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GARRITY ELECTED NESCA’S 32^ND PRESIDENT (Go Top)

Kevin J. Garrity, Senior Vice President/Secretary of Rose & Kiernan, Inc., was elected president of NESCA for 2004-05 at the association’s June 10^th membership meeting held at the Century House. Kevin became NESCA’s 32^nd president, succeeding Jeffrey B. Senft of S & O Construction Services, Inc. He has served as NESCA’s vice president, treasurer and secretary during the last three years respectively, following several years of service representing insurance companies, banks, accountants and other service companies on NESCA’s Board of Directors.

Rose & Kiernan is an employee-owned insurance agency with origins back to 1869. Rose & Kiernan sells and services all forms of insurance including coverage for commercial businesses, individual and group life and health benefits and fidelity and surety bonding.

Kevin began his insurance career in 1980 as a surety underwriter for The Peerless Insurance Company. In 1985 he joined the S.H. Gow and Company Insurance Agency as Bond Manager for their Buffalo, Rochester, Syracuse and Albany offices. Kevin joined Rose & Kiernan’s Construction and Bond Department in 1989. In 1996 he was appointed Vice President and was elected to the Board of Directors. In 2000 he was appointed Senior Vice President and assumed the Corporate Secretary duties in 2002. Kevin is a 1979 graduate of the State University of New York College at Cortland with a Bachelor of Arts Degree in Political Science. He also attended the School of Irish Studies in Dublin, Ireland. He is a former member of the Board of Trustees for the Village of Voorheesville, a former member of the Village Planning Board, and is the current Chairman of the Village Water Board.

Also elected on June 10^th were Hal Hatfield of Maximum Security Products Corp. as vice president; Toni Cristo of Cristo Demolition, Inc. as treasurer; and Peter Clechenko of Albany Interiors, Inc. as secretary.

Outgoing president Jeff Senft (left) accepts plaque from new president Kevin Garrity

ESSA SCRAMBLES TO GET PAYMENT BOND BILL RECONSIDERED (Go Top)

In an effort to have an amended version of an ESSA program bill that was vetoed by Governor Pataki on May 5th reconsidered before the end of the 2004 legislative session, ESSA has taken an unusual step to try to get the bill back on the Governor’s desk.

The legislation in question would require payment bonds to be posted by owners on certain “hybrid” construction projects in New York State where contractors and subcontractors do not currently have lien rights. Such projects include those where a private entity leases land from a public entity and then constructs a building on this land. Governor Pataki vetoed the original bill citing several technical concerns.

Since the veto came late in the session, there was not enough time to have an amended version of the bill introduced and ushered through the entire legislative process. To get around this problem, ESSA essentially barrowed the bill number from another of its program bills and completely amended it to become the new amended payment bond bill. The amendments include making the bill’s provisions applicable only to projects over $250,000, and also allowing the owner to post alternative forms of security (other than just a bond) as a means of guaranteeing payment to contractors and subcontractors. ESSA is seeking to have the new amended version considered by both houses and sent to the Governor before the end of the session.

PRESIDENT’S MESSAGE (Go Top)

As NESCA begins a new year and I begin my term as president of the association, I’d like to kick things off by asking all members to consider doing just one thing for NESCA during the next 12 months. The one thing I ask of you is to recruit one new member into the association. I’m not asking that you regularly attend membership meetings, seminars or any other association events or activities, and if you choose not to participate in the many services NESCA has to offer, that’s fine too. All I ask of you is to get just one subcontractor or supplier to join the association. That’s it.

You may wonder why I put such a premium on increasing NESCA’s membership. Well it’s this simple. Every activity the association engages in, every service offered, every beneficial law enacted, begins and ends with membership; that is, keeping existing members and recruiting new members. Clearly, our effectiveness as an organization is directly related to the number of members we have. The more members NESCA has, the more strength and influence it will have as an advocate for subcontractors and suppliers doing business in New York State. With a strong membership base, NESCA will continue to make changes in New York State law and regulation to improve the construction business climate within which we all operate. In fact, many of the changes NESCA has secured over the last 30 years have saved your business both time and money…..even if you don’t realize it! Just take a look at the list of NESCA’s 33 legislative successes and you will see how many beneficial laws there are that would not be in place if not for the collective effort of subcontractors and suppliers through NESCA. Many of us probably now take these laws for granted. But remember something, none of them would exist if not for NESCA. For example, if you appreciate your right to file a lien when an owner or contractor has failed to pay you, thank NESCA. Because without NESCA’s efforts to statutorily prohibit it, you would be forced to waive your lien rights in virtually every construction contract you sign.

