Vol 19, No. 12

(518) 869-9800

June 2001

Inside This Edition: Scaffold Act Amendments Introduced In Legislature * NESCA Annual Meeting * President’s Message * No Damage For Delay Clause Fails To Protect Construction Manager * Unions Sue Over Bush PLA Executive Order * Welcome New Members * Membership Committee Announces Year-End Member Recruitment Incentive *

SCAFFOLD ACT AMENDMENTS INTRODUCED IN LEGISLATURE Go Top

A bill has been introduced in both houses of the State Legislature which would provide much-needed relief for contractors and subcontractors besieged by lawsuits filed against them under Sections 240 & 241 of the Labor Law, often referred to as the “Scaffold Act” or the “Safe Place to Work Law”.

Sections 240 & 241 of the Labor Law saddles contractors and owners with an “absolute liability” to provide a safe place to work on construction worksites. This absolute standard of liability effectively prevents contractors and owners from defending themselves in lawsuits filed by injured workers because who is negligent is not a factor under the law. Injured workers need not prove negligence by the contractor and are almost automatically awarded huge settlements (in addition to the workers’ compensation benefits they receive) by simply showing they have been injured in a gravity-related incident. Through contractual indemnification, subcontractors are routinely sued in 3rd party actions by the general contractor. In recent months, contractors and subcontractors have seen their liability insurance rates skyrocket (or have had their policies canceled) due in large part to this law.

Legislation recently introduced by Senator Dale Volker and Assemblyman Joseph Robach would bring an employee’s culpable conduct into consideration under a Section 240/241 lawsuit if that employee has completed a special safety course developed by the Department of Labor, and which conduct relates to the use of drugs or alcohol, failure to use the safety devises furnished at the job site, or failure to comply with employer instructions regarding the use of safety devices at the job site.

A coalition of contractor, subcontractor and insurance industry associations, including NESCA, has been aggressively promoting reform of the Scaffold Act during the 2001 Legislative session. In addition to backing the Volker/Robach reform legislation, the coalition has been lobbying individual legislators throughout the State for relief from this law, and has encouraged members of the various associations to contact their individual Senators and Assemblymen about the problems Labor Law Sections 240 & 241 are causing for their businesses.

NESCA ANNUAL MEETING Go Top

NESCA’s June 14, 2001 membership meeting will be the association’s “Annual Meeting”, at which time we will hold an election of officers to serve during the 2001-2002 fiscal year. All members are encouraged to attend this meeting and cast your vote. The nominating committee has recommended the following slate of officers for member approval:

PRESIDENT VICE PRESIDENT

Robert Kind James Elacqua

Teal Becker & Chiaramonte, CPAs AFSCO Fence Supply Co.

TREASURER SECRETARY

Jeffrey Senft Kevin Garrity

S&O Construction Services, Inc. Rose & Kiernan, Inc.

PRESIDENT’S MESSAGE Go Top

This message will be my last as President of NESCA, and it’s been my great pleasure to have served in this capacity during our 2000-01 fiscal year. Time has really flown by these last 12 months, and it seems just when I was beginning to get comfortable with the position, my time is up and I’ll be turning the reins over to a capable successor. Such is the nature of volunteer-driven organizations!

I have learned much about NESCA during the time I have served as a member of the Board of Directors and particularly as an officer. I have seen first-hand just how valuable NESCA is to Northeastern New York subcontractors and suppliers. I’ve had a birds-eye view of how much this association accomplishes each and every year, from arranging a vast selection of educational programs, to providing many networking opportunities for members, to fighting for OUR interests in the State Legislature.

