Skip to main content

Failure to Keep Trench Edges Clear From Hazards Draws OSHA Citation

Written by Costas Cyprus on . Posted in Safety Policy.

The perils of cave-in or trench collapses are well-documented in this Safety Watch series given the large number of workers who have died from such instances.  Construction companies must ensure that all proper safety precautions are taken during excavation activities, including the use of proper shoring or use of trench boxes. Companies must also ensure that equipment and spoil piles are placed at a safe distance from the edges of any excavated trenches – and at least two feet away- to prevent collapse/cave-ins of trench walls and avoid materials and equipment from falling in and striking workers.  

The recent decision in Secretary of Labor of Montroy Development LLC affirms the need to keep trench edges clear at worksites.  This matter did not involve an accident or anonymous call regarding unsafe practices.  Rather, it originated through OSHA’s national emphasis program (NEP) to address the hazards of excavations that can lead to “high fatality” situations.  OSHA’s NEPs are temporary programs focused on specific and particular workplace hazards and high-hazard industries, in this instance pertaining to excavation and trenching activities. Under the applicable NEP, OSHA’s Compliance Safety and Health Officers (CSHOs) shall initiate inspections whenever they observe an open trench or an open excavation, regardless of whether a violation is readily observed.  

On May 8, 2023, a CSHO was driving by a worksite in Camillus, NY and noticed an excavation site where a person appeared to be standing on the edge of the excavation speaking with someone in the excavation.  The CSHO parked her vehicle, and began her investigation by taking video recordings, photographs and measurements at the excavation.   She also interviewed individuals at the site, including the owner of Montroy Development, LLC – who was the individual initially observed standing at the edge of the excavation – along with a Montroy worker who had been in the excavation and another individual observed in the excavation.  The CSHO observed a lack of adequate protective systems (no shoring or trench box). The excavated materials did not consist of stable rock, and Mr. Montroy admitted not knowing the soil type.  In fact, the soil included aggregate, supporting that it was of a loose type or classification.  The excavation site also had various spoil piles consisting of the excavated materials.  One of these spoil piles was right at the excavation’s upper edge, between the path of egress from the excavation and the CAT excavator, and one could not distinguish the separation from the spoil pile and the excavation’s beginning. The excavator was at the edge of the spoil pile and parked at a slight angle to the excavations’ rim, with a portion of its tread appearing over the upper part of the excavation.  Given the observed dangers, the CSHO did not enter the excavation but rather assessed the excavation’s depth by placing a stud board across the excavation and using a measuring tape suspended from a rod to determine the distance between the ledge and the bottom of the stud board, measuring a depth of at least five feet, which was also confirmed by her other observations.  From the CSHO’s inspection, OSHA issued various citations against Montroy, for improper cave-in protections and for failing to have adequate protection from materials or equipment for workers in excavations.  Under the applicable federal safety regulation, equipment and materials, including excavated materials that can “pose a hazard for falling or rolling into an excavation…” must be placed “at least two feet (.61 m) from the edge of excavations, or by use of retaining devices…or by a combination for both if necessary”. The Citation alleged that Montroy violated this safety standard by not protecting employees from excavated materials and the excavator’s tread, protruding over the edge, also constituted a struck-by hazard for workers as it could fall or roll into the excavation. 

Montroy contested the citations.  At the hearing, the Administrative Law Judge found that photographic and video evidence confirmed that materials and equipment were within two feet of the excavation even if the CSHO acknowledged that she did not physically take measurements of the distance (as it was unsafe to do so at that time). The excavator and spoil pile were along the upper edge of the excavation and that there was no “discernible distance” between the excavator’s tread and the top of the excavation, while the end of spoil pile aligned with the excavation’s edge.  Montroy’s attempts to rebut and refute this evidence were found unavailing.  Although Montroy’s employee claimed that while the CSHO was investigating, he had measured the distance between the excavator and the excavator’s edge, showing a distance of approximately five feet, he then corrected his prior statement to allege that it was 28 inches.  However, even this revision lacked any corroborating photographic evidence, while the CSHO’s testimony and her photographs showed there was no distinction between the excavation edge and excavator tread and her testimony was found to be more credible.  Similarly, the ALJ found both the CSHO’s testimony and her photographic evidence more credible, showing no distinction between the spoil pile and the excavation edge.  Moreover, the violative condition was “readily apparent” to the individual that had the authority to abate the hazards.  Consequently, the ALJ affirmed the citation against Montroy.   The key takeaways from this Decision are as follows: 

  • Proper cave-in protections (such as trench boxes or shoring) must be in place at excavation sites to prevent fatalities and serious injuries.
  • Spoil piles and heavy equipment must be kept at least two feet away from trench edges, pursuant to federal safety regulations, to reduce the risk of collapse or struck-by hazards.
  • Observations by OSHA Compliance Officers can prompt inspections without complaints or incidents, as occurred in this case with a drive-by inspection.
  • The case emphasizes the importance of visual clarity of trench boundaries, consistent documentation, and proactive hazard abatement at job sites.

This case reinforces that even absent an accident, OSHA can and will act on visible noncompliance, and employers must maintain clear, consistent safety practices with supporting documentation.

