Duane Morris Construction Law

August 7, 2025August 7, 2025 by Jose A. Aquino

Appellate Court Reaffirms Limits on Delay Damages in Construction Contracts

On June 5, 2025, the Appellate Division, First Department of the New York Supreme Court issued an opinion in Gamma USA, Inc. v. Pavarini McGovern, LLC, addressing the enforceability of a no-damages-for-delay clause in a construction contract between the subcontractor and contractor. The subcontractor had brought breach of contract claims based on alleged project delays, but the court dismissed those claims, citing the clause in the subcontract that barred recovery for delay-related damages..

The court found that the subcontract’s unambiguous Section 6.3 barred the subcontractor from recovering delay damages, regardless of other terms in the agreement. Section 6.3 provided:

“Notwithstanding any other provisions of this Subcontract, the Subcontractor agrees to make no claim for additional costs on account of, and assumes the risk of, any and all loss and expense for delay.”

This language was central to the ruling. It clearly allocated the risk of delay to the subcontractor and took precedence over any conflicting provision. The court rejected claims of ambiguity or conflicting terms and dismissed the case based on established precedent.

The subcontractor argued that exceptions to the no-damages-for-delay rule applied, including bad faith, reckless indifference, and breaches of fundamental obligations. The court rejected those arguments, concluding that the alleged conduct—such as poor planning, lack of scheduling detail, and removal of a crane—did not amount to intentional wrongdoing or fundamental breach. These were characterized as “inept administration,” which was insufficient to overcome the no-damage-for-delay clause.

The court also rejected the argument that the delays were unexpected. The subcontract clearly covered delays in starting, carrying out, and finishing the work. The subcontractor’s claim of a year-long delay did not alter the outcome, as the subcontract anticipated such delays.

The subcontractor’s claim that the contractor breached a fundamental obligation by failing to provide a crane was also dismissed. The subcontract stated that hoist size and capacity were limited, placed responsibility for oversized materials on the subcontractor, and gave the contractor discretion over site logistics. The court found no basis to support the argument that crane availability constituted a fundamental obligation under the subcontract.

This decision confirms that New York courts enforce no-damages-for-delay clauses that are clear and specific. Exceptions like bad faith or uncontemplated delays will not apply unless they involve conduct that goes beyond mere poor planning or administrative missteps. Subcontractors seeking to avoid the impact of such clauses must show that delays stemmed from deliberate misconduct or circumstances undisputably outside the scope of the agreement.

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

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.

August 5, 2025 by Jose A. Aquino

Navigating Payment Protections in New York’s Public Improvements Without Public Funds

In New York, construction professionals face a distinct legal challenge when public improvements are carried out by private entities without public financing. Under the New York Lien Law, a “public improvement” refers to work performed on real property owned by the state or a public corporation. Mechanic’s liens apply only to private real property, while public improvement liens can be filed only against public funds. In the absence of either, contractors and suppliers lack a lien-based remedy to secure payment for their labor or materials.

To address this gap, the legislature amended Section 5 of the Lien Law in 2004 to require a payment bond for public improvement projects exceeding $250,000 when no public fund has been established. This bond guarantees prompt payment to contractors, subcontractors, and suppliers and serves as the exclusive financial safeguard in such cases. The statute as amended provides in pertinent part:

“Where no public fund has been established for the financing of a public improvement with estimated cost in excess of two hundred fifty thousand dollars, the chief financial officer of the public owner shall require the private entity for whom the public improvement is being made to post, or cause to be posted, a bond or other form of undertaking guaranteeing prompt payment of moneys due to the contractor, his or her subcontractors and to all persons furnishing labor or materials to the contractor or his or her subcontractors in the prosecution of the work on the public improvement.”

Unlike traditional payment bonds—which are typically posted by contractors or subcontractors as part of their contractual obligations—the Section 5 bond must be posted by the private developer. This statutory requirement shifts the financial responsibility upstream, placing the burden on the entity commissioning the work rather than those performing it. This framework ensures workers and suppliers receive payment even when lien rights are unavailable.

While this Section 5 bond protects against nonpayment in the absence of public funds, developers also typically require contractors to furnish other types of bonds within the construction agreement. These include payment bonds, which ensure compensation for subcontractors, suppliers, and laborers, and performance bonds, which guarantee that the contractor completes the work as specified under the contract. Though separate from the Section 5 bond, these additional bonds serve complementary roles—one aimed at securing financial compensation, the other enforcing contractual execution.

A key distinction exists between mechanic’s liens and payment bond claims. Mechanic’s liens typically permit recovery only for unpaid amounts owed to the defaulting party. If a contractor or subcontractor has already been paid, downstream parties—such as unpaid subcontractors or sub-subcontractors—may be left without lien rights. In contrast, payment bond claims offer broader protection. An unpaid party may still recover under the bond even when no outstanding obligation remains to the defaulting contractor or subcontractor, provided the claim is timely and complies with the bond’s terms.