So please consider bringing in a new member this year. Do it for no other reason than the fact that you, as a dues paying member, are helping to pull the wagon, and all non-member subcontractors and suppliers are essentially getting a free ride. After all, it costs money to finance the operations of an association. Seeking beneficial changes in the laws that affect us all does not come for free. That’s what our dues money goes for, to collectively accomplish what none of us can do on our own. And that is why we need more subcontractors and suppliers helping to pull the wagon and fewer riding in it.

Your participation in NESCA on a day-to-day basis is important and encouraged, but your support through your continued membership is an absolute necessity. While I would love to see all members of NESCA become fully engaged in the many activities of the association, if that is not possible for you, please know that your dues dollars are being well spent and that your company will benefit from NESCA’s activities even if you cannot personally participate.

Kevin J. Garrity, President

COURT HOLDS CONTRACTOR NOT ENTITLED TO INDEMNIFICATION WHERE CONTRACTOR WAS PARTIALY NEGLIGENT

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On May 11, 2004, the Supreme Court of New York, Appellate Division, First Department decided the Patrick Cavanaugh v. 4518 Associates, et al. case. Ambassador Construction Co., Inc., a general contractor had subcontracted carpentry work to S&H Carpentry, a subcontractor which in turn hired Parwall as a sub-subcontractor. One of Parwell’s employees, the plaintiff in this case was injured in a fall from a scaffold on a job.

The jury returned a verdict of $500,000 in plaintiff’s favor and apportioned the award 70% against Ambassador and 30% against S&H despite S&H’s opposition on the ground that such indemnification would violate the General Obligations Law. Ambassador claimed indemnification from S&H pursuant to an indemnification clause in the subcontract which read in part “to the fullest extent permitted by law, S&H shall indemnify and hold harmless Ambassador against all claims, damages, losses, and expenses, including, but not limited to attorneys fees, arising out of or resulting from the performance of the work attributable to bodily injury or to property damage and, caused, in whole or in part, by any negligent act or omission of S&H, regardless of whether or not it is caused in part by a party indemnified hereunder” (emphasis added). A second provision of the same subcontract required the subcontractor to procure insurance coverage for the contractor. The lower court reasoned that because the subcontract agreement contained an indemnification agreement and an insurance procurement provision any finding of negligence on the contractor’s part in connection with plaintiff’s injuries were totally irrelevant.

The Appellate Court held that the subcontract agreement ran afoul of General Obligations Law § 5-322.1(1), which in effect barred a contractor’s right to indemnification where the damage was caused or contributed to by the negligence of a contractor whether such negligence be in whole or in part. The Appellate Court pointed out that General Obligations Law § 5-322.1 was enacted to void indemnification agreements that seek to exempt the indemnitee from liability based on negligence, irrespective of whether that negligence is wholly or partially the cause of the injury. The Appellate Court in further overruling the lower court’s determination that the combination of an indemnification clause and an insurance procurement provision in a contract allows the contractor to be indemnified for its own negligence pointed out that a contract to procure insurance is clearly distinct from and treated differently from an agreement to indemnify. The Appellate Court held that this particular distinction is what renders indemnification but not insurance procurement agreements violative of the public policies underlying General Obligations Law § 5-322.1. While an agreement purporting to hold an owner or a general contractor free from liability from its own negligence undermines the strong public policy of placing and keeping responsibility for maintaining a safe workplace on those parties, the same cannot be said for an agreement which simply obligates one of the parties to a construction contract to obtain a liability policy insuring the other.

This case clearly demonstrates the differences between an insurance provision and an indemnification provision in a subcontract. While a contractor cannot require the subcontractor to indemnify him from losses he suffers due in part or whole to his own negligence, he can require the subcontractor to provide insurance which will protect the contractor even in the event the contractor’s negligence has partially or totally caused his own injuries. It has long been contended by subcontractors that requirements in subcontracts to name the contractor as an additional insured on the subcontractor’s insurance policy was a circumvention of the General Obligations Law. However, legislative attempts in the past to correct this perceived inconsistency have failed.

