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Coming off its 34^th legislative success during the 2004 session, the Empire State Subcontractors Association (ESSA) has adopted its legislative program for the 2005 session of the New York State Legislature. Requiring that retainage on private projects be placed into an interest-bearing escrow account and reforming the strict liability provisions of Sections 204/241 of the Labor Law continue to top the priority list. ESSA’s 2005 program consists of a variety of proposals intended to protect the rights of construction industry subcontractors and suppliers, as follows:

Retainage held in interest-bearing escrow account – This legislation would require that retainage on private projects in NYS be deposited into an interest-bearing escrow account for the benefit of those from whom retainage has been held. This bill advanced to 3^rd reading in the Senate during the 2004 session and will be pushed hard by ESSA early in the 2005 session.

Reform of 240/241 Labor Law – This legislation would provide much-needed relief to NYS contractors and subcontractors who must currently cope with an absolute liability standard (no defense) when sued for gravity-related injuries. The current law has resulted in runaway litigation, which has had a huge cost and insurance impact on the construction industry since injured workers don’t have to prove negligence. ESSA will again join other construction industry groups in seeking amendments to this onerous and costly law.

Retainage Reduction – This legislation would require a 50% reduction in retainage on all public works projects upon completion of 50% of the project. Retainage held on state and local public works projects can amount to a significant sum of money for many subcontractors. This bill would get a large portion of the money held as retainage by the public owner into the pockets of subcontractors sooner than is currently the case.

Bid Listing/Standard Subcontract/Direct Pay – This is “back burner” legislation only intended to be pushed if it appears the Wicks Law is in jeopardy. It would require bid listing of subcontracts in excess of $25,000, a standard form subcontract, and direct payment to listed subcontractors by public owners.

Prohibition of Additional Insured/3^rd Party Hold Harmless Requirements – This legislation would prohibit an owner and/or contractor from requiring a subcontractor to list such owner and/or contractor as additional insureds on the subcontractors’ insurance policy for the purpose of covering damages caused by the owner or contractor. This bill would also close a long-standing loophole in the law by prohibiting hold harmless clauses that require a subcontractor to indemnify the contractor or owner for damages caused by the negligence of 3^rd parties.

Delay Damages – This legislation would impact on all public works projects in New York State by allowing contractors and subcontractors to recover delay damages where such delay is for an unreasonable period of time and is the fault or responsibility of the public owner.

Notice of Lien – Service to P.O. Box – This legislation would allow the service of a notice of lien to the owner at a P.O. box as an alternative to personal service or service by mail at the owner’s street address. This bill would make it easier for subcontractors and suppliers to serve the owner in cases where the only available address is a P.O. box.

In addition to the foregoing bills, during the 2005 legislative session ESSA will support an extension of the workers’ compensation payroll limitation law, which is scheduled to “sunset” in December 2005

NESCA Membership Meeting

November 11, 2004

Century House – 6:00 p.m.

6:00 Open Bar/Registration

6:30 Dinner: Prime Rib

7:10 Business Announcements

7:30 Program: “New Federal Overtime Rules –

Ignore at Your Own Risk”

Open Bar, Dinner, Tax & Gratuities - $35

PRESIDENT’S MESSAGE (Go Top)

On October 14^th, NESCA held its 24^th Annual Trade Show at the Century House in Latham. As we’ve all come to expect, the Trade Show was another excellent NESCA event. Our exhibit space was sold out, and hundreds of subcontractors, general contractors, suppliers, owner representatives and others connected to the commercial construction industry were brought together for an evening of business networking and fun. The exposure our exhibitors received was fantastic, and both the new business connections that were made and the old ones that were enhanced, made attendance at the Trade Show extremely beneficial.

On September 30^th, the Empire State Subcontractors Association (ESSA) adopted its legislative program for the 2005 legislative session (see story on page 1). ESSA’s legislative program will include several bills that have been introduced in the past, such as the “retainage held in escrow account” measure, along with some new bills, such as a prohibition of additional insured requirements in construction subcontracts. As NESCA’s state affiliate, ESSA has accumulated a list of legislative accomplishments unsurpassed in the construction industry. Coming off our 34^th legislative victory last summer, ESSA stands poised to continue its exceptional legislative advocacy on behalf of New York State subcontractors and suppliers.

