The New York City Department of Buildings (“DOB”) recently announced the expansion of its online NYC Development Hub. Introduced by the DOB to facilitate the review and approval process on major construction projects, the Development Hub is a high-tech plan processing center offering faster approvals, fewer office visits to DOB and reduced paper submissions. Since its inception in October 2011, the Hub has approved more than 300 new buildings and major renovation projects.
In the construction industry, the payment application process usually requires contractors and subcontractors to complete a great deal of paperwork. In addition to submitting traditional payment applications that identify the contractor’s or subcontractor’s schedule of values, work completed to date, and balance to finish, contractors and subcontractors may also be required to submit certain lien waivers, certifications, affidavits, and other types of sworn representations. While these additional submissions may seem clerical, or even ceremonial in nature, they can have serious legal ramifications.
In 2008, a crane operator and a construction worker were killed when a construction crane collapsed on the east side of Manhattan. The decedents’ estates brought suit against the project owner, the construction manager and the crane operator. The three construction defendants asserted cross-claims against the City of New York seeking indemnification and contribution on the grounds that the City failed in its duty to keep the construction site safe.
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.
A recent decision of New York City Office Of Administrative Trials And Hearings (“OATH”) highlights the significance of compliance with each and every provision of a construction contract. Ferreira Construction Co., Inc. v. Dep’t of Transportation, OATH Index No. 1619/12 (Nov. 16, 2012), involved a public contract to reconstruct a pedestrian bridge in Manhattan at East 78th Street and the FDR Drive. The New York City Department of Transportation (“DOT”) contract contained a contractor initiated value engineering change (“CIVEC”) provision that gave the contractor an incentive to propose innovations by allowing for an award to the contractor of 50% of the cost savings if the proposal was accepted by DOT. The dispute concerned the application of the CIVEC clause. The contractor claimed that its accepted proposal under the CIVEC clause saved DOT $252,320.50, and that it was entitled to 50% of the savings of $126,160.25. DOT claimed that the proposal saved the agency only $93,011.50, and that the contractor was entitled to only $46,505.75 additional compensation.
In November 2012, Governor Andrew Cuomo formed the NYS 2100 Commission in response to the recent, and extraordinary, weather events experienced in New York State (Super Storm Sandy, Hurricane Irene and Tropical Storm Lee). The Commission, consisting of 25 members, is co-chaired by Judith Rodin, President of Rockefeller Foundation, and Felix Rohatyn, former Chairman of the Municipal Assistance Corporation.
The February 1st deadline to comply with the New York Wage Theft Prevention Act is fast approaching. The Act requires New York State employers to provide to each employee a written notice containing specific information about the employee’s wages. The notice must be given to all employees, including employees earning union wages and employees earning prevailing wages on public construction projects.
The Superior Court of Pennsylvania recently affirmed the dismissal of a contractor’s mechanics’ lien on the grounds that the lien was not filed within 6 months after the completion of the work as required by Pennsylvania’s Lien Law. In Neelu Enterprises, Inc. v. Agarwal, 2012 PA Super. 276, No. 787 MDA 2012 (December 18, 2012), Agarwal, as owner, hired Neelu Enterprises, Inc., a contractor, to build a house. The contractor completed a substantial portion of the work for which it was paid. However, the owner decided to terminate the contractor before the house was completed. The owner and contractor entered into a termination agreement on December 8, 2010. Thereafter, the contractor returned to the job site to correct deficiencies on several occasions through January 7, 2011. The contractor filed its mechanic’s lien on June 23, 2011, within 6 months of January 7, 2011, but more than 6 months from the date of the termination agreement. Pennsylvania’s Lien Law provides that a claimant must file a lien “within six (6) months after completion of his work.” 49 P.S. § 1502(a)(1).
On June 25, 2012, Governor Jack A. Markell signed legislation that provides for significant revisions to a statute formerly known as the “Delaware Building and Construction Payments Act.” By enacting House Bill 109, the statute has been renamed the “Building Construction Procedures Act” (the “Act”).
More significantly, the scope of the Act has been expanded to include all services provided on construction projects. In addition, the Act now provides that all construction contracts must be governed by Delaware law and all litigation, arbitration, mediation or other dispute resolution procedures must take place in the state of Delaware. Specifically, the Act states:
We’re happy to announce that our construction group has made Chambers’ short-list for the Chambers USA Award for Excellence. 2012 marks the third year in a row Duane Morris has been nominated. Criteria for the nomination includes notable achievements over a 12-month period such as outstanding work, impressive strategic growth and excellence in client service and is based on the independent research conducted for Chambers USA 2012. Congratulations to all of our construction attorneys for this recognition.