Together, these provisions form an integrated framework of financial and legal safeguards. For those engaged in public improvement projects without direct public financing, understanding these requirements is essential to managing risk and securing payment.

August 1, 2025 by Jose A. Aquino

New York Appellate Court Highlights Standards for Dismissal and Summary Judgment in Contract Cases

In its July 30, 2025 decision in All Nations Steel Corp. v. KSK Construction Group, LLC, the New York Appellate Division, Second Department, reinforced the legal standards for dismissal and summary judgment motions in breach of contract cases. The case arose from a dispute between a subcontractor (the plaintiff) and the general contractor and project owner (the defendants) over the termination of a subcontract. The subcontractor claimed it was wrongfully terminated, while the defendants argued the termination was justified because the subcontractor did not obtain the required insurance.

The defendants moved to dismiss the complaint, or alternatively for summary judgment, including a request to limit damages to $50,000 based on a liquidated damages clause. The trial court denied the motion in all respects, and the appellate court affirmed.

The appellate court emphasized that dismissal is only appropriate when the documentary evidence “utterly refutes” the complaint’s allegations and “conclusively establishes a defense as a matter of law.” Here, the defendants’ affidavits and insurance documents failed to meet that high bar. Affidavits are not considered documentary evidence, and the insurance policy submitted did not definitively disprove the plaintiff’s claim that it complied with the subcontract’s requirements.

The court reiterated that on a motion to dismiss the complaint must be liberally construed, with the plaintiff afforded every favorable inference. The complaint sufficiently alleged the elements of a breach of contract claim: the existence of a contract, plaintiff’s performance, defendants’ breach, and resulting damages. The defendants failed to show that any of these allegations were indisputably false.

The court also rejected the defendants’ request for summary judgment. The defendants failed to meet their initial burden of showing that the termination was justified. Because they failed to eliminate all material issues of fact, the court did not even need to address the plaintiff’s opposition papers. Similarly, the request to limit damages under the liquidated damages clause was denied because factual disputes remained as to whether the clause applied—specifically, whether the termination was due to a material breach by the plaintiff.

This decision reinforces the legal standards required to succeed on a motion to dismiss or for summary judgment in contract disputes. It also reflects the courts’ reluctance to enforce liquidated damages clauses where the underlying breach is contested. The decision is a reminder that conclusory assertions and incomplete records will not suffice to dispose of claims at the pleading or summary judgment stage.

June 9, 2025June 9, 2025 by Jose A. Aquino

If It’s Not In The Contract, Don’t Count On Consequential Damages

A recent decision by the New York State Supreme Court, Appellate Division, Fourth Department, in James Vermillion v. The Roofing Guys, Inc., sheds light on the limitations of consequential damages in breach of contract cases. The ruling reinforces the principle that damages are only recoverable if they were reasonably contemplated by both parties at the time the contract was formed.

In this case, the plaintiff hired the defendant to reroof his home. During construction, however, a severe storm caused extensive water damage. The plaintiff sought to introduce expert testimony on damages related to delays—such as increased mortgage rates, rising material costs, and disruptions to financing. However, the trial court excluded this evidence, and the appellate court unanimously upheld that decision.

The appellate court emphasized that consequential damages require clear evidence that both parties anticipated such risks when entering the contract. Here, the agreement focused solely on roofing services and did not address financing risks or potential delays. Because the contract didn’t mention these damages and there was no evidence the parties expected them, the court didn’t allow the plaintiff to recover them.

This ruling underscores the importance of drafting contracts that clearly define the scope of potential damages, especially in construction projects where external factors like weather can significantly impact timelines and costs. To protect against such risks, parties must include specific clauses addressing delays, financing impacts, or other foreseeable complications.

Ultimately, Vermillion reaffirms that courts will enforce contracts as written. If consequential damages are not expressly included, parties may be limited to recovering only direct losses.

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

Preserving Evidence vs. Protecting Property: A Court’s Perspective

The Appellate Division First Department of the Supreme Court of the State of New York recently issued an order affirming the denial of defendants’ renewed motion for spoliation sanctions in Blinbaum v. Chan. The decision arose from a dispute between neighboring townhouse owners regarding damages allegedly caused by construction work.

In January 2018, the plaintiff and defendants entered into a license agreement granting the defendants temporary access to the plaintiff’s property to complete renovations on defendants’ adjoining townhouse. Under the agreement, the plaintiff had sole discretion over any necessary repairs if damage resulted from the defendants’ work. In January 2020, Plaintiff filed a lawsuit asserting that water infiltration in August 2018 had harmed his townhouse. When additional water infiltration occurred in July 2021, the plaintiff repaired the roof.

Defendants sought spoliation sanctions in May 2022, arguing that plaintiff’s July 2021 repairs violated a court order that allowed an expert inspection of the roof. The trial court denied their motion without prejudice, directing another inspection by June 30, 2023. After the inspection, defendants renewed their motion, submitting an expert affidavit stating that the prior repairs had obstructed a proper assessment. Plaintiff opposed with evidence showing that defendants’ insurer, accompanied by their attorney, had inspected the roof and taken photographs in October 2018, just two months after the plaintiff first reported water damage. Additional inspections were made in 2021 and 2023, with sections of the roof removed at the request of defendants’ expert to provide access.