On October 19^th, the first meeting of the NESCA/OSHA Alliance Safety Committee was held at the Building Industry Center. This Committee, comprised of both NESCA members and OSHA representatives, has developed an ambitious plan of action designed to help members reduce and prevent employee exposure to the four hazards responsible for 80% of serious injuries and death in the construction industry (falls, struck-by, caught-in-between, and electrical). This collaboration between NESCA and OSHA will result in a series of educational programs, written information, tool box talks and other means to assist NESCA’s members beginning in January 2005.

By now, I hope everyone knows that on August 23, 2004, new federal overtime regulations went into effect. Under these regulations, there are new wage and job duties tests that must be applied before employers can make a determination that an employee is exempt from overtime pay. Based on a discussion held at a recent Board of Directors meeting, it is clear that many businesses are NOT properly complying with the new overtime rules. That is why I urge members to attend NESCA’s November 11^th membership meeting where we’ll hear a presentation about this topic. Department of Labor fines are substantial for violations of the overtime requirements, so why not attend the November 11^th dinner meeting and bring yourself up to speed?

Finally, at last month’s Trade Show I was challenged by a non-member subcontractor to tell him what NESCA can do for him. Well it seems to me, that in addition to benefits like our lien filing service, workers’ compensation safety group, and day-to-day staff assistance, the four topics I’ve covered in this Newsletter message are a good place to start. Networking (Trade Show), legislative advocacy (ESSA), safety assistance (NESCA/OSHA Alliance) and information important to running your business (overtime presentation) are all very good reasons for subcontractors and suppliers to belong to NESCA, and I encourage all members to help us convince non-member subcontractors and suppliers to join.

Kevin J. Garrity, President

FAILURE TO EXTEND NOTICE OF PENDENCY DOOMS LIEN FORECLOSURE ACTION (Go Top)

On March 11, 2004, the Supreme Court of New York, Appellate Division, Third Department decided MCK Building Associates, Inc. v. St. Lawrence University. In this case, the Appellate Division in reversing a lower court determination held that when a notice of pendency filed in conjunction with a commencement of a mechanic’s lien foreclosure action expires, it cannot be renewed and no new notice can be filed. The court stated that “Lien Law §17 dictates that a mechanic’s lien and the notice of pendency that extends it expire if the plaintiff fails to obtain an extension of the notice pursuant to CPLR 6513”. It is important to note that this case involved a mechanic’s lien foreclosure action against real property which constituted a private improvement under the mechanic’s lien law. It is under these circumstances that the CPLR requires a notice of pendency to be filed in order to give notice of the claim against the real property involved. The court also pointed out that CPLR 6513 provided that a notice of pendency shall be effective for a period of three years and an extension must be requested before the expiration of the three-year period. The plaintiff’s subcontractor in this case failed to move to extend the notice of pendency within the three-year period and succeeded in the lower court in getting an order for extending the notice of pendency nunc pro tunc. The Appellate Court in reversing the lower court held when such a notice expires, it cannot be renewed and no new notice can be filed. While the expiration of the notice of pendency terminated the mechanic’s lien and prevented the plaintiff from maintaining a cause of action for lien foreclosure, the court pointed out that the plaintiff was not precluded from pursuing an action quantum merit, since that form of action is not defeated by the expiration of the notice of pendency.

Terence J. Burke, NESCA Legal Counsel

$2,300 RAISED FOR TOYS FOR TOTS

At NESCA’s October 14^th Trade Show, approximately $2,300 was raised from the silent auction and a raffle held by Trojan Energy Systems. This money will be donated to the Marine Corps Toys for Tots program at NESCA’s December meeting. Thank you to Trojan Energy Systems and to all exhibitors who donated items for the silent auction.

NESCA/OSHA ALLIANCE SAFETY COMMITTEE ADOPTS ACTION PLAN (Go Top)

On October 19^th the newly formed NESCA/OSHA Alliance Safety Committee met to discuss how the Alliance can best provide education, information and guidance to NESCA members on job site safety issues. The committee particularly focused on the four hazards responsible for 80% of all serious injuries and deaths in the construction industry: fall hazards; electrical hazards; struck-by hazards; and caught-in-between hazards.

NESCA signed an Alliance Agreement with OSHA and the NYS Department of Labor On-Site Consultation Program on August 10, 2004. The purpose of the Alliance is to establish and maintain a collaborative relationship between NESCA, OSHA and the On-Site Consultation Program in order to better assist NESCA members in protecting employee safety and health by reducing and preventing exposure to job site hazards.