In fact, there are really two sides of NESCA; the “visible” NESCA and the “behind-the-scenes” NESCA. All our members see and are aware of the visible NESCA. The visible NESCA sends out monthly newsletters, holds monthly membership meetings, presents numerous educational seminars, and arranges for plenty of social events such as our golf outings, our trade show and the annual car/cash giveaway. The not so visible behind-the-scenes NESCA performs many additional functions and also benefits members tremendously. The behind-the-scenes NESCA reviews EVERY bill introduced each year in the Legislature and then analyzes all construction-related bills for their impact, positive or negative, on our members. During the course of a typical legislative session, that’s over 10,000 Assembly bills and more than 6,000 Senate bills which are monitored by NESCA staff. Our staff then prepares legislative memoranda in support or opposition to many of the construction-related bills, particularly those which show signs of passage and/or those with a particularly acute impact on subcontractors and suppliers. This work done by NESCA, while not particularly visible or apparent to members, is extremely important for all of us. The behind-the-scenes NESCA also engages in considerable direct assistance to members of NESCA. Of course, this work would be visible to you only if you have taken advantage of the assistance and services NESCA provides. Just ask any member who has utilized the free lien service how quickly and professionally their lien has been processed. Just ask any member who has gone to NESCA for help in drafting safety programs, or for help in analyzing and responding to particular contract language, or who had questions about prevailing wage requirements or any number of other issues if they were happy with the assistance they received.

The point I am making is, there are so many ways NESCA benefits our industry, and so many ways NESCA can assist your individual business on a direct basis as well. So even if you don’t take full advantage of the direct assistance NESCA provides, at least realize that assistance will be there if and when you need it. And always understand that NESCA is constantly and diligently working behind-the-scenes to fight for all of us each and every day. Please remember this when you receive your invoice for 2001-02 membership dues.

I thank you very much for the opportunity to serve as your association’s President this past year.

Steve Dewey

President

NO DAMAGE FOR DELAY CLAUSE FAILS TO PROTECT CONSTRUCTION MANAGER Go Top

In the case of Clifford R. Gray, Inc. v. The City School District of Albany, 277 A.D. 2d. 795 (3d Dept. 2000), the Appellate Division (affirming the trial court) held that a construction manager’s failure to supervise and coordinate a public works project constituted an uncontemplated delay in breach of his fundamental contract duty. The Court allowed a contractor to recover delay damages despite a provision within the contract prohibiting such recovery.

In this case, the plaintiff electrical contractor contracted with defendant school district to perform renovations within the school district’s construction project. The contract contained a “no damages for delay” clause purporting to preclude plaintiff from recovering damages based upon defendant’s delay.

Despite this contract language, both the trial court, and the thereafter affirming appellate court awarded the plaintiff delay damages. These courts held that a “no damages for delay” clause would not be enforced to bar compensation for delays that are: 1) caused by the owner’s bad faith, 2) uncontemplated, 3) so unreasonable so as to constitute abandonment, or 4) a result of the owner’s breach of a fundamental contract obligation.

Upon the plaintiff’s evidence that the defendant 1) failed to timely obtain appropriate utility easements, 2) failed to employ a construction manager to adequately supervise and coordinate the work of various contractors, 3) terminated the construction manager and the general contractor and then hired thirty subcontractors in lieu of replacing the general contractor, the trial court concluded that defendant’s actions were wholly unanticipated and out of character and magnitude with ordinary delays encountered on such a project. Furthermore, the defendant-construction manager’s failure to coordinate the project’s subcontractors constituted a breach of a fundamental contract obligation.

This conduct of the defendant and their construction manager allowed the plaintiff to recover delay damages despite a contract provision forbidding recovery for any delays.

Terence J. Burke

NESCA Legal Counsel

UNIONS SUE OVER BUSH PLA EXECUTIVE ORDER Go Top

The Building and Construction Trades Dept. of the AFL-CIO has filed a lawsuit in federal court seeking to invalidate a White House executive order that prohibits project labor agreements (PLAs) on federal construction projects. The unions’ action came just 20 days after President Bush had amended his executive order to allow existing PLAs to continue.

The lawsuit takes aim at Executive Order 13202, which President Bush had signed on February 17, blocking federal projects from using project labor agreements. Executive Order 13202 states that federal agencies awarding contracts after February 17th shall ensure that neither the agency nor any construction manager acting on behalf of the agency shall require or prohibit contractors and subcontractors to enter into or adhere to agreements with unions. The executive order further states that federal agencies may not discriminate against contractors and subcontractors for becoming or refusing to become signatory to agreements with unions on the project in question or other related construction projects. The ban on PLAs also covers federally assisted projects. In issuing Executive Order 13202, President Bush revoked the pro-PLA Executive Order 12836 issued by President Clinton in 1993 as well as all related rules, regulations and policies.

