Duane Morris Construction Law

April 4, 2025April 4, 2025 by Jose A. Aquino

Court Reinforces Limits on “Piggybacking” in Public Bidding

In New York, “piggybacking” refers to a procurement method authorized by General Municipal Law §103(16), which allows a municipality or school district to purchase goods or services through another governmental entity’s contract without conducting its own bidding process, if certain conditions are met. The original contract must have been awarded through competitive bidding or a process that satisfies the legal equivalent under New York law, and it must permit other public entities to make purchases from it. While intended to promote efficiency and cost savings, piggybacking is strictly limited in scope and is not a blanket exemption from public bidding requirements.

On February 13, 2025, the Supreme Court of New York, Broome County, issued decision in Daniel J. Lynch, Inc. v. Board of Ed. of the Maine-Endwell Central School Dist., addressing the limits of “piggybacking” under General Municipal Law (GML) §103(16) in the context of public construction contracts.

The case arose from a capital improvement project for which the School District awarded a sitework contract to Smith Site Development, LLC. Several contractors, including plaintiff, challenged the award, arguing that the District improperly relied on a piggybacking arrangement to avoid traditional competitive bidding procedures. Specifically, the District piggybacked on a municipal contract that had not been awarded through sealed bidding as required by GML §103.

The Court held that the District’s use of piggybacking was impermissible. The Court found that GML §103(16) only authorizes piggybacking when the original contract was awarded through a process compliant with GML §103’s requirements – namely, public advertisement and sealed competitive bidding. Furthermore, the Court interpreted the statutory term “vendor” as applying only to suppliers of apparatus, materials, equipment, or related services, and not to contractors performing construction or alteration of buildings. Because the original contract did not meet these criteria, the piggybacking arrangement was invalid.

This decision cautions that piggybacking under GML §103(16) is restricted to eligible vendor contracts and cannot be used to bypass competitive bidding rules for construction projects. The ruling provides a clear precedent for challenging awards made through improper reliance on piggybacking.

Jose A. Aquino (@JoseAquinoEsq on X) is a special counsel at Duane Morris LLP’s New York office, where he is a member of both the Construction Group and of the Cuba Business Group, specializing in construction law, lien law, and government procurement law.

This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed herein are those of the author and do not necessarily reflect the views of Duane Morris LLP or its individual attorneys.

March 24, 2025 by Jose A. Aquino

Legal Doctrines: The Role of Res Judicata and Election of Remedies in a Construction Dispute

On February 13, 2025, the Appellate Division of the Supreme Court of the State of New York entered a ruling in the case of Alarcon v. Henry, highlighting the significance of adhering to the doctrines of res judicata and election of remedies.

The plaintiff entered into a contract with HKH Construction, Inc., owned and operated by Matthew Henry, for the reconstruction of plaintiff’s home. Alleging that the defendants failed to complete the contracted work, plaintiff filed a complaint with the Nassau County Department of Consumer Affairs (DCA) in April 2019. DCA held an administrative hearing in November 2019, which the defendants did not attend. Consequently, DCA issued a default judgment against the defendants, awarding plaintiff $100,000 and assessing $8,500 in fees.

In response, the defendants initiated a proceeding under CPLR article 78 to review the DCA’s determination. The Supreme Court partially annulled the DCA’s default judgment against Henry but upheld the judgment against HKH Construction.

This appellate court reversed the previous order from the Supreme Court which had denied the defendants’ motion for summary judgment dismissing the complaint. The appellate court’s decision hinged on two key doctrines: res judicata (claim preclusion) and election of remedies.

Res judicata prevents the relitigation of claims that have already been resolved in a prior proceeding. The court noted that the claims raised by plaintiff were previously addressed in the administrative proceeding and the CPLR article 78 proceeding. Despite the default judgment, the court affirmed that such a judgment is considered a judgment on the merits.

Election of remedies bars a plaintiff from pursuing multiple remedies for the same wrong. Plaintiff had the option to file a plenary action but chose to file a complaint with DCA. By fully participating in the administrative process, plaintiff waived the right to seek relief through other procedural avenues.

The decision highlights the finality of default judgments and the necessity for parties to actively participate in legal proceedings.

