As I’ve mentioned in my recent President’s Messages, the STA Construction Awards Dinner and 50th Anniversary is coming up on Wednesday, April 6 at the Pierre Hotel in Manhattan.
The STA recently announced its slate of honorees, and I would like to extend heartfelt congratulations and thank the following awardees for their contributions to the construction industry:
• Chris Zegler of Turner Construction as the Builder of the Year
• Linda Chiarelli of NYU as the Silver Shovel Recipient
• Christine Donaldson-Boccia of JD Traditional Industries as the Ronald Berger Subcontractor of the Year
• Terry Moore of Local 46 Metallic Lathers as the Labor Leader of the Year.
We need your help in making this dinner a success! There are numerous sponsorship opportunities for the dinner as well as advertisement space in the printed awards journal. Further, the dinner and celebration on April 6 will be a great opportunity to pay tribute to the past year in construction with your fellow industry colleagues. I encourage everyone to attend!
The STA is holding a construction insurance breakfast seminar on Thursday, March 10 at Arno’s Ristorante in midtown Manhattan. This seminar will be presented by STA member American Global. Please click here to register or see below in the newsletter for further details!
I look forward to seeing all of our members at the Construction Awards Dinner and 50th Anniversary Celebration on April 6!
Robert J. Ansbro
By Hank Kita, STA Executive Director
When New York State Assembly Speaker Sheldon Silver resigned in disgrace from his legislative leadership position in early 2015, there was great optimism that there would finally be some positive movement towards the reform of the archaic New York Scaffold Law. His subsequent conviction on federal corruption charges several months ago, further fueled the optimism that perhaps there was finally some impetus for this reform. After all, Silver had for many years, almost singlehandedly stalled any chance to reform this statute with the considerable financial aid of the Trial Lawyers Lobby as well as organized labor.
As in previous years, I had the opportunity to attend the 4th Annual Lobby Day of the Lawsuit Reform Alliance of New York (LRANY) that was held on February 2 in Albany. Once again, I was part of a sizable contingent of over 125 advocates (including members of the STA) from various industries and professions which lobbied the Assembly, Senate and Administration to reform the outdated and patently unfair Scaffold Law. Now unique among the 50 states, the New York Scaffold Law holds contractors and owners absolutely liable in lawsuits for gravity related injuries, no matter what the circumstances. Like they had in the past, the Scaffold Law Reform advocates in Albany that day, pressed the various legislators and their staffs to change the law to a “comparative negligence” standard, where the conduct of the employee is considered when apportioning liability, just as it is the case in every other state in the country as well as every other part of New York State’s civil justice system.
Where I saw a glimmer of hope in my visits with the legislators and their staffs on Lobby Day last year, I must unfortunately report that I felt a marked indifference towards the cause of Scaffold Law Reform this year. Perhaps it is the fact that the legislature is up for election this year, or maybe last year’s optimism for reform was merely misplaced. What became obvious h in our meetings with the legislators this year was the feeling that any chance for reform would hinge on the will and efforts of Governor Cuomo. Without a push from the Governor on this issue, it would seem that the legislature would rather not go on its own against the wishes of the Trial Lawyers Lobby and organized labor.
If Governor Cuomo ever had the motivation to finally seek Scaffold Law Reform, it would seem that his recent grand proposals of $100 billion for various capital development projects not only in New York City but around the state, would push him in that direction. Following the Governor’s recent capital program proposals, the Lawsuit Reform Alliance calculated that the Scaffold Law would “consume at least $5 billion of public infrastructure spending planned by the Cuomo Administration”. The LRANY used actuarial, public, and academic data to develop this estimate, including data from the Port Authority and the Metropolitan Transportation Authority. After reviewing these sources, the LRANY came up with the estimate that the Scaffold Law adds between 5%-7% to the costs of public projects in New York. While the entire scope of the Governor’s $100 billion in projects has not been clarified, the LRANY estimated some specific cost on several of the proposed initiatives including:
• $1.1-1.54 billion in additional costs to upstate transportation;
• $150-210 million in additional costs to Penn Station upgrades;
• $10-14 million in additional costs to upstate airport reconstruction;
• $50-70 million in additional costs to the Javits Center project;
• $50-70 million in additional costs to the LIRR project;
• $415-580 million in additional costs to the MTA Capital Plan.
Obviously, these added costs to the New York taxpayer caused by the Scaffold Law are staggering and should be viewed by Albany as sufficient justification to reform this law. Just think of the additional projects that could be built not only in New York City but across the entire state for the $5 billion that will go for legal and insurance costs to preserve the status quo of the current law.
