Protect Yourself on NY Public Works Jobs
New York is one of the few states that allows subcontractors to file a lien on a public works project. Rather than attaching to the land, the lien attached to the project funds. In order to file a lien, the subcontractor must have a written contract for the work done or materials furnished. The lien also must be filed within 30 days from completion and acceptance of the project. It can be filed at any time before the 30 day mark. The lien is filed with the public entity in control of the project as well as the entity paying for the job.
Since the lien is filed with the public agency controlling the project, service upon them is not needed. Service must only be made on the prime contractor. An affidavit of service must also be filed with the public agency, which shows them that the contractor has been notified of the filing. The public lien is valid for 1 year after the filing date. A public lien may be extended for an additional year as long as the extension is filed within the 6 month period.
The city of Syracuse hired a contractor to construct a parking deck. The relationship fell apart, and Syracuse terminated the contract. The contractor sued the City for breach of contract, claiming that the breach was so material it defeated the purpose of the contract.
At trial, the jury awarded the contractor damages for the following: costs of performance, overhead, minus payments from the owner. The city claimed that the jury’s award was improper because there was a written contract and the calculation used by the jury was one of “quantum meruit” (i.e. the value of the work, rather than the amount allocated by the contract itself). This calculation resulted in a higher award for the contractor.
The District Court rejected the City’s arguments. Applying New York law, the Court found that if a contract is wrongfully terminated, then quantum meruit can be used to measure damages. The court then went further, finding that wrongful failures to make payment or assess delays (and resulting damages) against a contractor can be so material that it results in a “wrongful termination” by the owner. When that happens, damages calculated on the basis of a quantum meruit theory of recovery can be recovered.
In so finding, the Court said that under New York law, “once an agreement has been wrongfully terminated, the non-breaching party may elect to pursue quantum meruit damages. Where a party seeks quantum meruit damages for the premature wrongful termination of a construction contract, courts calculate the damages by considering the actual job costs plus allowance for overhead and profit minus amounts already paid.”
The case can be found at American Underground Engineering, Inc. v. City of Syracuse (N.D.N.Y. 2011).