New York Governor Andrew Cuomo ended 2018 by vetoing New York Senate Bill 6686 to amend the state finance law by adding a new section 138-b to allow contractors working on public construction projects seek delay damages against government agencies. The vetoed bill would have required all public contracts to contain a clause allowing a contractor, subcontractor or supplier to make a claim for costs due to excusable delays resulting from actions or omissions by a public owner or any of its representatives. The bipartisan bill sponsored by Senators Michael Ranzenhofer (Republican) and Luis Sepulveda (Democrat) passed the Assembly by a vote of 103 to 40 and the Senate 59 to 0. The text of the bill can be seen here.
Jose A. Aquino (@JoseAquinoEsq on Twitter) 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 Duane Morris Cuba Business Group. Mr. Aquino focuses his practice on commercial litigation with a concentration in construction law, mechanics’ 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.
We all do it. We all use multipart agreements, or structure transactions where multiple parties are agreeing to the same set of terms and conditions, or seek to bind remote parties to a unified set of obligations, because it makes sense to do that from any number of perspectives. In construction, the practice has existed beyond memory: use of “incorporation by reference” or “flow-down” clauses to impose consistent contractual obligations down the chain of privity is so common as to be remarkable only in its absence. When done lazily, however, problems can result, particularly in the areas of dispute resolution, as illustrated by recent court decisions concerning arbitration clauses that were “incorporated by reference”.
Continue reading Careful: That Flow-Down Clause is Loaded (or, “How Incorporation by Reference” Can Leave Marks in Unintended Places)
By Michael L. Chartan, partner in the Construction Group in Duane Morris’ New York office
Construction contracts in New York and in other states frequently include provisions that bar recovery of damages for delay and require extra work to be authorized in writing. These types of provisions are enforceable. Exceptions exist that will permit recovery of delay damages and for extra work in the face of these exculpatory provisions. In Bricklayers Ins. & Welfare Fund v. Minhas Gen. Contrs. Co., LLC, 2015 U.S. Dist. LEXIS 151965, Judge Frederic Block sitting in the United States District Court for the Eastern District of New York, denied summary judgment finding triable issues of material fact. Subcontractors and general contractors have limited leverage to remove these types of provisions from the contract. Nonetheless, review of project records by a knowledgeable attorney may well reveal facts to overcome these provisions.
A recent decision of the Supreme Court of the State of New York reminds us of the importance of using consistent terms when drafting a construction contract. In Clinton Assoc. For A Renewed Envt. Inc. v. Monadock Constr. Inc., defendants, pursuant to a contract (the “Contract”), agreed to provide architectural services and contract administration services to plaintiffs.[i] As part of their work, defendants prepared architectural plans, including specifications for the design system and choice of materials for the exterior masonry wall system. The Certificate of Substantial Completion was signed on March 29, 2006 and, at or about that time, the masonry walls began to fail, causing the walls to bulge and take on water. It was determined that the walls could not withstand the weather cycles to which they were exposed. Following Substantial Completion of the project, defendants worked extensively to cure the flaws in the masonry walls by, among other things, creating an alternate design and supervising the corrective work until August 18, 2008, when an Architect’s Certificate approving the repairs was issued.
Continue reading Importance Of Using Consistent Terms In A Construction Contract