Vol 19, No. 2 (518) 869-9800 August 2000

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Inside This Edition: Workers’ Comp. Rate Changes Will Impact Subcontractors * Bill To Extend Residential Lien Filing Period Approved By Legislature * President’s Message * Clause Indemnifying Contractor From Its Own Negligence Is Unenforceable * Welcome New Members * Play Ball

WORKERS’ COMP. RATE CHANGES WILL IMPACT SUBCONTRACTORS Go Top

General Rate Revision - The New York State Insurance Department has approved workers’ compensation rates which will provide for an average rate reduction of 2.5 percent effective October 1, 2000. However, assessments that employers must pay which pay for the Second Injury Fund and other special funds will increase by 2.6 percent. NESCA members are reminded that the 2.5 percent average rate reduction is just that --- an average rate reduction. Specific rate classifications may see reductions greater or less than 2.5 percent or even rate increases. Details of the rate revision, including individual changes by rate classification, will be published by the New York Compensation Insurance Rating Board within a few weeks.

Construction Industry Payroll Limitation Program - Members may recall that a new law became effective last year which incorporates a payroll cap for construction classifications in the calculation of workers’ compensation premiums. The Payroll Limitation Program became effective for policies having an anniversary rating date on or after October 1, 1999, and over four years phases in a decreasing cap on wages subject to premium calculations. For policies with effective dates beginning October 1, 2000 and ending September 30, 2001 the cap has been reduced to a maximum of $900 per week. However, the three separate territorial surcharges have been considerably increased as follows:

Territory 1- New York City - from 13.5% to 32.0%

Territory 2 - Downstate counties - from 10.0% to 23.0%

Territory 3 - Upstate counties - from 6.5% to 15.0%

CIC to Conduct Workers’ Comp Survey - To monitor how the Payroll Limitation Program is affecting the construction industry, the Construction Industry Council of the Business Council of New York State will be surveying contractors and subcontractors on how premium costs have been impacted. The survey will be distributed through CIC’s member associations (including NESCA), and responses will be collected and analyzed in August. Final results will be presented in September at the Business Council’s Annual Meeting.

BILL TO EXTEND RESIDENTIAL LIEN FILING PERIOD APPROVED BY LEGISLATURE Go Top

A bill which would extend the time period subcontractors and supplier have to file a mechanic’s lien on certain residential property has been approved by both houses of the State Legislature and will be sent to Governor Pataki for his consideration.

This bill, S.2375-C/A.4241-C, sponsored by Senator Ronald Stafford (Plattsburgh) and Assemblyman Joseph Morelle (Rochester) increases the lien filing period from the current four months to eight months after the last furnishing of labor or materials on certain residential properties. Currently, the lien law provides for an eight month filing period for most private construction performed in New York State. However, the law provides for only a four month filing period on certain “single family dwellings”. This legislation redefines single family dwellings to exclude a dwelling unit which is part of a subdivision owned by a developer for purposes other than his personal residence in cases where the developer builds two or more single family dwellings. Current law excludes from the definition of single family dwellings a subdivision where five or more units are built. In other words, if signed by the Governor, this bill will apply the eight month lien filing period to all private construction other than (1) a single family residence being improved by a home owner, and (2) a subdivision of two or less single family dwellings.

This legislation was promoted by the Northeastern Retail Lumber Association and supported by NESCA.

PRESIDENT’S MESSAGE Go Top

Each and every summer, NESCA takes two months “off” from holding our normal monthly membership meetings and educational programs. We do this primarily because between summer vacations and the busy construction season, it is much more difficult for our members to attend meetings and seminars. However, while NESCA may not be as visible to our members during the summer months, we do put this time to good use in planning our many membership meeting programs, educational programs and other activities for the coming year.