If you would like more information regarding this topic please contact Costas Cyprus at ccyprus@wbgllp.com or call (914) 607-6445

Supreme Court Rules that Mechanic’s Lien is Void Due to Willful Exaggeration and Homeowners are Entitled to Damages

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

The lien law affords contractors a safeguard for payment in connection with the improvement of real property in the form of a mechanic’s lien, which can ultimately be foreclosed like a mortgage. This is separate from, and in addition to, any breach of contract or other claims that may be asserted against the non-paying owner or contractor in connection with the project. In the recent case of Gregory Allan Cramer & Co. Inc. v. Robert Edward Rescoe and Erin Stacy Rescoe, the Court also reminds us that the amount stated in the lien must not be willfully exaggerated. If a lien is found to have been willfully exaggerated, courts have authority to, among other things, void the lien and award statutory damages to property owners. Cramer also stands for the principle that a construction contract for a home improvement project can be deemed unenforceable if the contract is not compliant with applicable consumer protection statutes, or is ambiguous with respect to key provisions—such as the project completion date.

In Cramer, the Rescoes hired Cramer & Co. an interior designer and contractor, to renovate and furnish their home in Westchester County. The contract entitled Cramer & Co. to a 25% commission on the total net budget, and required them to provide detailed documentation for all goods and services. The Rescoes ultimately paid Cramer & Co. over $780,000, though the certificate of occupancy (CO) was never procured. A dispute arose over the final balance, which Cramer & Co. claimed to be $152,924.90. This was substantially more than the previously discussed remaining balance of $43,000.

The Rescoes alleged that the mechanic’s lien filed by Cramer & Co. was willfully exaggerated. In doing so, they cited discrepancies such as inflated invoices, missing receipts, and goods that did not constitute permanent improvements. The court noted that some items listed as “gifts” or “free of charge” were later included in the lien claim. The Rescoes also argued Cramer & Co.  failed to perform agreed work including, but not limited to, obtaining the CO. (The Rescoes also claimed that Cramer & Co. took affirmative steps with the village to impede the CO procurement process.)

The court found that Cramer & Co.’s testimony was not credible, and it determined that the lien was willfully exaggerated. The court also found that Cramer & Co. acted in bad faith and breached the contract by failing to complete the work, and by obstructing the CO process. Specifically, the record showed that the lien included items explicitly waived, or never agreed upon by and between the parties.

The court further rejected Cramer & Co.’s breach of contract claims due to its non-compliance with Section 771 of the General Business Law (which provides for certain requirements in home improvement contracts), lack of performance, and absence of agreed pricing or documentation. As a result, the court (i) declared Cramer & Co.’s  mechanic’s lien void due to its willful exaggeration; (ii) awarded the Rescoes  $109,924.77 in statutory damages (the difference between the lien amount and the previously agreed-upon balance), plus costs and prejudgment interest at 9%; and (iii) ordered Cramer & Co. to pay the Rescoes’ attorneys’ fees as the non-prevailing party under the contract.

This case underscores the importance of correctly identifying the amounts to be included in a mechanic’s lien filing, and the grave consequences of failing to do so. Additionally, the case reminds us that it is critical for home improvement contractors and owners to only enter into contracts that are compliant with Section 771 of the General Business Law, as well any local requirements.

If you would like more information regarding this topic please contact Andrew E. Zeyer at azeyer@wbgllp.com or call (914) 607-6485

Appellate Court Buries Yet Another Contractor’s Claim in the Graveyard of Lack of Contractual Notice

Written by Gregory J. Spaun on . Posted in Attorneys' Column.

We have written on numerous occasions about how a construction contract is meant to define the relationship between the parties, and that absent a provision which violates public policy (pay-if-paid, pre-emptive lien waivers, indemnification of a party for its own negligence, etc.), the contract will be strictly enforced as written. The provision of these contracts which seems to be invoked most frequently is the provision for delivering notice of claims to the owner for extra, additional, or even delay compensation. In the recent case of Trocom Construction Corp. v City of New York, an appellate court yet again showed us the importance of strict compliance with these contractual notice of claim provisions.  

Background

In October of 2008, Trocom Construction Corp. entered into a contract with the City of New York for Trocom to perform the reconstruction of a portion of Fulton Street in Lower Manhattan in connection with the Fulton Transit Center project. The contract contained a provision requiring Trocom to provide the City’s engineer with a notice of claim for any claimed delay impacts within 45 days of the date on which Trocom first incurred damages, and to provide an additional notice with updated details every 30 days thereafter. The contract allowed Trocom to seek an extension of these deadlines, but warned that “on failure of [Trocom] to fully comply with the foregoing provisions, such claims shall be deemed waived and no right to recover on such claims shall exist”. The contract contained similar provisions for other claims, such as unpaid change orders, etc.

