Bill Text: NY S07615 | 2015-2016 | General Assembly | Introduced
Bill Title: Relates to the obligation to subcontractors in construction contracts, including contracts between contractors and subcontractors, monies to be paid for work performed by a subcontractor, and resolving disputes through arbitration.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2016-05-11 - REFERRED TO CONSUMER PROTECTION [S07615 Detail]
Download: New_York-2015-S07615-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 7615 IN SENATE May 11, 2016 ___________ Introduced by Sen. MARTINS -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection AN ACT to amend the general business law, in relation to the obligation to subcontractors in construction contracts The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subdivision 1 of section 756 of the general business law, 2 as amended by chapter 417 of the laws of 2009, is amended to read as 3 follows: 4 1. "Construction contract" means a written or oral agreement for the 5 construction, reconstruction, alteration, maintenance, moving or demoli- 6 tion of any building, structure or improvement, or relating to the exca- 7 vation of or other development or improvement to land, and where the 8 aggregate cost of the construction project including all labor, 9 services, materials and equipment to be furnished, equals or exceeds one 10 hundred fifty thousand dollars. For the purposes of this article a 11 construction contract shall not include any such contract made and 12 awarded by the state, any public department, any public benefit corpo- 13 ration, any public corporation or official thereof, or a municipal 14 corporation or official thereof for construction, reconstruction, alter- 15 ation, repair, maintenance, moving or demolition of any public works 16 project nor any contract with a contractor or subcontractor which is 17 part of such project; or any such contract the purpose of which is the 18 construction, reconstruction, alteration, repair, maintenance, moving or 19 demolition of an individual one, two or three family residential dwell- 20 ing or a residential tract development of one hundred or less one or two 21 family dwellings, or any residential construction project where the 22 aggregate size of such project is four thousand five hundred square feet 23 or less, or any residential project of fewer than seventy-five units 24 which receives financial assistance from the federal government, the 25 state or a municipal entity designed for households earning an average 26 of one hundred twenty-five percent of the housing and urban development 27 agency area median income, provided, however, that the provisions of 28 this subdivision as between a contractor and a subcontractor shall not EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD15004-01-6S. 7615 2 1 be so limited and they shall apply to all oral or written contracts or 2 understandings. 3 § 2. The opening paragraph of section 756-a of the general business 4 law, as amended by chapter 417 of the laws of 2009, is amended to read 5 as follows: 6 It is the policy and purpose of this article to expedite payment of 7 all monies owed to those who perform contracting services pursuant to 8 construction contracts. Except as otherwise provided in this article, 9 the terms and conditions of a construction contract shall supersede the 10 provisions of this article and govern the conduct of the parties there- 11 to. No contract between a contractor and a subcontractor shall expressly 12 or impliedly be construed in a manner which is detrimental to the rights 13 of a subcontractor to be paid for work performed or services provided in 14 other than a timely manner. 15 § 3. Subdivision 2 of section 756-a of the general business law is 16 amended by adding two new paragraphs (c) and (d) to read as follows: 17 (c) Nothing in this subdivision shall authorize an owner or contractor 18 to withhold payment to a subcontractor unless by clear and convincing 19 evidence, documented in writing, that work performed by a subcontractor 20 was deficient or done other than as specified in the contract. 21 (d) Where there is any objection to any allegation made by an owner 22 with respect to a submitted invoice, a contractor or subcontractor, as 23 the case may be, shall be entitled to cure any defect or satisfy any 24 objection forthwith. Should such attempt to cure or satisfy be disap- 25 proved by the owner, the contractor or subcontractor may demand an imme- 26 diate expedited arbitration by the American Arbitration Association of 27 such disapproval. Included in such right to arbitration there shall be 28 the right to arbitrate any objection alleging that the notice to cure is 29 not sufficiently detailed so as to enable a timely replacement, repair, 30 or solution to any objection raised by an owner, or that the invoice 31 submitted by the contractor or subcontractor is not a final invoice. 32 § 4. Subparagraph (i) of paragraph (a) of subdivision 3 of section 33 756-a of the general business law, as amended by chapter 417 of the laws 34 of 2009, is amended to read as follows: 35 (i) Unless the provisions of this article provide otherwise, the owner 36 shall pay the contractor strictly in accordance with the terms of the 37 construction contract and the contractor shall immediately pay any 38 subcontractor amounts due from such payment. 39 § 5. Section 756-a of the general business law is amended by adding a 40 new subdivision 5 to read as follows: 41 5. Performance of the subcontractor. It shall be presumed that any 42 subcontractor performing work for a contractor has acted in good faith 43 in accordance with the contract, used proper materials and otherwise 44 performed in accordance with generally applicable standards in the 45 industry and a contractor may refuse such presumption only by clear and 46 convincing evidence to the contrary. 47 § 6. Clause (A) of subparagraph (iv) of paragraph (b) of subdivision 2 48 of section 756-b of the general business law, as amended by chapter 417 49 of the laws of 2009, is amended to read as follows: 50 (A) A contractor or subcontractor that suspends performance as 51 provided in this section shall not be required to furnish further labor, 52 materials or services until the contractor or subcontractor is paid the 53 undisputed invoice amount at the time period for completion as provided 54 in the construction contract, or a final determination has been made in 55 compliance with subdivision three of this section and complied with. All 56 of the time frames established within this section shall be extended forS. 7615 3 1 the length of time performance was suspended. Payment of documented 2 actual costs incurred for re-mobilization resulting from suspension 3 shall be negotiated between the parties. Where a subcontractor can 4 demonstrate that the unreasonable withholding of amounts due to him or 5 her have resulted in lost time he or she may have spent in performing 6 additional work for another contractor or owner, the arbitrator charged 7 with conducting the arbitration proceeding may award monies occasioned 8 by such withholding. 9 § 7. Paragraphs (c) and (d) of subdivision 3 of section 756-b of the 10 general business law, as added by chapter 417 of the laws of 2009, are 11 amended to read as follows: 12 (c) If efforts to resolve such matter to the satisfaction of all 13 parties are unsuccessful, the aggrieved party may refer the matter, not 14 less than fifteen days of the receipt of third party verification of 15 delivery of the complaint, to the American Arbitration Association for 16 an expedited arbitration pursuant to the Rules of the American Arbi- 17 tration Association. Where the dispute in question is brought by a 18 subcontractor, the arbitrator shall first require the contractor or 19 owner to post a performance bond in the amount of the demand payment. 20 Failure to post such bond within five days after the requirement is so 21 imposed shall result in an immediate award to the subcontractor and such 22 decision shall not be appealable. 23 (d) Upon conclusion of the arbitration proceedings, the arbitrator 24 shall submit to the parties his or her opinion and award regarding the 25 alleged violation. Where the arbitrator determines that a subcontractor 26 is entitled to an award he or she shall order the contractor or owner, 27 as the case may be, to pay the reasonable attorney fees incurred by the 28 subcontractor and any monies the subcontractor may have earned during 29 the time spent in attending to such proceeding. Where the arbitrator 30 concludes the withholding payment to a subcontractor was especially 31 egregious and a delay in payment was unfairly withheld, he or she may 32 award punitive damages as he or she deems warranted. 33 § 8. This act shall take effect on the ninetieth day after it shall 34 have become a law.
