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Inside This Issue:

  • No Liability under New York Labor Law for Project Owner and Lender where Worker’s
  • Injuries Attributed Solely to His Own Fault

*  Multi-Million Dollar Claim Invalidated by Court Due to Contractor’s Failure to Give Timely Notice

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ARTICLE #1
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No Liability Under New York Labor Law for Project Owner and Lender where Worker’s Injuries Attributed Solely to his Own Fault

By:  J. Kent Holland, Esq.

The strict liability imposed by Section 240 of the New Labor Law appears to have been somewhat clarified in the decision of Rupert Blake v. Neighborhood Housing Services of New York City, Inc., 2003 NY Slip Opinion 19690, Court of Appeals (Dec. 2003).  In this case, the plaintiff was an individual that operated his own contracting company.  He was working alone on a renovation job at a two-family house when the ladder on which he was standing collapsed, resulting in the plaintiff breaking his ankle.

The plaintiff filed suit against Neighborhood Housing Services of New York City (NHS), a not-for-profit lender, which had provided low-interest financing to facilitate the project.  NHS had nothing to do with construction decisions or supervision.  Its role was limited  to dispatching a rehabilitation specialist to the premises to assess the scope of the work and the amount of the loan. NHS prepared a work estimate and gave the homeowner a list of contractors, from which she chose plaintiff.

Plaintiff contended that NHS was strictly liable under New York Labor Law, section 240(1) as a statutory agent under the section for having failed to provide a proper workplace and mandated safety equipment.  At trail, a jury found against the plaintiff on the facts presented.  The trial court denied plaintiff’s motion to vacate the jury’s verdict and direct one in his favor. The Appellate Division affirmed, stating that “a factual issue was posed as to whether plaintiff’s injury was caused by some inadequacy of the ladder or was solely attributable to the manner in which plaintiff used the ladder” and that there were no grounds to disturb the jury’s factual determinations. On appeal, the plaintiff argued Labor Law § 240 (1) is a strict (or absolute) liability statute and that the court should have set aside the jury’s verdict.

The question for the court was whether a plaintiff who was injured while using a ladder may prevail in a Labor Law § 240 (1) action even when a jury finds that the ladder was so constructed and operated as to give him proper protection and he was the sole cause of his injury.

The court stated that in deciding the appeal, it is necessary to address the concept of strict (or absolute) liability and the predicates for its application under Labor Law § 240 (1). The court explained that it has in numerous previous decisions “steadfastly held that contributory negligence will not exonerate a defendant who has violated the statute and proximately caused a plaintiff’s injury.”  But the Court states that: “At no time, however, did the Court or the Legislature ever suggest that a defendant should be treated as an insurer after having furnished a safe workplace. The point of Labor Law § 240 (1) is to compel contractors and owners to comply with the law, not to penalize them when they have done so.”

Plaintiff asserts, in essence, that despite the jury’s findings he is entitled to recover because Labor Law § 240 (1) provides for strict (or absolute) liability. In addressing this contention, we note that the words strict or absolute liability do not appear in Labor Law § 240 (1) or any of its predecessors. Indeed, it was the Court — and not the Legislature — that began to use this terminology in 1923 (under an earlier version of the statute [see L 1921, ch 50]), holding that employers had an “absolute duty” to furnish safe scaffolding and would be liable when they failed to do so and injury resulted.”

The Court states that it has always stressed two points in applying the doctrine of strict (or absolute) liability under section 240 (1) of the Labor Law. “First, that liability is contingent on a statutory violation and proximate cause…. [and] second, that when those elements are established, contributory negligence cannot defeat the plaintiff’s claim.” It is imperative, therefore, to recognize that the phrase “strict (or absolute) liability” in the Labor Law § 240 (1) context is different from the use of the term elsewhere, says the Court.  Thus, says the Court, “an accident alone does not establish a Labor Law § 240 (1) violation or causation.”

The court rejected the plaintiff’s argument that “he is entitled to recover in the face of a record that shows no violation and reveals that he was entirely responsible for his own injuries,”  concluding that to impose liability for a ladder injury even though all the proper safety precautions were met would not further the Legislature’s purpose.  The court stated: “If liability were to attach even though the proper safety devices were entirely sound and in place, the Legislature would have simply said so, or made owners and contractors into insurers. Instead, the Legislature has enacted no-fault workers’ compensation to address workplace injuries where, as here, the worker is entirely at fault and there has been no Labor Law violation shown.”

