construction law – Page 2 – Duane Morris Construction Law

August 17, 2025August 17, 2025 by Jose A. Aquino

Court Affirms Quantum Meruit Award in Home Construction Dispute

In Schott v. Lucatelli, decided by the New York State Supreme Court, Appellate Division, Third Department on June 12, 2025, the court addressed a dispute between two members of an extended family over the construction of a home. In 2017, the defendant asked the plaintiff to build a home, but the parties never entered into a written contract. Construction began in 2018, and while plaintiff was paid for work performed that year, a dispute arose in early 2020 over escalating costs. When plaintiff returned from a winter trip to Florida in April 2020, he discovered that defendant had changed the locks on the unfinished home and hired someone else to complete the project.

Plaintiff sued to recover compensation for work performed between May 2019 and January 2020. Defendant responded with counterclaims, including breach of contract. The trial court found no enforceable contract under New York General Business Law § 771, which requires a written agreement for building a new single-family home on land the buyer owns at the time of the contract. As a result, plaintiff could not recover under a breach of contract theory. Instead, the court evaluated his claim under the equitable doctrine of quantum meruit, which allows recovery for services rendered when no formal contract exists, provided certain elements are met.

The court found that plaintiff had performed services in good faith, that defendant accepted those services, that he expected compensation, and that the services had reasonable value. Plaintiff testified that he worked 31 weeks at 40 hours per week, and the court determined that $35 per hour was a fair rate, totaling $43,400. However, due to evidence of defective work, the court reduced the award by $12,750, resulting in a judgment of $30,650 in plaintiff’s favor. The court also granted prejudgment interest from the date defendant prevented plaintiff from completing construction.

On appeal, the defendant challenged both the award and the prejudgment interest. The appellate court affirmed the trial court’s decision, noting that the plaintiff had provided sufficient testimony and supporting evidence. It further held that prejudgment interest was appropriate, reasoning that although quantum meruit is an equitable theory, its quasi-contractual nature permits interest under NY CPLR 5001(a), which authorizes interest on damages in contract and property-related actions from the time the claim arose. Without deciding whether such interest is mandatory or discretionary, the court found the award proper under either standard.

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 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.

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.

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.

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.

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.

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.

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 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.