March 18, 2025 by Jose A. Aquino

Court Upholds Sanctions for Frivolous Filing of Notice of Pendency

In Consumer Protection Restoration, LLC v. Hickory House Tenants Corp., the Second Department of the New York Appellate Division upheld a trial court’s decision to impose sanctions and legal fees on the plaintiffs for filing a frivolous notice of pendency. The plaintiffs initially sought to foreclose on two mechanic’s liens and recover damages for breach of contract and unjust enrichment against the defendant, Hickory House Tenants Corp. (hereinafter “Hickory House”). However, the Supreme Court of Rockland County had previously directed the expungement of the mechanic’s liens under Lien Law § 39, ruling that they were willfully exaggerated.

Subsequently, the plaintiffs filed a notice of pendency against Hickory House’s cooperative apartment complex in relation to their sole remaining claim for unjust enrichment. Hickory House moved to impose sanctions, arguing that the notice of pendency was frivolous.

The Second Department affirmed the lower court’s ruling that the plaintiffs’ notice of pendency was frivolous and upheld the imposition of sanctions. The court reiterated that a notice of pendency is proper only when a plaintiff’s claim directly affects the title, possession, use, or enjoyment of real property. In this case, the plaintiffs’ unjust enrichment claim did not implicate a property interest in a manner that justified filing a notice of pendency.

The ruling underscores the judiciary’s willingness to impose financial consequences on litigants who file a notice of pendency without a legitimate property interest claim.

March 5, 2025March 5, 2025 by Jose A. Aquino

The Impact of Corrective Work on Performance Bond Deadlines: A Case Study

The recent decision in BCC Housing Development Corp. v. LPCiminelli, Inc., entered on February 27, 2025, by the New York Supreme Court, Appellate Division, Third Department, addresses the enforcement of contractual time limits in performance bonds and clarifies when a contractor’s work is considered complete under a construction contract.

BCC Housing Development Corp. (“BCC”) engaged LPCiminelli, Inc. (“LPCiminelli”) to construct student housing for SUNY Broome Community College. As required by the contract, LPCiminelli executed a performance bond issued by defendant Liberty Mutual Insurance Company, as surety. The bond required that any action on the bond be commenced within two years after the contractor stopped work. Substantial Completion of the project occurred in August 2014. The building housed students starting in the 2014–2015 academic year. The Final Payment was made in June 2015. However, construction defects required LPCiminelli to perform corrective work until September 2017. After LPCiminelli stopped performing corrective work without rectifying all the defects, BCC commenced an action against the performance bond in August 2019.

Under the construction contract, the LPCiminelli was responsible for correcting non-conforming work discovered after Final Payment. LPCiminelli was required to promptly correct work rejected by BCC or failing to conform to the contract documents, whether discovered before or after Substantial Completion. If non-conforming work was found within a year of Substantial Completion, the contract required LPCiminelli to correct it.

Defendants argued the lawsuit was untimely, claiming the two-year period started with Substantial Completion or Final Payment. BCC countered that the deadline should run from September 2017, when corrective work stopped. The trial court ruled in favor of BCC, finding that the contractor’s continued performance of corrective work rendered the lawsuit timely. Defendants appealed.

The appellate court affirmed, emphasizing that the terms of the contract must be interpreted according to their plain meaning. Since LPCiminelli was required to remedy defects discovered after completion, its corrective work was part of the contract. The court stated:

“[I]t is manifest that the terms of the contract placed a continuing obligation on LPCiminelli to perform corrective work, which it had done until September 2017. As such, substantial completion was not synonymous with cessation of work nor was the fact that final payment had become due indicative of the same.”

Performance bonds are strictly construed against the surety. Given the contract’s wording, the lower court determined that the work terminated in September 2017, when LPCiminelli stopped corrective work. Since BCC filed suit in August 2019, within the two-year contractual limitations period, the claim was timely. The appellate court upheld the denial of defendants’ summary judgment motion, emphasizing that corrective work can extend the timeframe for performance bond claims.

The decision underscores the role of contract language in determining claim deadlines under performance bonds. Notably, depending on the terms of the contract, ongoing defect correction work can extend the limitations period, thereby affecting the timing of actions against the bond.

Jose A. Aquino (@JoseAquinoEsq on X) is a special counsel in the New York office of Duane Morris LLP, where he is a member of the Construction Group and of the Cuba Business Group. Mr. Aquino focuses his practice on construction law, lien law and government procurement law. This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this blog are those of the author and do not necessarily reflect the views of the author’s law firm or its individual attorneys.