Once again, it will be up to groups such as the LRANY and the STA to push for this much needed Scaffold Law reform. As has been the case in the past, I once again urge all STA members to get on board and become a part of this Scaffold Law Reform effort by writing to or calling your state legislators and the Governor’s Office to let them know where you stand on this issue. If you don’t let your elected representatives know where you stand on the Scaffold Law, don’t expect to see any reform of this archaic and costly law anytime soon!
The Subcontractors Trade Association’s 2016 Annual Construction Awards Dinner & 50th Anniversary is coming up on Wednesday, April 6! The dinner will be held at the iconic Pierre Hotel in Manhattan.
The STA recently announced the slate of awardees for the night:
The STA is proud to be honoring Chris Zegler of Turner Construction as the Builder of the Year. Mr. Zegler is the Vice President and General Manager for Turner Construction Company’s New York Office, and oversees a diverse portfolio of projects across the metropolitan area, including Lower Westchester and Long Island. He is directly responsible for the overall performance of the New York Business Unit.
Mr. Zegler has been with Turner since 1982, and was promoted to positions of greater responsibility in the New York Office throughout his long career there, including Project Executive, Operations Manager, and most recently Preconstruction Manager. Mr. Zegler also oversees Turner Logistics in the New York Office, a specialized division focused on equipment procurement, in addition to client based initiatives of global sourcing and prefabrication.
New York University (NYU) and Linda Chiarelli will be receiving the 2016 Silver Shovel Award. Ms. Chiarelli is the newest appointed Vice President for Capital Projects and Facilities at NYU. NYU has supported many of New York City’s union subcontractors on its projects including 181 Mercer Street Community Campus and the new construction and reshaping of NYU Langone Medical Center. NYU has been one of the strongest supporters of union subcontractors in the city in recent years.
The 2016 Ronald Berger Subcontractor of the Year Award will be given to Christine Donaldson Boccia of J.D. Traditional Industries Ms. Donaldson Boccia is the Executive Manager of JDTI which is a certified MWBE and union subcontracting company that specializes in drywall, acoustics, lath, taping, plaster, ornamental plaster, metal and specialty ceilings.
With a background in business and administration, Ms. Donaldson Boccia oversees all aspects of her company including accounting, estimating, project management, marketing, business development, and union & contractor relations. She took over the company from her father nine years ago and has since quadrupled the company’s size.
Ms. Donaldson Boccia has been a board member of the STA for several years and has assumed an active leadership position in the industry serving on the Board of the Building Trade Employers’ Association, the Association of Wall Ceiling and Carpentry Industries and the Women Builders Council.
The Labor Leader of the Year for 2016 will be presented to Mr. Terry Moore, the Business Manager and Financial Secretary Treasurer of Metallic Lathers and Reinforcing Ironworkers Local 46. Local 46 represents 1,500 active members and 900 retirees.
Mr. Moore was an active building tradesman since the early 1980s and was elected twice to the Union’s Executive Board before being elected Business Agent in 1993, which he served as for 18 years. He is also on the Executive Board of the Building and Construction Trades Council of Greater New York. Prior to being elected as Business Manager of Local 46, Mr. Moore served organized labor in several other capacities, including president of the Bronx Board of Business Agents and president of the Manhattan Board of Business Agents.
2016 is very special year for the Subcontractors Trade Association: it is the association’s 50th anniversary of their inception in 1966. Not only will April 6 be celebrating the award recipients, it will be celebrating 50 years of success, positive change and subcontractor representation in New York City’s construction industry.
After another long and busy year, it’s important to pay tribute to those construction professionals and companies who have accomplished great feats and continue to make a significant impact on our industry.
Please click here for this year’s invitation. Contact Samantha Sweeney at 212-398-6220 or firstname.lastname@example.org
for more information or to reserve your sponsorships, advertisement space or tickets.
Part I of III in a series:
Article 3-A of the New York Lien Law - Know your Rights
By Henry L. Goldberg, Managing Partner, Goldberg & Connolly & STA Legal Counsel
Clearly there’s nothing more important to the continued success of a subcontractor than to be paid. Many subcontractors can be one bad job away from closing up shop if they are unable to collect on work performed. “Making it up” on the next job is no longer a viable strategy. Additionally, failing to receive payment from the contractor jeopardizes the subcontractor’s relationships with its vendors and suppliers when it is unable to pay them.
This month’s legal log is the first in a series about ‘Getting Paid” in today’s construction environment which can be harsh on subcontractors who do not properly protect themselves. Goldberg & Connolly emphasizes using the full panoply of tools the law uniquely affords subcontractors and suppliers. This first article addresses the protection provided by Article 3-A of the New York Lien Law (Article 3-A), known as the “Trust Fund Provisions”.
