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Last Reviewed / Modified On 12 Apr 2018.

NEW YORK CONSTRUCTION CLAIMS RESOURCES

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CONSTRUCTION CLAIMS

Limitations & Repose Periods

Statutes of Limitations

Bodily Injury, Property Damage and Malpractice (other than medical malpractice) actions must be commenced within three (3) years. CPLR §214. The statute of limitations on a claim against an architect or design professional that is essentially stated as a breach of the ordinary professional obligations, has a three year statute of limitations, regardless of whether it is asserted as breach of contract or negligence. This malpractice cause of action commences “from the date of termination of the professional relationship … and the completion of the ‘performance of significant (i.e. non-ministerial) duties under the parties’ contract.’” Board of Managers of 255 Hudson Condominium v. Matorella, 37 Misc.3d 1222 (S.Ct. N.Y. Ct. 2012) citing Sendar Development Co., LLC v. CMA Design Studio, P.C., 890 N.Y.S.2d 534 (1st Dep’t 2009).

Statute of Repose:

CPLR §214-d imposes certain procedural requirements, i.e. filing of a Notice of Claim, upon prospective plaintiffs for personal injury and property damage claims or cross-claims and third party claims against licensed architects, engineers, surveyors and landscape architects which accrue more than ten (10) years after the performance of services that gave rise to the claim. Once the Notice of Claim is filed, a prospective plaintiff is entitled to proceed with discovery. However, the design professional is also entitled to bring a motion to dismiss for failure to state a cause of action prior to the actual filing of suit. CPLR §214-d does not, however, extend any applicable statutes of limitation, nor does it affect the dates of accrual for claims against architects or engineers. Getwicks v. Campbell, 257 A.D.2d 601 (2d Dep’t. 1999).

Right to Repair Laws and/or Pre-Suit Statutory Procedures

New York has limited right to repair laws.

New York Gen Bus. Law § 777-a, a housing merchant implied warranty is implied in the contract or agreement for the sale of a new home and shall survive the passing of titled. A housing merchant implied warranty shall mean, inter alia, that one year from and after the warranty date the home will be free from defects due to a failure to have been constructed in a skillful manner.

Indemnity and Contribution

Indemnity

  1. A covenant, promise or agreement in a construction contract which purports to indemnify or hold harmless the indemnitee against liability for personal injury or property damage caused by or resulting from the negligence of the indemnitee is void and unenforceable. N.Y. Gen. Oblig. Law §5.322.1
  2. The phrase “[t]o the fullest extent permitted by law” is often interpreted by New York courts to be “savings language” making a contractual indemnity provision enforceable. See, Dutton v. Pankow Bldrs., 745 N.Y.S.2d 520 (1st Dep’t 2002).
  3. “To the fullest extent permitted by law” contemplates partial indemnification and limits the contractual indemnity obligation to a subcontractor’s own negligence. Brooks v. Judlau Contr., Inc., 869 N.Y.S.2d 366 (2008).
  4. However, the phase ‘regardless of whether or not it is caused in part by a party indemnified hereunder’ has been held to violate the General Obligations Law, even when the indemnity provision includes the “savings language.” Cavanaugh v. 4518 Associates, 776 N.Y.S.2d 260 (1st Dep’t 2004).
  5. A subcontractor’s obligation to indemnify cannot be ‘incorporated by reference’ to the indemnity obligation in the prime contract. Waitkus v. Metropolitan Hous. Partners, 854 N.Y.S.2d 388 (1st Dep’t 2008).
  6. The statute of limitations on a claim for contractual or common law indemnity is six (6) years, CPLR §213 (2); McDermott v. City of New York, 428 N.Y.S.2d 643 (1980), and accrues when a judgment is entered or payment is made. Bay Ridge Air Rights Inc. v. State, 404 N.Y.S.2d 73 (1978).

Contribution

Where two or more parties are subject to liability for damages for the same bodily injury, property damage or wrongful death may claim contribution among them whether or not an action has been brought or a judgment has been rendered against the party from whom contribution is sought. CPLR §1401.

Certificate of Merit – Experts

In New York, there is no requirement for filing certificate or affidavit of merit for claims against design or construction professionals.

Economic Loss Doctrine

  1. In New York, there is no recovery for economic loss arising out of negligent construction where the claimant is an incidental beneficiary and there is no privity of contract. Board of Mgrs. of the A Bldg. Condominium v. 13th and 14th St. Realty, LLC, 121 A.D.3d 432 (1st Dep’t 2014); Residential Bd. of Managers of Zeckendorf Towers v. Union Square-14th Street Associates, 594 N.Y.S.2d 161 (1st Dep’t 1993).
  2. Individual unit owners are incidental and not intended beneficiaries of the contracts entered into between the Sponsor and general contractors, architects, or engineers. Kerusa Co., LLC v. W10Z/515 Real Estate Ltd. Partnership, 858 N.Y.S.2d 109 (1st Dep’t 2008).
  3. Individual unit owners have standing to seek relief for damage and defects to their own unit, and not for damage to the common elements of a condominium. Devlin v. 645 First Ave. Manhattan Co., 645 N.Y.S.2d 476 (1st Dep’t 1996).
  4. Absent a duty independent of the contract, a plaintiff cannot recover in tort for what is a breach of contract claim. Clark-Fitzpatrick, Inc. v. Long Island Rail Road Co., 521 N.Y.S.2d 653 (1987).