February 24, 2025February 24, 2025 by Jose A. Aquino

FEMA’s Withdrawal from Building Code Development

For approximately 25 years, the Federal Emergency Management Agency (FEMA) has been involved in developing building codes to help homes withstand natural disasters. However, the Trump Administration has recently halted these efforts, withdrawing FEMA’s involvement from the latest building code improvements.

National Public Radio (NPR) reported that FEMA is withdrawing from the latest effort to improve building codes. This decision has raised concerns among disaster experts about the potential impact on safety and property protection.

Building codes, reviewed every three years by the International Code Council (ICC), are important for disaster resilience. The ICC convenes experts and stakeholders in the building industry to review and improve these codes and is currently developing a new set of standards. The ICC’s International Codes are being updated for a 2027 version. FEMA’s involvement has encouraged states to adopt stronger codes. According to FEMA’s “Building Codes Save: A Nationwide Study,” modern building codes have led to significant reductions in property losses from natural disasters, avoiding at least $32 billion in losses over a 20-year period.

The decision to cease work on stronger building codes could affect efforts to improve construction practices, potentially leaving a gap in disaster preparedness and response.

February 21, 2025 by Jose A. Aquino

Appellate Court Highlights the Essential Role of Pre-Bid Inspections in Construction Projects

A recent appellate decision underscores the importance of due diligence in construction projects. The dispute arose from a construction contract between Maric Mechanical, Inc. (“Maric”) and the New York City Housing Authority (“NYCHA”). The contract involved the replacement of boilers at the Ravenswood Houses in Queens. According to the contract documents, the project required the construction of 40 temporary shoring towers. However, Maric later discovered that 206 shoring towers were necessary, significantly increasing the project’s cost.

Maric sought compensation for this “extra work,” arguing that the additional towers were not included in the original contract. NYCHA moved to dismiss the complaint, citing Maric’s failure to perform a pre-bid site inspection and the explicit disclaimers in the contract documents regarding the accuracy of the provided information.

The Supreme Court, New York County, granted NYCHA’s motion to dismiss the complaint. The decision was unanimously affirmed by the Appellate Division, First Department.

The appellate court’s decision was based on several factors. First, Maric admitted that it did not conduct a pre-bid project work site inspection, as required by the contract. This acknowledgment meant Maric could not claim that the need for additional shoring towers was unforeseeable. Second, the contract documents explicitly warned that NYCHA did not assume responsibility for the accuracy or completeness of the information regarding existing conditions. This disclaimer placed the responsibility on Maric to independently verify the site conditions. Lastly, Maric’s argument that its engineer’s post-contract determination of the need for extra work could not have been made based on a pre-bid inspection was deemed conclusory and insufficient to support its claim.

The decision in Maric Mechanical, Inc. v. New York City Housing Authority serves as an important reminder for contractors and legal professionals alike. It highlights the importance of pre-bid inspections and the need for documentation and verification of site conditions. Contractors must conduct pre-bid inspections to inspect and document all site conditions before submitting a bid. Additionally, contractors should pay close attention to disclaimers in contract documents, recognizing the limitations of the provided information.

The lower court’s decision can be found here, and the appellate decision here.

February 6, 2025February 6, 2025 by Jose A. Aquino

Appellate Court Affirms That Flagging Work Qualifies for Prevailing Wage

The New York Appellate Division, First Department’s decision in Santana v. San Mateo Construction Corp., entered on January 16, 2025, reinforces the enforceability of prevailing wage claims under Administrative Code of City of N.Y. § 19-142. The court clarified that section 19-142 applies to any permit issued “to use or open a street,” not just public works projects. It reaffirmed that flagging work qualifies for prevailing wages, and that laborers can enforce agreements related to this provision as third-party beneficiaries.

San Mateo Construction Corp.’s flagging contracts obligated compliance with all laws, making putative class members third-party beneficiaries despite contractual disclaimers, which the court deemed void as against public policy. The ruling also affirmed that prevailing wage rights under Administrative Code § 19-142 extend to private projects, rejecting the contractual forfeiture of such rights as contrary to public policy.