There is helpful recent case law that has somewhat streamlined the trust fund procedures which will be discussed below. First, however, I would like to clarify some of the common misunderstandings regarding the use of Article 3-A.
Most contractors are generally aware of the existence of Article 3-A and that it is designed to insure that entities who have provided the labor or furnished the material on the project are all fully paid out of the project funds before the trustees (owner, general contractor, or upstream subcontractor) are permitted to use these funds for any other non-project-related purpose. Article 3-A does so by prohibiting the trustees from essentially “stealing from Peter to pay Paul.”
In fact, Article 3-A provides a harsh penalty for owners, general contractors, and subcontractors, on both public and private construction projects, who use monies from one project to pay creditors on other projects or use the monies for their own purposes. The owner, general contractor or subcontractor who “diverts” project funds for purposes other than paying labor and material claims on that particular project is subject to civil liability and criminal penalties. Under the New York Penal Law, such a diversion would constitute larceny. The risk is real and we have seen contractors prosecuted for these violations.
First, there is a misconception in the industry that in order to take advantage of Article 3-A one must either have filed or have the right to file a mechanic’s lien. This is not true. As part of New York Mechanic’s Lien Law, Article 3-A is an independent remedy, like a payment bond claim, neither of which is dependent upon nor derived from the filing of a mechanic’s lien even if mechanic’s lien rights have expired.
A second misunderstanding is that the trust fund provisions of Article 3-A only apply to public works projects. This is also not true.
A third misunderstanding is that a trust fund beneficiary, such as a contractor, subcontractor or materialman, is only entitled to a written verified statement of all funds received by the trustees and all funds paid out by the trustees from those funds. However, the itemized statement of account is certainly not the beneficiary’s only option.
Under the trust fund provisions of the statute, a trust fund beneficiary may demand to personally examine the books and records of the owner or contractor, in lieu of, demanding a written statement under oath setting forth an itemized accounting of all monies received, and each expenditure made on the project. This right to examine books and records is unqualified and is at the beneficiary’s option. However, we have seen very few instances where this tool is properly taken advantage of. Either the trust fund beneficiaries are unaware of the option, or for reasons unknown, they opt for the verified statement in lieu of demand for partial inspection of books and records.
While inspecting the books may be more time-consuming than simply demanding a Verified Statement, such an option may be more effective than a Verified Statement, where the Trustee has more of an opportunity to be less than totally forthcoming. I would suspect that most Trustees would prefer to provide an Itemized Statement than to allow a potential competitor access to company books
The other important benefit offered to the trust fund beneficiary’s right to an accounting is the additional requirement set forth by statute for trustees to maintain accurate records of trust accounts by project. Failure to maintain such records is presumptive evidence that the trustee has diverted trust funds by permitting payments from the trust for some other purpose than (project-specific) trust purposes. All contractors, subcontractors and upstream subcontractors must keep accurate, project-specific records at all times. There need not be a separate bank account for each project, but there must be a separate accounting.
The fourth historic misconception is that trust fund litigation is a time consuming process not to be undertaken. In the past this may have been true because the issue of whether there was a diversion of funds on the part of the trustee was normally a question of fact which required a trial of that issue. However due to a recently decided appellate court decision, the establishment of a diversion may now be established “summarily”, that is by motion, in lieu of a trial given the right set of facts. According to a New York appellate court decision, a trust fund diversion may be summarily established if the following criteria are met:
1. The trustee’s have failed to keep the statutorily required books and records (which shall be presumptive evidence that the trustee used trust funds for purposes other than a purpose of the trust),
2. The trustee had ample opportunity to correct the documented deficiencies in its verified statement; and
3. Any reasonable explanation for the shortcomings the trustee has failed to provide to overcome the statutory presumption of an improper diversion of trust assets.
This is a very positive ruling for all subcontractors and suppliers in New York who now are more readily able to utilize Article 3-A to proceed with a trust fund diversion action on a more expedited and cost-effective basis.
Article 3A of the New York Lien Law, the construction trust-fund statute, provides powerful, relatively inexpensive tools for collecting money for labor performed or materials supplied on a construction project. At times, this may be the only source of recovery where mechanic’s lien rights are no longer available or the claimant is not protected under a labor and material payment bond. At other times, when all lien rights have been timely protected, the Article 3A trust fund provisions can be used very effectively in conjunction with mechanic’s lien rights.
Next month’s article, in our “Getting Paid” series, will address the proper implementation and utilization of another powerful New York Lien Law weapon for obtaining payment on both public and private projects, the Mechanic’s Lien.