The First Department concluded that the trial court properly exercised its discretion in denying the defendants’ renewed motion for sanctions. The defendants failed to show that the missing evidence was their only means of defending against the plaintiff’s claims or that the July 2021 repairs impaired their ability to challenge allegations that their construction work caused the damage. Notably, they did not dispute that their insurer and counsel had inspected and documented the roof conditions as early as October 2018. Furthermore, their expert acknowledged during a June 2023 inspection that he could distinguish between the July 2021 repairs and earlier ones.

The appellate court also found that the plaintiff acted within his rights under the license agreement in repairing his roof. Given his assertion that water infiltration had continued since August 2018, the court determined that the repairs did not amount to spoliation. The record further supported that the repairs were undertaken to mitigate ongoing damage, not in bad faith.

The decision highlights the balance courts must maintain between preserving evidence and allowing property owners to protect their homes from further damage. By affirming the trial court’s decision, the First Department reinforced the principle that necessary repairs made in good faith should not be penalized under spoliation doctrine.

June 5, 2025June 17, 2025 by Duane Morris

Chambers USA Recognizes Duane Morris Construction Group and 10 Individual Construction Team Members

Duane Morris is pleased to announce that Chambers USA has once again nationally recognized our Construction Group as well as construction attorneys across the country. We share this honor with our clients and colleagues whose support makes this possible.

Austin

Benton T. Wheatley, Construction

Chicago

Jeffrey L. Hamera, Construction

Charles B. Lewis, Construction

Miami

Scott D. Kravetz, P.A., Construction

New York

Mark Canizio, Construction

Frederick Cohen, Construction

Kenneth H. Lazaruk, Construction and Construction: Mediators

Allen J. Ross, Construction: Mediators

Brian A. Shue, Construction

Philadelphia

Patrick J. Kearney, Construction

June 4, 2025 by Duane Morris

Duane Morris Recognized as a Top 50 Construction Law Firm by Construction Executive

Duane Morris was ranked in the top 10 among the 2025 Top 50 Construction Law Firms by Construction Executive. Selected for excellence and prominence in the field of construction law, this marks the firm’s fifth consecutive appearance in the top 50 list.

Construction Executive is the leading source for news, market developments and business issues impacting the construction industry. To determine the ranking, published in the June 2025 issue, Construction Executive asked hundreds of U.S. law firms with a construction practice to complete a survey. Data collected included: 1) 2024 revenues from the firm’s construction practice; 2) number of attorneys in the firm’s construction practice; 3) percentage of firm’s total revenues derived from its construction practice; 4) number of states in which the firm is licensed to practice; 5) year in which the construction practice was established; and 6) the number of AEC clients served during fiscal year 2024. The ranking was determined by an algorithm that weighted these factors in descending order of importance.

Duane Morris’ Construction Group is nationally ranked by Chambers USA among the leaders in the industry and recognized as a Leading Law Firm in Construction by The Legal 500.

June 3, 2025 by Jose A. Aquino

Construction Liability and Insurance: How State Law Shapes Policy Exclusions

The Arkansas Court of Appeals recently issued a ruling determining that insurance coverage must be provided for both defense and indemnification in a dispute arising from faulty workmanship during flooring installation. The decision, in Nationwide Mutual Insurance Co. v. NWA Restore-It, Inc., 2025 Ark. App. 218, 710 S.W.3d 475 (Ark. Ct. App. 2025), clarifies how exclusions related to completed work and intended use apply in cases where damage occurs during installation rather than afterward.

The dispute began when a contractor installed replacement flooring after a water damage event. Approximately six months after the installation was completed, the flooring started exhibiting defects such as rippling and cracking. Attempts to repair the damage were unsuccessful, leading to a lawsuit alleging improper installation.

The contractor was listed as an additional insured under the installation subcontractor’s commercial general liability policy. After coverage was denied, the contractor sought a judicial declaration that defense and indemnification should be provided. The insurer contested coverage, citing policy exclusions that bar liability for property damage occurring after work has been completed or put to its intended use.

The court rejected these arguments, citing state law that explicitly defines an “occurrence” to include property damage resulting from faulty workmanship. The court found that the underlying complaint alleged damage occurring during installation rather than after completion, meaning that the cited exclusions did not apply.

The ruling distinguished the case from others in which damages were confined to the contractor’s own product. Here, the damage stemmed from the installation, rather than the product itself, which resulted in the court determining that the exclusions did not preclude coverage.

This ruling underscores the significance of statutory definitions in resolving insurance coverage disputes in construction. It establishes that insurers cannot rely solely on policy exclusions when state law has its own definition of covered occurrences.

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.

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.

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.