PLAs negotiated between construction unions owners generally make the unions the sole representative of craft labor on projects, require both union and non-union contractors to obtain all or most labor through union hiring halls and require all contractors to pay into union health and welfare funds. In return, the unions install uniform work rules and practices and pledge labor peace.

On April 6, the administration amended Executive Order 13202 to allow existing PLAs to continue, but new PLAs are still effectively banned.

The lawsuit was filed by the building trades in the U.S. District Court for the District of Columbia in Washington, D.C. Joining as co-plaintiffs with the unions are the City of Richmond, California and the Contra Costa Building and Construction Trades Council. The city and the trades council want to negotiate a project labor agreement on a federally funded, “mixed-use” retail and housing construction project, but are prevented from doing so by the Executive Order.

WELCOME NEW MEMBERS Go Top

Coyne Electric, Inc.

44 Highland Drive

East Greenbush, NY 12061

(518) 479-3255; Fax (518) 479-7011

Contact: John Coyne

Esserman & Pelter, LLP

PO Box 29, 141 Washington Avenue

Endicott, NY 13760

(607) 748-7408; Fax (607) 748-9081

Contact: William Starring

KMR Enterprises, Inc.

PO Box 296

Cropseyville, NY 12052

(518) 279-3724; Fax (518) 279-0644

Contact: Robert Moon

McGregor Industries, Inc. - Tichener Division

23 Griswold Street

Binghamton, NY 13904

(607) 724-4241; Fax (607) 724-3439

Contact: Douglas Wilcox

Rondout Electric, Inc.

33 Arlington Avenue

Poughkeepsie, NY 1603

(845) 471-4810; Fax (845) 471-1903

Contact: Wilber Whitman

MEMBERSHIP COMMITTEE ANNOUNCES YEAR-END MEMBER RECRUITMENT INCENTIVE Go Top

NESCA Membership Committee Chairman Mark Woodward has announced a year-end member recruitment incentive as NESCA makes a final push for new members during 2000-2001. The rules of this new incentive are as follows:

For any new member applications received by NESCA up to and including the July 12, 2001 Board of Directors meeting, the sponsors of those new member applications will have their names placed in a hat for a special cash drawing. If you recruit one new member, your name is entered once, two new members and your name gets entered twice, and so on. There will be three drawings. The first name drawn wins $300, the second name drawn wins $200 and the third name drawn wins $100. This special drawing is in addition to the existing membership recruitment incentive which also runs through the July Board of Directors meeting and which awards sponsors of new members $50 for each and every new member they sponsor. The following NESCA members have already won at least $50 in this membership recruitment campaign:

Dick McNitt - KAMCO Supply Corp.

Dennis Colgan - C & C Welding Co.

Ed Lawless - Weather Guard Industries, Inc.

Russell Veith - Royal Crane, Inc.

Jeff Senft - S & O Construction Services, Inc.

Jim Vellano - Vellano Bros., Inc.

Ralph Cioffi - LaCorte E.C.M., Inc.

Bill Edwards - Rainbow Sheet Metal

Jim Elacqua - AFSCO Fence Supply, Inc.

Kevin Garrity - Rose & Kiernan, Inc.

Joe Gomez - Gomez Electrical Contractors

Tony Groat - Albany Ladder Co., Inc.

Roger Jones - Campito Plumbing & Heating

Judy Moran - Keystone Builders Supp

Bob Kind - Teal Becker & Chiaramonte, CPA

Ed Minkiewicz - Huff ‘n’ Puff Insula.

Kevin Laurilliard - McNamee, Lochner

Kevin Viana - Marshall & Sterling

Mark Woodward - The Woodward Co.

All members are encouraged to recruit a new member before July 12th, win $50 and a chance at the three drawings!!