During the project, Trocom encountered numerous delays, and was required to perform significant additional work above and beyond its original scope. When these claims went unpaid, Trocom commenced a lawsuit against the City, seeking to recover $829,998.82 in unpaid change orders and $1,275,400.00 in delay damages, amongst other damages. After discovery, the City moved for summary judgment dismissing Trocom’s lawsuit, alleging that Trocom failed to provide the City with the contractually required notice. While Trocom was constrained to admit that it did not strictly comply with these requirements, it argued that voluminous email correspondence, in person discussions at project meetings, and “thousands of pages of documents [provided] to the Comptroller” adequately advised the City of the details of Trocom’s claims. The City conceded that there were discussions, but argued that the complaints of “general delay”, without specifics, were woefully inadequate to apprise the City of the details of the claims, or substitute for contractual notice.

Decision

The motion court granted the City’s motion, finding that the complaints of general delay, without specifics, were not sufficient, and that it was incumbent on Trocom to “show that a particular delay actually delayed the completion of the project and did not run concurrently with independently caused delays”. The court held that Trocom made no such showing, and had failed to produce documents in response to the Comptroller’s request. The court further held that even if Trocom’s documents did provide specifics, the City was nevertheless entitled to strict compliance with the contractual notice provisions.

Trocom appealed, arguing that the City was unreasonable and unduly burdensome with its document demands. The appellate court affirmed, finding that Trocom had failed to comply with the contractual conditions, and had failed to raise any issue of fact as to whether it was hindered or prevented from complying with the contractual requirements by the City’s bad faith, negligence, or misconduct.

Comment

Trocom is one in a long series of reminders that in most circumstances, contractual conditions precedent will be strictly enforced. Here, a $3.5 million lawsuit  ended up dismissed for a simple failure to follow contractual formalities. (Contractors should know that requirements to give notice of a claim may also come from statutes, city charters, or elsewhere, in addition to those found in the contract.) While Trocom’s claims here ended up buried in the graveyard of inadequate notice, this did not need to happen.

It goes without saying that contractors would be well advised to follow such contractual conditions precedent to the letter so that you are not in the position of having to later argue, like Trocom, that cobbled together correspondence constitutes the notice required by the contract. Often, and unfortunately, by the time the contractor recognizes that it is up against a deadline to submit a notice of claim, that deadline may have already passed. Your project people must learn to recognize the actions and correspondence from the Owner that trigger the Notice stopwatch. Further, never be afraid of being accused of starting a “letter war”. …like Tessio in the Godfather, sophisticated contractors will realize that it’s only business, and there are diplomatic and businesslike ways to do so.  In that regard, contractors should examine their contracts with experienced construction counsel so that they can—at the outset of, or during the progress of the job—have a checklist of what to submit when a claim arises, and the deadline for doing so.

If you would like more information regarding this topic please contact Thomas H. Welby at twelby@wbgllp.com or call (914) 428-2100

Unsafe Use of Powered Industrial Trucks Result in 100 Fatalities Each Year: US DOL

Written by Costas Cyprus on . Posted in Safety Policy.

The use of powered industrial trucks is a significant source of serious and fatal injuries to workers. Violations for the unsafe operation of powered industrial trucks (PITs), such as forklifts and lift trucks, are among the most cited by OSHA following work-site inspections. In fact, an average of 100 workers are killed each year and 20,000 workers are seriously injured by fork truck-related incidents. Half of the forklift fatalities occur in construction and manufacturing, according to the U.S. Department of Labor.

Federal safety requirements, which are enforced by OSHA, mandate an operator’s training and certification in a set of topics such as equipment operation, load handling, proper maintenance and recognition of applicable safety hazards, etc. The training “shall consist of a combination of formal instruction (e.g. lecture, discussion, interactive computer learning, video tape, written material), practical training (demonstrations performed by the trainer and practical exercises performed by the trainee), and evaluation of the operators in the workplace.”

PIT operators must be evaluated on their performance at least every three years with refresher trainings, or, more frequently if an operator is observed to have operated the PIT in an unsafe manner, was involved in an accident or a near-miss incident. PITs must not be used to lift loads beyond the equipment’s capacity, and operators much ensure the load’s stability to prevent circumstances that could compromise balance, such as in instances of improper stacking or overloading. Other workplace-related topics include pedestrian traffic in areas where the vehicle will be operated and the use of ramps or other sloped surfaces that could affect the vehicle’s stability.

Employers must certify that each operator has received the necessary training and evaluation with records noting the names of the operator, the dates of training, the dates of evaluation and the identity of the individual performing the training or evaluation. Operators must also perform daily inspections to identify any issues that could affect safety, and if so, they are not to be placed in service.

Moreover, special precautions must be taken when operating a PIT near open flames, sparks or electric arcs in battery charging areas, a prominent issue in light of recent high-profile fires that have led to deaths and serious injuries caused from the charging of lithium-ion batteries. Although, currently, there are no specific OSHA standards for lithium-ion batteries, OSHA has general industry standards, including for PITs that could apply, such as requirements that facilities shall be provided “for flushing and neutralizing spilled electrolyte, for fire protection and for protecting the charging apparatus from damage…and for adequate ventilation…”