February 4, 2025February 4, 2025 by Jose A. Aquino

Trust Fund Diversion Claims Require Clear Evidence of Unauthorized Expenditures

In a recent decision, a New York appellate court reversed a trial court ruling that had granted summary judgment in favor of the plaintiff in a dispute over alleged diversion of trust funds under Article 3-A of the New York Lien Law. The case, 1 Park East Construction Corp. v. Uliano, underscores the evidentiary burden required for a plaintiff to establish a case of trust fund diversion for summary judgment.

The underlying dispute arose from a construction project in which the plaintiff alleged that a corporation owned by defendant, acting as a subcontractor, received trust funds from plaintiff to purchase materials for the installation of a stormwater filtration system but failed to pay the vendor. The plaintiff sought recovery of trust funds pursuant to N.Y. Lien Law Article 3-A. Initially, the trial court denied the plaintiff’s motion for summary judgment without prejudice, allowing for renewal once issue had been joined. The plaintiff subsequently renewed its motion, which the trial court granted, awarding damages in the principal sum of $78,066.62 against the defendant. The defendant appealed, leading to the reversal of the trial court’s decision.

The Appellate Division, Second Department, found that the plaintiff had failed to establish, as a matter of law, that the defendant had diverted trust funds. Under Article 3-A of the Lien Law, contractors and subcontractors who receive payments for construction projects hold those funds in trust for the benefit of subcontractors, suppliers, and other designated beneficiaries. Any unauthorized use of these funds before all trust claims have been satisfied constitutes an impermissible diversion, regardless of intent. However, the court emphasized that a plaintiff moving for summary judgment must eliminate all triable issues of fact regarding whether the trust assets were improperly used for unauthorized expenditures.

In this case, while it was undisputed that the defendant had received trust assets and had not paid the vendor, the plaintiff failed to show that the defendant had used the funds for unauthorized purposes. The court cited precedents emphasizing that summary judgment is inappropriate where factual questions remain unresolved, particularly in cases involving allegations of improper use of trust assets.

This decision serves as a reminder that plaintiffs seeking summary judgment on claims of trust fund diversion must present undisputed evidence that the defendant misused trust assets in violation of Lien Law § 71. Mere nonpayment to a vendor, without additional proof of improper diversion, is insufficient to grant summary judgment. The ruling confirms that summary judgment is inappropriate when factual disputes exist, leaving such issues to be resolved at trial.

Notably, however, the opinion fails to address how the plaintiff acquired standing to assert a trust fund diversion claim. Under the trust fund provisions of the Lien Law, only those who are beneficiaries—that is, those entitled to receive payment from the trust—generally have standing. In this case, the opinion states that the plaintiff paid trust funds to defendant’s corporation, a fact that typically indicates the plaintiff was merely the payer rather than a beneficiary. The sole exception in the statute is found in Lien Law § 71‑a(4)(a), which provides that under a home improvement contract, payments received from an owner by a home improvement contractor prior to substantial completion may be considered trust funds, thereby designating the owner as the beneficiary. Unfortunately, the decision does not address whether the dispute involves a home improvement contract, nor does it clarify the plaintiff’s actual role in the construction project, leaving its standing under the trust fund diversion claim uncertain.

January 20, 2025 by Jose A. Aquino

The New York City Fair Chance Housing Law: Advancing Inclusivity and Equity by Addressing Criminal History Discrimination

Effective January 1, 2025, the New York City Fair Chance Housing Law prohibits housing discrimination based on criminal history. The primary objective of this legislation is to foster an inclusive and equitable housing environment for all New Yorkers.

The law imposes specific limitations on when and how housing providers can consider an applicant’s criminal history. Landlords, real estate brokers, and other housing providers are permitted to review criminal history only after assessing an applicant’s other qualifications. Furthermore, housing providers may only consider a limited set of convictions, referred to as “Reviewable Criminal History.” These include:

Convictions that require registration on a sex offense registry at the time of the background check.
Misdemeanor convictions within three years from the date of release from incarceration or the date of sentencing if no incarceration occurred.
Felony convictions within five years from the date of release from incarceration or the date of sentencing if no incarceration occurred.

The 3 or 5 years are measured from the actual date of release or the sentencing date (if the sentence does not include jail or prison time), regardless of probation or parole status.