Contractor Licensing Requirements

In New York, only asbestos handling contractors and crane operators are licensed at state level. Every other type of construction-related general contractor license, including general contractor, is issued by the city of county in which the contractor will be will be working. General requirements for New York Contractors License include submitting an application and appropriate fee, proof of identity (i.e., a driver’s licenses) and proof of liability and workers’ compensation insurance. Some municipalities require a criminal background check.

Common Law & Statutory Claims

NA

Construction Damages

Cost of Repair

NA

Diminution in Value

NA

Punitive Damages

  1. Punitive damages are not recoverable for an ordinary breach of contract claim as their purpose is not to remedy private wrongs but to vindicate public rights. Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354 (1976).
  2. The New York Court of Appeals has held that a private party seeking punitive damages has to show not only that the person they are suing acted wrongfully, “but also that such conduct was part of a pattern of similar conduct directed at the public generally. Rocanova v. Equitable Life Assur. Soc. Of U.S., 83 N.Y.2d 603 (1994).
  3. Public policy precludes insurance indemnification for punitive damage awards whether based on intentional acts or gross negligence, recklessness, wantonness or conscious disregard of the rights of others. Home Ins. Co. v. American Home Products Corp., 551 N.Y.S.2d 481 (1990).

Attorney’s Fees

Joint and Several Liability (specific to construction)

Cost Incurred to Access Repair Areas

Consequential Damages

Coverage Trigger of Coverage

Definition of an Occurrence

New York follows the general rule that a commercial general liability policy does not afford coverage for breach of contract, breach of fiduciary duty, or breach of warranty, but rather for bodily injury and property damage. National Union Fire Ins. Co. v. Turner Construction Co., 119 A.D.3d 103 (1st Dep’t 2014).

Duty to Defend

  1. Contractual Indemnity

    2. NA

  2. Anti-Indemnity Statures

    3. NA

  3. Additional Insureds
    1. Coverage for AI’s own negligence vs. vicarious liability for Named Insured
    2. Determining Primary and Non-Contributory vs. Excess Position
    3. AI carrier’s rights to reimbursement for defense expenses from other, co-primary carriers
  4. Insureds Right to Independent Counsel and Consequences of Rejecting a Defense
    1. Reservation of Rights
      1. If an insurer defends with knowledge of facts which constitute a defense to coverage, it will be estopped from later asserting that the policy does not cover the claim. O’Dowd v. American Sur. Co. of N.Y., 165 N.Y.S.2d 458 (1957)
      2. An insurer must timely reserve its rights in writing before defending an action on behalf of an insured. The reservation of rights letter should include every reason of which an insurer is aware or should then be aware as to why the insured might not be entitled to coverage. Federated Department Stores, Inc. v. Twin City Fire Ins. Co., 807 N.Y.S.2d 62 (2006).
      3. However, an insurer does not have to assert every conceivable defense, and the failure to reserve its rights as to a particular defense is excused where the insurer lacked knowledge of the available defense. Federated Dept Stores, Inc. v. Twin City Fire Ins. Co., 807 N.Y.S.2d 62 (2006).
      4. When being defended under a reservation of rights, the insured is entitled to retain its own counsel. Prashker v. United States Guar. Co., 154 N.Y.S.2d 910 (1956).
    2. The New York Court of Appeals has held that an insurer which breaches its duty to defend does not waive coverage defenses applicable to indemnification of an insured’s settlement. K2 Inv. Group, LLC v. American Guar. & Liab. Ins. Co., 2014 N.Y. LEXIS 201 (N.Y. Feb. 18, 2014).

Coverage Defenses

Late Notice

  1. For policies issued after January 1, 2009, “a provision that failure to give any notice required to be given by such policy within the time prescribed therein shall not invalidate any claim made by the insured, injured person or any other claimant unless a failure to provide timely notice has prejudiced the insurer. N.Y. Ins. Law §3420(a)(5).
  2. For policies issued before January 1, 2009, an insured’s failure to satisfy the notice requirement contained in a policy constitutes a failure to comply with a condition precedent to coverage, which as a matter of law vitiates the contract. Great Canal Realty Corp. v. Seneca Insurance Co., 800 N.Y.S.2d 521 (2005). No showing of prejudice is required. Argo Corp. v. Greater N.Y. Mut. Ins. Co., 794 N.Y.S.2d 704 (2005).
  3. An Additional Insured has an independent duty to provide the insurer with notice of an “occurrence” and “suit”. American Home Assur. Co. v. International Ins. Co., 661 N.Y.S.2d 584 (1997).

Lack of an Occurrence

  1. Under New York law, defective workmanship alone is not an “occurrence.” Aquatectonics, Inc. d/b/a Loebs & Gordon PoolCraft v. The Hartford Casualty Insurance Company, 2012 U.S. Dist. LEXIS 41185 (E.D.N.Y. 2012).
  2. The defective workmanship in the work must create a legal liability for bodily injury or property damage to property other than the work itself. George A. Fuller Co. v. United States Fid. & Guar. Co., 613 N.Y.S.2d 152 (1st Dep’t 1994)

  3. However, where there was in fact “property damage” resulting from an “occurrence” and no policy exclusion for work product, a Commercial General Liability policy may be called upon to cover contractual liability. Hotel des Artistes, Inc. v. Gen. Accident Ins. Co. of Am., 775 N.Y.S.2d 262 (1st Dep’t 2004).

Choice of Law (Forum Selection Clauses)

NA

Targeted Tenders

NA

Consent Judgments

NA

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