Henry L. Goldberg may be contacted by email, email@example.com
The STA and some of its members, along with the BTEA, GCA, and other associations, participated
in the Lawsuit Reform Alliance’s Scaffold Law Lobby Day on February 2. The STA has for a number
of years been active in pushing for the reform of this Law which holds owners and contractors totally
liable for gravity related injuries sustained by employees on the job. The battle for the reform of this
archaic and unfair law does not appear to have the support of the Assembly and Senate without
the support of the Governor. The STA will continue to press elected officials to revise the liability
standards prescribed in the current Scaffold Law
By: Daniel A. Castellano, CPA
A “Construction Claim” is defined as a written request for time and/or money submitted under the terms of the contract or law. Claims may be filed by the contractor, the owner, or others. The formal submittal of a written claim is typically an administrative requirement of the contract documents and may be required by law. The formal claim submissions is intended as a mechanism to obtain relief related to some action or inaction of the other party to the contract.
Construction claims can be categorized as either:
1. Directed Changes – virtually all contracts have a “change clause” – a contract provision allowing the owner to change the scope of the work during the project by directive. Decisions to make changes to the work are typically evidenced by the issuance of a written directive (e.g. change order). When change orders are forward priced and bilaterally executed, there is joint agreement on the scope, time and cost of the change before the work is performed. In such a case, there is little likelyhood of a claim arising from such an agreement. The risk of performing the changed work is assumed by the contractor. However, when work is performed before the owner and contractor can agree on time and cost, disagreements may arise concerning the fairness of the time and costs incurred. Such disagreements can turn into claims.
2. Constructive Changes – Constructive changes are unintended changes. Some action or inaction of the owner or the owner’s agents causes the contractor to perform work beyond that required by the terms of the contract documents. Constructive changes may also arise from:
• Defective contract documents (e.g. errors, omissions, ambiguities)
• Inspection actions
• Nondisclosure of relevant information
To recover for a constructive change, the contractor generally must show that:
• The work performed was not required within the original scope of the contract.
• Appropriate notice of change was given to the owner
• The change was actually required by the owner
• Additional costs and or time were actually incurred in performing the changed work
3. Differing Site or Changed Conditions – Public works contracts usually have a clause that addresses unanticipated or hidden physical conditions at the site that differ from those represented in the contract. These differing site conditions can usually be broken down into 2 types:
• Type 1 – Subsurface or hidden physical conditions at the site differing materially from those indicated in the contract documents. Examples include rock where none is shown, subsurface water where none is indicated, and buried pipes and utilities.
• Type II - These are conditions that are so unpredictable that the contractor could not have reasonably foreseen their existence at the time of bidding. Examples include subsurface hazardous or toxic waste materials in a previously undisturbed area or buried construction debris in an area where no previous construction was known.
Types of Damages
• Direct Costs – These are “hard dollar costs” incurred in performing extra work. These include labor (including fringe benefits), materials, equipment, subcontractors, and mobilization/demolition costs.
• Indirect Costs – There are generally two basic types of indirect cots: Field overhead and Home Office overhead. Examples of field overhead include any project management staff, superintendents, project office expenses and temporary utilities and security. Examples of home office overhead include engineering, estimating, corporate management, computers and office equipment, etc.
When filing an actual claim the contractor should take the following actions:
• Provide the claim notice in writing
• Obtain statements of the facts relating to the claim
• Identify clauses of the contract that relate to the claim
• Identify how the claim has or will affect the project schedule
• Obtain an estimate or actual cost backup
• Make a record of the claim from the project record and assemble all relevant correspondence, meeting minutes, memos and schedules.
• Seek legal and professional claims assistance to settle the claim
• Determine whether any attempt was made to mitigate damages
Castellano, Korenberg & Co., CPA’s, P.C.
313 W. Old Country Road
Hicksville, New York 11801
Featured Member: Dierks Heating
1. When was Dierks Heating founded?
2. Who founded Dierks Heating?
3. Where is Dierks Heating based?
Long Island City, New York
4. Is the company a family-owned business?
The company is family owned and operated. John Dierks, the current owner, is the 3rd generation
5. What have been some of the firm’s major accomplishments; major projects?
“Our major accomplishment has been to survive as a family owned and operated contractor for all of these years. Any family owned business that survives 3 generations is virtually unheard of. The fact that we have done so is remarkable by itself.” Dierks Heating does both large scale work and some small scale work. However, the one project that Mr. Dierks is the most proud of was the work they did in Engine 10 / Ladder 10 (Ten House) that was virtually destroyed when the Twin Towers fell.