An additional reason the Court gave for rejecting the Plaintiff’s suit and holding NHS could not be liable under the New York Labor Law was that NHS was not itself a  contractor or project owner, or an agent of a project owner.  Authority would have had to be given to a NHS by the owner to supervise or control the work in order for NHS to be deemed an agent for purposes of Labor Law section 240 (1).  The court states: “Although defendant [NHS] here coordinated home repair work, it did not involve itself with the details of how individual contractors would perform their jobs. Instead, NHS acted as a lender: it is a non-profit organization that provides low-interest loans. The homeowner retained primary control over decisions on how the renovation project would proceed. NHS did not supervise the contractor; it never instructed workers on how to undertake repairs, and it took only a de minimis role in ensuring that the contractor would complete the financed repairs.

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Multi-Million Dollar Claim Invalidated by Court Due to Contractor’s Failure to Give Timely Notice

By: Katz & Stone, L.L.P.

Construction Newsletter
November/December 2003

Most construction contracts contain language obligating the contractor to submit claims for extras or changes to the owner or higher-tier contractors within a certain period of time after it incurs increased costs or delay. In addition, many contracts also require the contractor to notify the owner or higher-tier contractors of its intention to ultimately make such claims within a certain period of time after the event giving rise to the claims. As demonstrated by MCI Constructors v. Spotsylvania County, 2003 Va. Cir. LEXIS 115 (Spotsylvania County Cir. Ct. 2003), it is critical for contractors to understand the precise moment when the time period to take action on a claim will begin to run. Adopting an unreasonable or unrealistic view of the triggering event can have disastrous consequences.

In MCI Constructors, a contractor was engaged by Spotsylvania County to construct a water treatment facility. As work progressed, disputes arose between the county and the contractor, delays occurred and extra work was required. During the course of this project, the contractor submitted various change orders to the county for approval, several of which were rejected. Months after the project was scheduled to be completed, the contractor submitted a “Request for Equitable Adjustment” to the County, requesting additional payment of more than $9 million and an eight-month time extension for the changed and extra work it performed. The County disputed 93 of the 106 claims asserted within the Request on the grounds that, among other things, the contractor failed to give timely notice of its intention to submit such claims. In response, the contractor brought suit to recover on its claims.

The trial court first examined the provisions relevant to the timing of the contractor’s notice. The court found that the contract between the County and the contractor provided that no claim for changed or extra work could be made against the County unless it was notified of the contractor’s intention to present such claim “within ten days of the event, thing, or occurrence giving rise to the alleged claim.” Similarly, state and local laws required the contractor to provide written notice of its intention to file a claim within ten days of the occurrence or beginning of the work upon which the claim was based.

The court next examined when the “event” or “occurrence”, which triggered the contractor’s duty to notify the county of its intention to present a claim for extra or changed work, happened. The County argued that the contractor was required to notify the County even before a dispute arose — in effect, simultaneously with its submission of a proposed change order in response to a request or directive in the field. The contractor took an opposite view, arguing that it was entitled to wait until a full-fledged dispute had arisen, and it was able to precisely determine the monetary impact of the extra or change, before having to provide notice of its intention to submit a claim. The court rejected both arguments, instead concluding that, as to each claim, the triggering event for the notice requirement was the contractor’s learning that its proposed change order, or other request for adjustment of contract terms, was denied, disallowed, or disapproved, in whole or in part, by the County. Applying such standard, the court concluded that the contractor did not give the County timely notice of its intent to submit all 93 disputed claims, and thus held that those claims were barred.

Contractors should always be careful to comply with all notice requirements in their contracts. In order to do so, contractors need to have (1) a firm grasp on the time period(s) in which they must take action to preserve their claim and (2) a good understanding of the point of which those periods will begin to run.

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About the Author:

Katz & Stone is a nationally recognized law firm.  , with a practice emphasizing construction law and risk management.  For the balance of the newsletter from which this article was first published, visit:  http://www.katzandstone.com/newsletters/dec2003.html.

For more information contact:  Gerald Katz, Esq., Katz & Stone, 8230 Leesburg Pike

Suite 600 ; Vienna , VA 22182 ; (703) 761-3000.

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ABOUT THIS NEWSLETTER & A DISCLAIMER

This newsletter Report is published and edited by J. Kent Holland, Jr., J.D., a construction lawyer and risk management consultant for environmental and design professional liability.  The Report is independent of any insurance company, law firm, or other entity, and is distributed with the understanding that ConstructionRisk.com, LLC, and the editor and writers, are not hereby engaged in rendering legal services or the practice of law.  Further, the content and comments in this newsletter are provided for educational purposes and for general distribution only, and cannot apply to any single set of specific circumstances. If you have a legal issue to which you believe this newsletter relates, we urge you to consult your own legal counsel. ConstructionRisk.com, LLC, and its writers and editors, expressly disclaim any responsibility for damages arising from the use, application, or reliance upon the information contained herein.

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