Our Golf Outing Committee, chaired by Mark Woodward with The Woodward Company, has begun to plan NESCA’s 16th Annual Golf Outing to be held on September 18th at Colonie Country Club. Please mark this date on your calendar. I am told by Chairman Woodward that information and registration forms for the Golf Outing will soon be mailed to all members. Remember, our Golf Outing normally fills up pretty quickly, so please complete and send your reservation form back to the NESCA office promptly after you receive it in the mail. Also remember that the NESCA/GBC Joint Golf Outing at the Wiltwyck Golf Club in Kingston, and which was rained out on June 12th, will be held on August 21st. Anybody who now wishes to sign up for that tournament who couldn’t play on the June 12th date should call the NESCA office.

Chairman Bob Kind and the Program Committee, met on July 26th to begin preparations for NESCA’s 2000-2001 membership meetings. If you have any fresh ideas for meeting programs and speakers, I’m sure the Program Committee would welcome your input. Starting in September, we’re going to work extra hard to attract more members to our monthly membership meetings. Above and beyond the speaker or the program topic at dinner meetings, there are so many other good reasons for members to attend. If nothing else, just the networking with other subcontractors and suppliers along with the information and industry updates regularly provided at our meetings makes them well worth attending. It is virtually impossible to attend a NESCA membership meeting without picking up a least one piece of useful information which can benefit your company. I ask all of you to mark the 2nd Thursday of the month between September and June on your calendars as “NESCA Night”, and make a habit of attending our meetings. I know everyone’s time is precious, but a couple of hours invested each month to network with construction industry peers and gather valuable information and knowledge to help our businesses is something we can ill-afford NOT to do.

The joint NESCA/GBC/ECA Educational Partnership will meet on August 23rd to begin planning our educational seminars, courses and training programs for the coming year. Once again, if you and your business have particular educational/training needs you wish to see the Educational Partnership fulfill this year, please contact the NESCA office with your ideas.

I hope everyone is having a busy, prosperous summer, and I look forward to seeing you at NESCA’s kick-off meeting on September 14th!

Steven R. Dewey

President

CLAUSE INDEMNIFYING CONTRACTOR FROM ITS OWN NEGLIGENCE IS UNENFORCEABLE Go Top

The New York State Supreme Court, Appellate Division, Third Department, recently held that a jury must determine whether a contractor is free of negligence in order to allow the contractor to enforce an indemnity clause in its contract. Potter v N.A. Bongiovanni, Inc. In that case, the court held that an indemnification clause requiring a subcontractor to indemnify a contractor in relation to liabilities arising out of injuries on the job would only be enforceable if the injuries were not caused by the negligence of the contractor.

Plaintiff, James R. Potter (“Potter”), was injured while performing masonry work for Sweet Associates, Inc. (“Sweet Associates”). At the time of the accident, defendant M.A. Bongiovanni, Inc. (“Bongiovanni”), was the general contractor of the construction project. Potter commenced the action against Bongiovanni and a prime contractor on the job, Roundout Electric, Inc., alleging their negligence as the cause of Potter’s injuries. Bongiovanni commenced a third-party action against Sweet Associates, the subcontractor for whom the plaintiff worked, seeking contractual and common law indemnification. Bongiovanni moved for summary judgment, claiming that an indemnification clause in its contract with Sweet Associates indemnified it from Potter’s claim.

The lower court, finding that the indemnification provision of the contract between Sweet and Bongiovanni was valid, granted Bongiovanni’s motion for summary judgment. Sweet appealed. The Appellate Court held that questions of fact existed regarding whether Bongiovanni’s own acts of negligence caused the plaintiff’s injuries.

The court noted, “It is well settled that a construction agreement containing an indemnification clause requiring the promisor to indemnify the promisee in relation to liability arising out of injuries caused by the negligence of the promisee is against public policy and unenforceable...... However, an indemnity clause is enforceable where the contractor is found to have been free from negligence, and liability is merely imputed or vicarious.”