Construction companies must follow these requirements for the use and maintenance of PITs to provide a safe work environment and reduce the risks of accidents and injuries at the worksite. The decision in Secretary of Labor v. Gander and White Shipping, Inc. (“Gander”) exemplifies the need for proper training when operating PITs. The matter was initiated by an anonymous complaint to OSHA on January 21, 2021 where it was alleged that an employee working out of Gander’s facility in Miami, Florida, was working on an elevated scissor lift and checking a box on a shelf when he fell out of the lift and fell approximately nine feet to ground, fracturing his left elbow. OSHA’s Compliance Officer Anthony Campos was assigned the matter and conducted an investigation. Officer Campos learned that Gander’s employee had fallen on January 18, 2021, and that employees were operating the forklift in a warehouse without the requisite training and certification for handling PITs. Consequently, he issued multiple citations to Gander asserting among items that it violated the applicable safety standards by not ensuring “that each powered industrial truck operator is competent to operate a powered industrial truck safely, as demonstrated by the successful completion of the training and evaluation…”

Gander’s Operation’s Manager, Eugene Layton, conceded that they utilized PITs such as scissor lifts and a battery powered forklifts at the worksite and in fact admitted their employees were not trained at the time of the accident. Mr. Layton testified in subsequent proceedings that Gander in fact trained their employees in the use of the PITs after the accident and after OSHA’s investigation. Moreover, Gander’s own foreman, Joel Hernandez admitted to the Compliance Officer Campos that neither he nor his subordinate who operated the forklifts had ever been trained in their operations, while these trucks were frequently used. The admission by Hernandez, a foreman with supervisory capacity, that a subordinate employee operated a PIT without having requisite training was sufficient to impute liability on Gander under a “serious” classification, which applies when an employer knows about and fails to prevent a “substantial probability” that either death or serious injury could result from a work-place condition. A “serious” classification mandates higher monetary penalties as well. The Administrative Law Judge affirmed OSHA’s citation against Gander.

If you would like more information regarding this topic please contact Costas Cyprus at ccyprus@wbgllp.com or call (914) 607-6445

Appellate Court Reminds Upstream Contractors That They Must Adequately Protect Pass-Through Claims

Written by Gregory J. Spaun on . Posted in Attorneys' Column.

A downstream contractor has no contractual relationship with a project owner; that relationship is between the general contractor (or, here, the construction manager, Hill) and the owner. Accordingly, parties downstream from the construction manager cannot sue the owner if they sustain money damages caused by the owner. In response to this lack of contractual privity, the downstream contractor and construction manager may enter into a liquidating agreement, or pass-through agreement, where the downstream contractor assigns its claim to the upstream contractor. Such a provision may also already be in place in the downstream contractor’s boilerplate contract. Under either provision, the party with the direct contractual relationship would, in turn, prosecute the downstream contractor’s pass-through claim against the owner, and then give that contractor any recovery (or part thereof). The purpose of such an arrangement is to limit, or liquidate, the upstream contractor’s liability to the downstream contractor to the amount the upstream contractor recovers from the owner (or further upstream contractor).

In the recent case of E.W. Howell Co., LLC v Hill International, Inc., an appellate court reminded us of a construction manager’s duty of good faith and fair dealing to adequately protect a downstream contractor’s claims.

Background

In April of 2010, the City University Construction Fund entered into a Construction Management Agreement with Hill International for the construction of a new performing arts center at Brooklyn College. Two years later, Hill entered into a contract with E.W. Howell to be the general contractor for the Project. This contract contained an exclusive dispute resolution process whereby the City University of New York’s (CUNY) Executive Director would make a determination as to the validity (and amount) of Howell’s claim. In order to effectuate this process, the general contract required Howell to submit a Notice of Dispute to Hill within 7 days of the claim arising, and 10 days later submit a “dispute report” with further information. Hill was then required to submit these documents to CUNY, along with its own dispute report setting forth the resolution Hill would like to see. An unfavorable decision from CUNY’s Executive Director could be appealed to its Vice Chancellor (and, after that, only via an Article 78 proceeding).

Of course, such a dispute arose, and Howell submitted both required notices to Hill. While Hill eventually passed along these documents, there was a significant delay in doing so, and Hill also failed to investigate Howell’s claims and prepare its own Dispute Reports, as required by the contract. Ultimately, CUNY denied Howell’s claims, citing, amongst other things, the failure to submit proper documentation. Howell then sued Hill, claiming that Hill frustrated Howell’s rights under the dispute resolution process, and thereby breached the covenant of good faith and fair dealing found in its contract.

Decision

After discovery, Hill moved for summary judgment dismissing Howell’s complaint, arguing that Hill’s failure to submit certain paperwork did not contribute to the substantive reasons for the denial of Howell’s claim and, therefore, Howell incurred no resulting damages. Howell opposed, claiming that there were issues of fact as to whether Hill’s failure to timely pass along Howell’s claims, and whether there was something contained in Hill’s submissions to CUNY (which were not shared with Howell) or said at Hill’s meeting with CUNY (at which Howell was not in attendance), that frustrated Howell’s claims. The trial court granted the motion, finding that there was no frustration of Howell’s claims.

Howell appealed, and the appellate court reversed. In doing so, the appellate court held that there were issues of fact as to whether Hill breached the covenant of good faith and fair dealing which, under well settled case law, “requires the [upstream] contractor to ‘take all reasonable steps so that the [downstream contractor’s] right to an eventual recovery, if any, from the [owner] w[ould] be protected”. Accordingly, the appellate court reinstated the complaint and directed the matter to further proceedings and trial.