The arrest of an applicant or a pending case cannot be taken into consideration. Nor can any of the following circumstances be considered:

Convictions that were sealed, expunged, are under an executive pardon or certificate of relief from disabilities, or legally nullified or vacated.
Convictions for violations, which are non-criminal offenses such as disorderly conduct.
convictions under federal law or another state’s law for conduct related to reproductive or gender affirming care that is lawful in New York State.
Convictions under federal law or another state’s law for cannabis possession that does not constitute a felony in New York State.
Adjournments in Contemplation of Dismissal (ACDs)
Adjudications as a youthful offender or for juvenile delinquency
Terminations in favor of an individual, including but not limited to, acquittals, reversals upon appeal, and exonerations).
Dispositions of criminal matters under federal law or another state’s law that are comparable to those listed here.

In the event that an applicant is rejected based on their criminal history, the housing provider is required to provide a written explanation for the decision.

The significance of this law cannot be overstated. It aims to offer a second chance to New Yorkers with a criminal history, facilitating their reintegration into society and reducing recidivism. By curbing discrimination based on criminal history, the law helps alleviate pressure on the city’s shelter system and addresses issues of racial bias and exclusion from housing.

It is important to note that the law does not apply to two-family owner-occupied housing or rooms in owner-occupied housing. Additionally, it does not apply in situations where federal, state, or local laws mandate or permit exclusion based on criminal history.

The Fair Chance Housing Law represents a progressive step towards ensuring fair housing opportunities for all, reflecting New York City’s commitment to justice and equality. Through the implementation of this law, New York City aspires to create a more just and inclusive community, where everyone has the opportunity to secure stable housing.

While this law promotes fairness and inclusivity, it also places significant responsibilities on landlords. They must navigate the complex requirements of the Fair Chance Housing Law, including conducting the bifurcated screening process, providing necessary notices, and justifying any decisions to withdraw a housing offer based on criminal history. This added responsibility necessitates that landlords remain informed and compliant with the law, ensuring that their practices align with the new regulations.

For more detailed information on the NYC Fair Chance Housing Notice and the specifics of the law, please visit the official website. The NYC Fair Chance Housing Notice can be found here.

January 16, 2025January 16, 2025 by Jose A. Aquino

U.S. Circuit Court Highlights the Importance of Timely Asserting Legal Arguments

On January 15, 2025, the U.S. Court of Appeals for the Second Circuit entered a summary order on the case of E & T Skyline Constr., LLC v. Talisman Cas. Ins. Co., LLC. This case revolves around a dispute over the obligations under a performance bond issued for a condominium project in Manhattan.

E&T Skyline Construction (E&T), a general contractor, had subcontracted NY Renaissance Corp. (NYR) to deliver and install custom windows for the project. To safeguard against potential non-performance by NYR, E&T secured a performance bond from Talisman Casualty Insurance (Talisman). When NYR failed to perform, E&T terminated the subcontract and demanded payment from Talisman. However, Talisman refused, citing E&T’s own failure to meet its obligations under the subcontract as a precondition for the bond payment.

After a bench trial, the district court ruled in favor of Talisman. E&T’s subsequent motion to alter or amend the judgment was also denied. E&T then appealed.

On appeal E&T argued that the district court erred in considering the terms of a March 8, 2019 revised schedule as part of the subcontract. E&T contended that since the revised schedule was not signed, it should not be enforceable. The district court had found that E&T could have raised this issue earlier in the proceedings but failed to do so, leading to the forfeiture of this argument. Specifically, the court noted that E&T had multiple opportunities to contest the enforceability of the revised schedule but did not. E&T had acknowledged the revised schedule in various communications and legal filings, treating it as binding. Despite these opportunities, E&T only challenged the enforceability of the revised schedule in a post-trial motion. As a result, the district court deemed this argument forfeited.

E&T also argued that even if the revised schedule was enforceable, the district court wrongly concluded that E&T breached the subcontract. The district court, however, determined that E&T’s failure to clear debris and obstructions from the construction site made it impossible for NYR to deliver the windows, constituting a breach of the subcontract.

The appellate court affirmed the district court’s judgment, agreeing that E&T had forfeited its argument regarding the revised schedule and that E&T’s breach of the subcontract justified Talisman’s refusal to pay the bond. The appellate court’s reasoning underscored the importance of timely raising all relevant arguments during the trial phase, as failing to do so can result in the forfeiture of those arguments on appeal.

This case highlights the critical need to assert all relevant arguments at the appropriate stages of litigation to avoid waiving them. Failing to do so can result in the forfeiture of potentially pivotal legal arguments, as demonstrated in this case.