Terence J. Burke, Esq.

There will be no NESCA membership meetings during July or August. The next regular membership meeting has been scheduled for September 9, 2004 at the Century House.

WELCOME NEW MEMBERS (Go Top)

D.F. Brandt, Inc.

1852 Kirkville Road

Kirkville, NY 13082

(315) 656-3884; FAX (315) 656-8078

Contact: Steve Brandt

Brown and Brown Insurance

646 Plank Road, Suite 208

Clifton Park, NY 12065

(518) 383-2111; FAX (518) 383-7990

Contact: Greg Scott

Cookingham Electric, Inc.

99 West Road

Pleasant Valley, NY 12569

(845) 635-9341; FAX (845) 635-9341

Contact: Scott Cookingham

Energy Management Technologies

5 Hemlock Street

Latham, NY 12110

(518) 783-7810; FAX (518) 783-2079

Contact: Bernie Santandrea

Merit Plumbing & Heating, LLC

669 Third Street

Albany, NY 12206

(518) 435-0043; FAX (518) 435-0204

Contact: Joe Crisafulli

Sure Temp Co., Inc.

43-47 Lake Avenue

Binghamton, NY 13905

(607) 729-6800; FAX (607) 729-5943

Contact: Glenn Miller

CALENDAR OF EVENTS (Go Top)

July 29, 2004

NESCA Day at the Races

Saratoga Race Course, 11 am

August 5, 2004

Board of Directors Meeting

Century House, Latham, 6 pm

TWO PREVAILING WAGE BILLS TO BE SENT TO GOVERNOR PATAKI (Go Top)

A number of prevailing wage-related bills being promoted by organized labor have been passed in both houses of the Legislature and will be sent to the Governor for his consideration as follows:

Posting of Wage Rates/Sign-in and Sign-out Sheets – This bill (S3766/A8180), sponsored by Senator Nick Spano and Assemblywoman Susan John, would make the failure by the contractor and subcontractors on public projects to post a statement of wage rates and supplements subject to prosecution as a misdemeanor and subject to a civil penalty of between $500-$1,000 for each offense. Contractors and subcontractors have been required under the prevailing wage law to post wage rates and supplements at the job site for several years. This bill now makes the failure to do so a crime. The bill also requires the contractor and subcontractors to maintain “sign in” and “sign out” sheets or other records reflecting the actual dates and times of work, including arrival and departure times, for all workers employed on the public project. Failure to produce such records within ten days of a request by the Department of Labor would result in a withholding of up to 25% of any payment due up to $100,000. Finally, the bill directs that two willful violations within a six-year period of time by the contractor or subcontractors to post wage and supplement rates on the job site or to produce the sign in and sign out sheets will result in disqualification from bidding on public projects for five years.

Access to Certified Payroll Records – This bill (S4610/A8486) is also sponsored by Senator Nick Spano and Assemblywoman Susan John. It would require public owners to make available for public inspection and copying the certified payroll records submitted by contractors pertaining to employee classifications, rate of wages and supplements paid, and the number of hours worked by the employees of contractors classified as apprentices. It would also amend the Freedom on Information Law (FOIL) to specify that a public entity may not withhold disclosure of this payroll information on personal privacy grounds. The bill further states that the social security numbers of apprentices shall be redacted (removed) by the agency. This bill is similar to several other bills that have been vetoed by Governor Pataki over the last five years due to personal privacy concerns. The difference between this bill and the previously vetoed bills, is that this bill limits the disclosure of payroll information to certified apprentices only, rather than all workers on a project, and the names of apprentices registered with the Department of Labor are already available to the public.

MEMBER ANNIVERSARIES (Go Top)

In July, the following members have reached milestone anniversaries as members of NESCA. Thank you very much for your continued support!

Five Years

Gallivan Corporation

Ten Years

Reo Welding Co., Inc.

Twenty-Five Years

Mechanical Testing, Inc.

Northern Stud Welding, LLC