Comment

Liquidating agreements are an effective way to address the problem of a downstream contractor’s lack of a contractual relationship with an owner by having the party in privity with the owner essentially admit the validity of the downstream contractor’s claims, and then prosecute those claims on behalf of that contractor with the promise that the recovery would be passed along. The benefit to a downstream contractor is that claims which would otherwise be barred because of the lack of contractual privity with the owner can be adjudicated. The benefit to the upstream contractor is that its liability is limited to the amount it ultimately recovers on the liquidated claims. However, as we can see from E.W. Howell Co. v Hill International, in order to enjoy that protection, the upstream contractor must be diligent in prosecuting the downstream contractor’s liquidated claims. As always, know what your contract requires for the preservation of your claims, and be vigilant. Further, upstream contractors would be well advised to take their responsibilities under a liquidating agreement seriously or else be prepared to be held responsible for the downstream contractor’s claims, and contractors on either side of this agreement would be advised to consult with experience construction counsel to make sure everyone’s rights are adequately protected.

If you would like more information regarding this topic please contact Thomas H. Welby at twelby@wbgllp.com or call (914) 428-2100

Dealing with Goliath? Proactiveness is your “Stone and Sling”

Written by Andreas M. Koudellou on . Posted in Publications.

As a General Contractor grows within the construction industry, and it takes on ever larger projects, two things simultaneously grow: (1) the GC’s prospective profits on a successful project, and (2) the GC’s prospective losses when forced to cover extended general conditions, labor and material costs, amongst other items. Moreover, owners and construction managers on large projects generally have much more bargaining power than a growing GC, and often lean on the contractor to accept a slanted one-sided contract that exacerbates the GC’s risk.

This is most obvious in the world of public works, where City and/or State agencies solicit bids on Projects and require the winning bidder – who most likely tightened their margins to win the bid – to enter into a non-negotiable contracts drafted solely by the agency. In my experience, amongst the most heavy-handed agencies is the New York City Housing Authority (“NYCHA”), who for decades have employed what some term COFEDs (Contractor Forfeiture Enhancement Devices) in their standard contracts. The most notable COFEDs utilized by NYCHA in its contracts are the following:

  1. A provision requiring the filing of a Notice of Claim within twenty (20) days of a claim being “ascertainable” in connection with ALL extra work performed on the project or requests for additional time;
  2. A provision stating that NYCHA cannot be deemed to have waived any provisions of the contract; and
  3. A provision stating that NYCHA is not subject to the legal principle of Estoppel, which precludes a party from asserting something contrary to what is implied by their previous actions or statements.

In other words, if a GC fails to file a Notice of Claim the moment its claim is “ascertainable” (i.e. quantifiable in some vague sense), whether or not the given change order was rejected, the GC loses its right to compensation – irrespective of whether NYCHA directed the GC to perform the work before a change order was formally issued, or even where there is a course of conduct between NYCHA and the GC where the agency did not require a Notice of Claim in connection with previous extra work or time extension requests on the same project. If a contractor is a single day late, they lose their claim.

In this context, NYCHA is a Goliath capable of bullying contractors. NYCHA can pick and choose which change orders will require accompanying Notices of Claim, and the contractor generally cannot use NYCHA’s own inconsistent actions/statements against the agency in court. This has been borne out in the courts for decades, where dozens (if not hundreds) of contractors have had their claims dismissed due to their “failure” to file a timely Notice of Claim – despite NYCHA routinely failing promptly reject a given change order, or NYCHA failing to enforce (i.e. waiving) the Notice of Claim requirement for certain change orders and then invoking it when faced with litigation. The courts routinely determine that NYCHA’s prior actions do not constitute waiver, and that NYCHA cannot be estopped on account of such actions, due to the aforementioned COFEDs.

A recent decision by the Appellate Division, First Department highlights the inherent risks NYCHA’s COFEDs pose to contractors. In AWL Industries, Inc. v. NYCHA, AWL accomplished something that few litigants have been capable of – that is, AWL survived NYCHA’s motion to dismiss its breach of contract claims due to purportedly unfulfilled Notice of Claim requirements (nearly all such cases are dismissed at the Lower Court). In its opposition to the motion, AWL wisely cited to the contract specifications’ language stating that a contractor may initiate “a claim” by submitting a potential change order, and highlighted the fact that it submitted its subject change order using NYCHA’s own prospective change order form.

In its decision rejecting NYCHA’s motion, the Lower Court notably referenced that AWL “provided…written notice of [AWL’s] intention to make a claim by filing a Potential Change Order form through [NYCHA’s] E-Builder System and that…the Potential Change Order did not become a claim until defendant approved or disapproved the Potential Change Order.” Despite the sound reasoning set forth by the Lower Court, the appellate court reversed the decision. In doing so, the appellate court relayed the same script it has used for decades, holding that AWL’s breach of contract claim “should have been dismissed…because [AWL] failed to comply with strict notice of claim provisions in its contract with defendant”.

This is not to say that you should avoid NYCHA projects all together, as they can be plentiful and quite fruitful under normal circumstances. But we all know that few if any projects go perfectly, and change orders for additional compensation and/or time are regular occurrences.