At the October 19th meeting, the committee established the following action plan:

· Beginning in January 2005, the Alliance will hold four educational programs, one every three months, on the four major hazards.

· Following each seminar, the NESCA Newsletter will feature an article about the topic presented, to include a listing of the various OSHA standards/requirements related to that topic.

· During the succeeding three-month period, NESCA will send out a series of sample “tool box talks” and other information related to the topic presented.

Enclosed with this Newsletter is a copy of the NESCA/OSHA Alliance Agreement along with information about the NYS On-Site Consultation Program.

STATE SPENDING RISING AT THREE TIMES THE INFLATION RATE (Go Top)

State Controller Alan Hevesi has reported that state spending in New York rose 32 percent from 2000 to 2004, an increase that was three times the rate of inflation. The state’s debt is also increasing rapidly, and rose nearly 20 percent, to $47 billion, in the fiscal year ending March 31, 2004. Public health ($1,893 per resident) and education ($1,530 per resident) make up the largest areas of state spending.

CALENDAR OF EVENTS (Go Top)

November 2, 2004

NESCA/GBC/ECA Seminar

Fall Protection & Scaffolds

Building Industry Center, 1 pm

November 9, 2004

NESCA/GBC/ECA Program

Bethlehem Central School District

Building Industry Center, 3 pm

November 10, 2004

NESCA/GBC/ECA Seminar

Notary Public

Building Industry Center, 12 noon

November 11, 2004

Board of Directors Meeting

Century House, Latham, 5 pm

November 11, 2004

NESCA Membership Meeting

Century House, Latham, 6 pm

November 11, 2004

NESCA/GBC/ECA Seminar

STP Unit #8

Building Industry Center, 6 pm

November 16, 2004

Binghamton Membership Meeting

Niko’s Char Pit, Binghamton,8 am

December 2, 2004

Board of Directors Meeting

Century House, Latham, 6 pm

December 9, 2004

NESCA Holiday Meeting

Century House, Latham, 6 pm

WELCOME NEW MEMBERS (Go Top)

Cullen Associates, Inc.

1 Steuben Place, 5^th Floor

Albany, NY 12207

(518) 427-6700; Fax (518) 462-6739

Contact: Gary Akrop

Dig Safely New York

28 Suncrest Drive

Waterford, NY 12188

(518) 238-9036; Fax (518) 238-9036

Contact: Donna Shave

JBS, LLC

6 Maple Avenue

Scotia, NY 12302

(518) 346-0001; Fax (518) 346-2572

Contact: John Busino

Maynard, O’Connor, Smith and Catalinotto

6 Tower Place

Albany, NY 12203

(518) 465-3553; Fax (518) 465-5845

Contact: Edwin J. Tobin, Jr.

QCQA Labs, Inc.

1594 State Street

Schenectady, NY 12304

(518) 372-4067; Fax (518) 372-6739

Contact: Thomas Lloyd

MEMBER ANNIVERSARIES (Go Top)

In November, the following members have reached milestone anniversaries as members of NESCA.

Thank you very much for your continued support!

Five Years

Casale Rent-All, LLC

Ten Years

Bennington Iron Works, Inc. Carver Construction, Inc.

Precision Industrial Maintenance, Inc. Pantel Contracting Corp.

NESCA FILES AMICUS CURIAE IN SUPPORT OF SUBCONTRACTOR PAYMENT RIGHTS (Go Top)

On September 28, 2004, NESCA filed an Amicus Curiae (“friend of the court”) brief in support of the plaintiff in the New York Supreme Court Case Gomez Electrical Contractors, Inc. v. Bast Hatfield, Inc. In the 1995 case West-Fair Electric v. Aetna Casualty & Surety Company, the NYS Court of Appeals declared pay-if-paid clauses void and unenforceable in New York. In the case at hand, the general contractor failed to pay the subcontractor, and sought to circumvent the West-Fair decision through a subcontract provision stating that the subcontractor agrees that it shall accept in full satisfaction of its payment rights, the assignment of the general contractor’s lien rights against the owner. NESCA argued that this clause is merely an attempt to disguise a pay-if-paid clause, that assignment of the contractor’s lien rights are worthless to the subcontractor, and that since pay-if-paid clauses are void and unenforceable, the contractor has no basis under such clause to escape its payment obligation to the subcontractor.