com or call (914) 607-6420