Notwithstanding the horrible track record of trying to fight NYCHA’s COFEDs in court, GCs are not left weaponless when dealing with this Goliath. Contractors can – and frankly should – lobby the state legislature for a statute providing that claims against NYCHA do not accrue (thereby triggering Notice of Claim requirements) until a claim/change order is formally rejected – as they did for the NYC School Construction Authority when they enacted Public Authorities Law §1744. This would make the date a Notice of Claim is due abundantly clear, eliminating a major pitfall in working on NYCHA projects. However, lobbying the assembly and governor is a long and expensive process, which has the unfortunate requirement of dealing with the political process.

So what is your best and most cost-effective course of action when dealing with NYCHA? The answer is to be proactive, and enlist the assistance of experienced construction counsel to perform “pre-litigation” services. That includes reviewing your NYCHA contract and charting a procedure for dealing with unanticipated issues – which can include a “job book” detailing each routine event on a project (a change order, a delay, an unforeseen condition, etc.) and providing the basic form document which should be submitted in such situation, complete with a caution as to when that document needs to be submitted. When brought into the fold early on, an experienced construction litigator can also review your proposed change orders and relevant circumstances, help you to determine when your claim will likely be deemed “ascertainable” by NYCHA and the courts, and assist in the preparation of a timely and sufficiently detailed Notice of Claim. In the event issues already arose on a given project, construction counsel can help stem the bleeding and minimize the losses to your bottom line. It may be hard to take on Goliath when a dispute arises but, like David, you can also prevail as the underdog.

If you would like more information regarding this topic please contact Andreas M. Koudellou at akoudellou@wbgllp.com or call (914) 607-6487

Fall Protection Rope Lines Must Be Reachable By Employees Working from Heights Above 6’

Written by Costas Cyprus on . Posted in Safety Policy.

Among the most-cited violations by OSHA following work-site inspections in construction are those related to fall protection failures. Fall protection must be provided to all employees working at or near edges with a drop of six feet or more either by a guardrail system, safety net system or other fall arrest system. The recent decision in Secretary of Labor v. Trinity Solar LLC reemphasizes this point arising from a work-site fatality-although this case dealt possibly with the transitionary activity of ascending/descending a portable ladder for which OSHA standards do not require a fall arrest system. Other safety standards still apply but were not cited.

Background

Trinity Solar LLC (“Trinity”) began as a small HVAC company that transitioned to a residential-only solar panel installation company operating in multiple states, including New York and New Jersey. The company employs more than 3,000 workers. In October 2022, Trinity had contracted to install panels on a two-story family home in South Orange, NJ. The multi-day project involved installing panels on two separate roofs of the residence, the upper roof, which was 22 feet in height, and the lower roof which was 12 feet in height. Trinity had two teams working at this site, one team worked on the upper roof and the other team worked on the lower roof. Angel Camacho was the team lead/foreman for the “main crew”. Four workers worked on the upper roof, two on either side of the ridge line, while two workers worked on the lower roof. They would access each roof using two designated ladders, the “large” ladder to get to the upper roof and another ladder to reach the lower roof. Trinity’s workers wore personal fall arrest systems (PFAS) while working. These consisted of a body harness, a lanyard/lifeline, clips/connectors and, in some instances a “shock pack”.

A lanyard would connect from the anchorage point on the roof to the body harness worn by the worker. The lanyard connected to the body harness by a clip. Two types of lanyards were utilized here, a Y-lanyard used as work-positioning device which attached to the front of the body harness at the waist, and a shock absorbing lanyard, which attached to the back of the body harness. The shock pack was used as a fall arrest device because it would absorb the impact if a worker fell within six feet. Critical to the proper function of the PFAS is ensuring that the lanyard is connected to the anchor in the roof. Here, on the first day of the project, Mr. Camacho and another worker installed the anchors on the roof. Pursuant to company policy, the anchors would not be moved or removed until final project completion. Trinity utilized a the “first man up technique,” which in effect means that the first person on the roof is in charge of putting down the anchors and connecting all the lines for use. Mr. Camacho would connect the workers’ personal rope lines, and they would remain on the roof all day. Mr. Camacho would take the lines down at the end of the day and return them to the workers. The rope lines were not left in place overnight although the anchors remained in place for the duration of the project. At issue here were the clips attached to the lifelines on the upper roof and lower roof as depicted in certain marked photographs. These clips would attach to the worker’s harness, with one being the clip connecting the work positioning lanyard and the other connecting to the shock pack.

On October 4, 2022, work began at 8 am, and the workers worked on the two roofs without incident. The decedent worker had been working on the upper roof. The team broke for lunch and at some point, after lunch, the decedent fell. No one saw him on any roof surface before the fall nor did they know where he was just prior to the fall. He was wearing his harness, but it was not connected to an anchored rope line. Tragically, he succumbed to his injuries.

OSHA was called to the scene and an officer arrived 40 minutes after the incident. The OSHA officer took pictures at the site from street-level, only, and did not take any measurements. Following the inspection and subsequent interviews, OSHA cited Trinity for failing to utilize any means of fall protection during the process of entry and exit from the roof.