6. Where does Dierks Heating operate-just NY or other areas?
Within the 5 boroughs of New York
7. What have been some of the unique traits of the firm?
“The most unique trait would be my personal involvement in every project we do. I grew up in this business and have been involved since I was teenager. “ Dierks Heating prides themselves on doing the right job every time. “We never take on more work than we can handle and I always make sure that I am actively and personally involved. It makes for long days and sleepless nights but I don’t know any other way. It’s how my father taught me. We are not the largest contractor in the city and that is by design. My name is on every job we do. I feel personally responsible for making sure that it is done right.”
8. How Dierks Heating been involved in theconstruction industry?
They are involved in different construction associations and by being active in those associations--not just members.
9. How has Dierks Heating been involved in the STA?
They have been members of the STA for many, many years. Mr. Dierks was honored to have been asked by Ron Berger several years ago to serve on the Advisory Board of the STA. Today he serves on the Board of Directors. “The STA has an incredible number of contacts throughout the city and they are always willing to help when you need it. In fact they have helped me on several occasions. The individuals who run the association are extremely dedicated and hardworking. I honestly don’t know why everyone isn’t a member.”
10. What are some challenges the firm has overcome?
As a Public Works contractor the biggest challenge Dierks Heating has always faced is the economy. “When times are tough and the private money dries up, everyone runs to the Public Works sector which provides a lot more competition. Besides, as my father always said ‘at least you know the money is there and eventually you will be paid.’”
11. What does the firm think it’s legacy has been for the NY construction industry?
“Our legacy is that we have survived and that we are still Family Owned. It is something that Dierks Heating is truly proud of.”
By Paul Ryan, Partner, Welby, Brady & Greenblatt, LLP
By now, I am sure all of you have heard about the recent crane collapse in New York City, and many of you may have even seen the video. As a result of this incident, Mayor DiBlasio has unilaterally changed the operating rules for cranes within the City of New York. As many of you may know, the City previously required cranes to cease operating at wind speeds of 30 miles per hour or greater.
Following the recent crane collapse, Mayor DiBlasio has lowered the wind speed threshold at which cranes must be shut down. Under the new set of rules currently in place, cranes are to stop operating and go into safety mode under two scenarios:
1) When there is a forecast of steady wind speed of 20 miles per hour or higher; or
2) Actual readings of gusts of at least 30 miles per hour
Prior to the recent incident, cranes were allowed to operate until measured wind speeds
reached 30 miles per hour or gusts reached 40 miles per hour. These parameters being self- monitored by the operator of the crane within the cab.
Additionally, in an effort to ensure compliance, Mayor DiBlasio increased the fine for failing to take precautions to $10,000.00 per infraction, up from the previous $4,800 level. To put this in perspective, according to data provided by the City, based upon 2015 weather data, under the old operating rules, cranes were only required to cease operating due to wind conditions for a total of seven (7) days during 2015. However, had the new rules been in place during 2015, cranes would have been required to cease operations due to wind conditions for a total of forty (40) days. Despite this estimate by the City, many in the industry feel this number is far too low. One NYC contractor already estimated that it would have lost 322 days on its current project over the last two years based on historical data had the Mayor’s new rules been in
effect. In response to this estimate, the Allied Building Metal Industries Inc. has authored an open letter to the NYC Building Commissioner, which is available (here).
Depending on how your contract reads, and whether you are working weekday or calendar day, that difference amounts, even by the City’s conservative numbers, to anywhere between six to eight weeks of downtime that would have occurred during the 2015 construction year. Mayor DiBlasio has indicated that these new rules are only meant to be temporary, however the new rules are here now and must be dealt with on the many ongoing jobs across New York City until any further rules are announced.
Therefore, the question that comes to mind is, assuming 2016 weather is the same or near the same as 2015 weather, who is responsible for the cost of this additional significant downtime that is likely to occur if the new crane rules remain in effect? Before anyone panics, the first course of action is to consult your contract and see what your delay provisions provide for, and whether there is any mention of risk of regulatory or other governmental authority delays. Also, look over your contract for liquidated damages provisions and under what parameters you are entitled to an extension of time, be it compensated or uncompensated.
Given the potential cost impact, there is little doubt that there will be disputes as to responsibility for this downtime. In all likelihood, owners will take the position that this is an anticipated delay and therefore not compensable, while contractors will look at this as an uncontemplated delay for which they should be compensated. Regardless of what the ultimate answer to that question is, each contractor must examine its contract carefully, and make sure that when experiencing any of these delays, the contractual notice provisions are followed so as to preserve its rights down the road. Failing to do so may serve to prevent any possibility of recovery.