The court held that to the extent that the indemnification clause of the parties’ contract purported to indemnify Bongiovanni with respect to its own negligence, it would be in violation of General Obligations Law Section 5-322.1(1), and would therefore be void. However, the court denied summary judgment to Bongiovanni, holding that only if Bongiovanni is found free of negligence, its liability will be truly vicarious and any clause requiring Sweet to indemnify Bongiovanni in connection with injuries arising out of Sweet’s negligence would be enforceable. The court concluded, “While the indemnity agreement is clearly unenforceable with respect to Bongiovanni’s own acts of alleged negligence, it will be enforceable should a jury determine that Bongiovanni is free of negligence.”

In conclusion, parties to indemnification agreements should keep in mind that in New York a party cannot be indemnified for acts caused by its own negligence.

Terence J. Burke

NESCA Legal Counsel

WELCOME NEW MEMBERS Go Top

Haun Welding Supply

320 N. Jensen Road

Vestal, NY 13850

(607) 797-9348; FAX (607) 797-9349

Contacts: Rebecca Jones, Glenn Jewell

United Specialties, LLC

32 Valencia Lane

Clifton Park, NY 12065

(518) 371-6094; FAX (518) 371-5736

Contacts: Robert Desbiens,

Richard Desbiens

“Play Ball” Go Top

Empire State Subcontractors Association Fall Conference

Otesaga Hotel, Cooperstown, New York

September 28 - October 1, 2000

Come to Cooperstown on the shores of Otsego Lake, where baseball, history and art co-exist with rolling, wooded hills and fresh country air. “Cooperstown”, claims one writer, “is right up there with the Grand Canyon, the Statue of Liberty, and Disneyland as an obligatory visit for anyone who wishes to know this country.

The Empire State Subcontractors Association (ESSA) Fall Conference will provide subcontractors and suppliers from around the state a unique opportunity to not only experience Cooperstown, but to gather for a few days of important business, timely educational opportunities, networking, and.......plenty of fun! Call the NESCA office for registration materials!!

ESSA Fall Conference Schedule

THURSDAY, SEPTEMBER 28

3:00 p.m. - 5:00 p.m. - Check in and Registration

6:00 p.m. - 7:00 p.m. - Welcome Reception

7:00 p.m. - Dinner

FRIDAY, SEPTEMBER 29

7:00 a.m. - 8:30 a.m. - Breakfast

8:30 a.m. - Educational Seminars

8:30 - 10:15 a.m. - Attorney Panel Discussion

“Contract Language” - Terry Burke, NESCA Attorney

“Payment Bonds” - Denis Frind, STA Attorney

“Prevailing Wage Law” - Terry Picard, SACNY Attorney

10:30 - 11:15 a.m. - Seminar “New OSHA Initiatives” - John Tomich, Albany Area Director of OSHA

11:15 - 12:00 noon - Seminar “The 10 Costly Human Resource Mistakes Every Employer Makes” - Anne Tindall, Employee Management Strategies, Inc.

12:00 noon - 1:00 p.m. - Lunch

1:00 p.m. - 6:00 p.m. - Afternoon on Your Own - Tee times available for golf.

6:00 p.m. - 7:00 p.m. - Reception

7:00 p.m. - Dinner

8:00 p.m. - Entertainment - Yvonne Conte, “The Positive Power of Humor”

SATURDAY, SEPTEMBER 30

7:00 a.m. - 8:30 a.m. - Breakfast

8:30 a.m. - Seminars/Legislative Planning Meeting

8:30 - 9:30 a.m. - Seminar “Sexual Harassment in the Workplace” - Deborah Miller, Employee Management Strategies, Inc.

9:30 - 10:15 - Chapter Reports

10:30 a.m. - 12:00 noon - ESSA Annual Meeting

12:00 noon - 1:00 p.m. - Lunch

1:00 p.m. - Golf Tournament (optional)

2:00 p.m. - Lakeboat Ride On the Chief Uncas (optional)

7:00 p.m. - Dinner

SUNDAY, OCTOBER 1

7:00 a.m. - 9:00 a.m. - Breakfast

9:00 a.m. - 12:00 noon - Free Time

12:00 noon - 1:00 p.m. - Sunday Brunch

1:00 p.m. - Checkout