Although the Secretary of Labor was alleging that the decedent fell “while stepping on the roof,” during the hearing and subsequent evidentiary findings, the Judge determined that it was unclear where the decedent was at the time he fell, whether he fell while climbing the ladder or from the rooftop itself. Moreover, Trinity’s employees consistently testified that the rope lines were “reachable” by the worker as they climbed the ladder to comply with Trinity’s safety policy.

Decision

Based on the credible evidence submitted, the Judge found that it was more likely that an anchored rope line was reachable by the Trinity worker from the ladder when they attempted to enter onto the roof. The Secretary’s assertions that the rope lines were too far away for the worker to connect without leaving the ladder leading him to access the upper roof without being tied-off, failed, and the citation was dismissed.

If you would like more information regarding this topic please contact Costas Cyprus at ccyprus@wbgllp.com or call (914) 607-6445

Court Shoots Down “Piggybacking” For Public Works Contracts

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

Section 103 of the General Municipal Law requires that with several narrow exceptions, any contract for public work in excess of $35,000 must be sent out for public bid. Because of the opportunity for fraud and collusion, the exceptions are narrow and relate to emergency work or a demonstrated need for standardization, amongst others. One of these narrow exceptions is contained in Paragraph 16 of the statute, which provides that notwithstanding the general provisions of the statute, a municipal entity may “make purchases of apparatus, materials, equipment or supplies, or to contract for services related to the installation, maintenance or repair of apparatus, materials, equipment, and supplies” by “piggybacking” onto a “contract let by the United States of America or any agency thereof, any state or any other political subdivision or district therein”, provided that such contract has, itself, been publicly bid consistent with the statute. A court, in the recent case of Daniel J. Lynch, Inc. v Maine-Endwell Central School District, held that the statutory language permitting piggybacking for services related to the installation of equipment, etc., could not be read so broadly as to effectively permit the letting of public works contracts without submitting them to a full public bidding process.

Background

In December of 2022, the District’s voters approved a bond to finance various improvements at the District’s schools. This Project was to be carried out in six phases over five years. In July of 2023, instead of using the bidding process set forth in the General Municipal Law, the District entered into a “piggyback” contract with The Interlocal Purchasing System (“TIPS”) to undertake Phase One of the Project (replacing a sewer line and installing a new parking lot at the high school) for $2.5 million. TIPS was created by the State of Texas, and has grown into a national clearing house to match municipalities around the US to contractors who have joined the program. Once subscribed to TIPS, a municipality submits its project specifications, and the TIPS system matches the municipality with a contractor who can handle the project. Once the match is made, the parties negotiate the agreement, which incorporates the pricing provided by the TIPS contractor. Here, TIPS matched the District with Smith Site Development LLC.
The District was pleased with Smith’s work on Phase One, and it inquired of its CM whether it believed that Smith could handle Phase Two of the Project (extensive HVAC renovations at one of the elementary schools for $8.9 million). The CM indicated its belief that Smith could handle the work, and the District began negotiating with Smith, through TIPS, to perform Phase Two. The District ultimately awarded the contract to Smith.
In response, several local contractors commenced an Article 78 proceeding to declare Smith’s contract void, arguing that the piggybacking arrangement violated state law in numerous respects, including the failure to solicit public bids, the failure to let sperate contracts for the Wicks Law trades, and the failure to mandate bonds. In response, the District argued that piggybacking was not only permitted, but encouraged by Section 103(16) of the General Municipal Law, and that both the District and the TIPS system complied with the requirements set forth in that statute.

Decision

The court granted the local contractors’ petition. In doing so, the court conceded that it was hampered by the statute’s failure to define “public work contracts” or “public works projects”, but was ultimately able to use definitions from other related statutes, and held that such meant “construction or repair projects undertaken by municipalities on their infrastructure that are subject to the competitive bidding process”. With that definition, the court held that the piggybacking exception applies to the “purchase of specific classes of things, namely apparatus, materials, equipment and supplies, as well as service contracts related to those specific things” (emphasis original), and not to public works, public works contracts, or public works projects. Accordingly, the court held that the legislature specifically excluded such projects when it drafted the piggybacking exception, and the contract here was improperly let.
As to the remedy, although the Petitioners had sought disgorgement of the funds paid on the contract, the court declined to grant that draconian relief, holding that such would not be in the public interest. In doing so, the court noted that there were no allegations that the project was being performed inefficiently, or in an manner injurious to the taxpayers, and the District was not malfeasant in letting the contract to Smith. Accordingly, the court permitted Smith to complete its work, but enjoined the District from using TIPS (or a similar system) to bypass the requirement of public bidding to award future public works contracts.

Comment

In a case of clear first impression, the court here limited the use of the piggybacking scheme to, essentially, “plug-and-play” things that only need minor work to install and get running. If it involves anything more, it is classified as a public works project that must be sent out to bid. While the public bidding process—particularly when combined with the Wicks Law requiring the letting of separate contracts for general construction, plumbing, electrical, and HVAC scopes of work—can be cumbersome, the countervailing considerations of bidding for maximum competition, the reduction of opportunity for collusion, and the maintenance of bonding requirements won the day here. However, as this decision is still “hot off the press” there remains time (as of the writing of this article) for the District or Smith, as the aggrieved contractor, to file an appeal. Needless to say, if there is such an appeal, we will keep you updated as to the outcome. Regardless, if a contractor believes that it has lost out on public work through the use of piggybacking, or some other alternative procurement scheme, the contractor would be advised to consult with experienced construction counsel to see if you have a remedy.

