March 2025 – Duane Morris Construction Law

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.

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 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.