If you would like more information regarding this topic please contact Thomas H. Welby at twelby@wbgllp.com or call (914) 428-2100

New York City Enacts FARE Act: Landlords to Shoulder Broker Fees Starting June 2025

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

In a major shift for the New York City rental market, the City Council passed the Fairness in Apartment Rental Expenses Act (FARE Act) on November 13, 2024. This legislation, effective mid-June 2025, significantly alters who bears the cost of broker fees in residential leasing transactions.

Key Provision: Landlords Pay Broker Fees

The FARE Act mandates that when a landlord hires a broker to market or lease an apartment, the landlord—not the tenant—must pay the associated broker fee. This effectively ends the longstanding (and often criticized) practice of tenants covering broker costs, even when they had no role in engaging the broker.

Historically, these fees have ranged from 10–15% of annual rent. For a typical $3,000/month apartment, this could add more than $5,000 to a tenant’s upfront costs, on top of first month’s rent and security deposit.

Legislative Background

Sponsored by Council Member Chi Ossé, the FARE Act passed by a 42–8 margin, with supporters citing the financial strain broker fees impose on tenants—particularly those in low- and middle-income brackets. The legislation aligns New York City with other major cities, such as San Francisco and Boston, where broker fees are commonly paid by landlords.

Pushback and Litigation

Opposition came swiftly from the real estate industry. The Real Estate Board of New York (REBNY) has filed a federal lawsuit challenging the FARE Act, claiming it infringes on state law and brokers’ First Amendment rights. Industry groups also warn that landlords may recoup costs through higher monthly rents, undercutting the Act’s intended relief for tenants.

Implications for Stakeholders

  • Tenants should see reduced upfront costs when renting apartments where the landlord has retained a broker.
  • Landlords must now budget for broker commissions when using intermediaries, potentially impacting rent-setting strategies.
  • Brokers may need to adjust business models and expectations regarding fee recovery.

What’s Next?

With the law set to take effect in June 2025, landlords, brokers, and tenants should begin reviewing their leasing practices and form agreements. Industry participants are advised to monitor the ongoing litigation, which could impact enforcement or interpretation of the FARE Act.

For further guidance on how the FARE Act may affect your leasing strategy or contractual obligations, please contact us.

FinCEN Eliminates BOI Reporting Requirement for U.S. Companies and U.S. Persons

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

In a sweeping reversal of policy, the Financial Crimes Enforcement Network (FinCEN) announced today that it has issued an interim final rule eliminating the Beneficial Ownership Information (BOI) reporting requirement for all U.S. companies and U.S. persons under the Corporate Transparency Act (CTA).

This unexpected but significant shift aligns with the Department of the Treasury’s March 2, 2025 announcement and is effective immediately, ahead of its formal publication in the Federal Register.

Key Changes Under the Interim Final Rule

No More BOI Reporting for U.S. Entities FinCEN has revised the definition of “reporting company” to include only:

  • Entities formed under the laws of a foreign country, and
  • Registered to do business in any U.S. state or tribal jurisdiction by filing with a secretary of state or similar office (previously referred to as “foreign reporting companies”).

This means:

  • All entities created in the United States are now fully exempt from BOI reporting under the CTA.
  • U.S. persons will no longer be subject to any BOI disclosure obligations as beneficial owners.

New Rules for Foreign Entities

Entities formed outside the U.S. but registered to do business here may still be required to report BOI — but only if they do not qualify for one of the CTA’s existing exemptions. The new rules include the following deadlines:

  • Foreign Entity Status
  • BOI Filing Deadline
  • Registered before March 26, 2025
  • 30 days from March 26, 2025
  • Registered on or after March 26, 2025

30 days from notice that registration is effective Importantly, even for these foreign entities:

  • No U.S. persons need to report BOI as beneficial owners.
  • No Enforcement for Domestic Entities

FinCEN has clarified that:

  • It will not enforce any BOI-related penalties or fines against U.S. citizens, domestic reporting companies, or their beneficial owners.
  • All exemptions and deadline extensions in this interim final rule are considered effective immediately.

What This Means for You

This is a monumental rollback of the CTA’s original reach. Effective today:

  • U.S.-formed LLCs, corporations, and other domestic entities no longer need to file BOI reports.
  • U.S. individuals will not be treated as beneficial owners for any reporting purpose under the CTA.
  • Only foreign entities registered to do business in the U.S. — and not otherwise exempt — must comply with the CTA’s reporting obligations.

Next Steps:

If you previously began preparing BOI filings for U.S. entities or U.S. persons, those efforts can now be suspended. For clients with foreign entities operating in the U.S., we recommend a fresh review to determine if a reporting obligation still applies under the narrowed rule.

Please contact us with any questions or to reassess your CTA compliance strategy.

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