TICL Construction and Surety Law Division

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Messages from the Division Chair

June 2017

From a TICL member:

I will consider [joining the Division], but I have a question:

Why is a negligence and personal injury-oriented Section of the Bar establishing a contract-oriented division?

Construction and suretyship law is a lot different from personal injury and insurance.

To the Member:

Good to hear from you – and good question. The Construction and Surety Law Division was established as part of the Tort, Insurance and Compensation Law Section (TICL) a number of years ago.

The reason why the Division is under the TICL is because surety bonds are primarily written by insurance companies. The Fidelity and Surety Law Committee of the American Bar Association, which was created first, is organized the same way where it is part of the Torts, Trial and Insurance Practice Section. Again this is because both fidelity bonds/insurance and surety bonds are issued by insurance companies.

As an aside, fidelity products these days look a lot like long and involved insurance policies, but originally they started out as short employee dishonesty bonds. Although some practitioners do not agree with me, it is my view that at bottom a fidelity policy is actually a surety bond with lots of bells and whistles. This is because if a fidelity loss is paid the carrier has the equitable right to look to the dishonest employee for reimbursement. When I got my start in this business in 1977 claims on both fidelity and surety bonds were handled by the same claims adjusters in just about all insurance companies. I handled both types of claims.

So the reason for our division being under TICL is both historical, and because there is no other section where construction clearly belongs because it involves so many different areas of law, e.g. contracts, suretyship, mechanics liens, trust funds, municipal bidding, litigation, bankruptcy, ADR, creditors’ rights, UCC, architect and engineer professional liability, insurance, etc.

Speaking of an overlap between construction and insurance, a significant issue needs to be addressed when preparing a construction contract to ensure that additional insurance is in place as contemplated by the various contracts involved. Owners want to push insurance coverage for the project down to the general contractor, the GC wants to push it down to its subs, and so on. The additional insurance endorsements available on the market (largely ISO) often don’t match up with additional insurance requirements in the contracts. This could cause a huge problem for all of the companies working on a project, as well as insurance brokers, who frequently don’t understand the limited role of a certificate of insurance. So this is an important drafting issue for attorneys who are responsible for preparing contracts and, of course, protecting their clients.

I would also point out that there is a Real Estate Construction Committee under the Real Property Law Section. As stated in the Committee’s web page “The Committee’s basic goal is to educate real estate lawyers, especially those not well-versed in construction, about issues that arise in connection with construction agreements – something virtually all real estate attorneys encounter.” Its emphasis seems to be more on construction contract documents (principally published by the American Institute of Architects) used mostly in private construction projects. This committee does not deal as much with public construction which necessarily involves suretyship. There is however a lot of overlap between the two groups.

Like I stated, they’re not sure where to put us construction-types, but for the foreseeable future the Construction and Surety Law Division will continue to be a part of TICL. I hope that answers your question.

If you would like to discuss this further please feel free to contact me.

Al Reeve

October 2016

To CSLD attorneys:

Since my note to you last year Pat Rooney, an adjunct professor of construction law at Touro Law School has cheerfully assumed the duties as editor of our newsletter. It has been renamed “Deconstruction” and was recently posted on TICL. I hope you find it useful. Pat is great to work with, as is Mike Spinelli, an architect and one of Pat’s students, who assisted with the first issue of Deconstruction. 

We plan to issue Deconstruction three times per year, and report on cases of importance to construction and surety attorneys. Of course it is my view that you can’t be a good construction lawyer unless you’re a good surety lawyer, and vice versa. 

We will also be informing you of cases which, although not purely construction or surety law, are important to various players in the construction industry, whether they be contractors, subcontractors, suppliers, public or private owners, etc. 

One such issue is additional insurance, which I follow closely, because a failure to provide additional insurance can be a catastrophic breach of contract. Not getting the contract language right along with the correct insurance can also result in liability to the contractor’s attorney who was supposed to make sure that he had his/her client’s back covered from this contractual exposure.

We will also be including an article, such as Marc Brown’s in our current issue, which discusses an issue of concern from a practitioner’s point of view.

I intend to use my role as chair of the division to weigh in on legislation that affects our industry. One such piece of legislation, which I supported on behalf of our division, is NY SB 6906 (please see my attached Letter). This revision to several statutes would require public owners to show prejudice if they want to assert late notice as a defense to claim by a contractor. 

This bill, which was spearheaded by Henry Goldberg, a Rockville Centre construction attorney and friend, was passed by both chambers and is awaiting signature by Gov. Cuomo.

If you become aware of any state or federal cases which you believe we should be aware of please send them to Pat or me. 

Also, if you would like to write a short article (and the emphasis is on short) let us know. This could be an analysis of an issue in a real case which could be revised to protect confidentiality. 

I would appreciate your mentioning our division of NYSBA to other construction and surety lawyers to help generate interest in our division. With the number of NY attorneys who practice in this area, and the issues we have to deal with, we should be a vibrant group. I hope to stimulate us in that direction. 

Al Reeve

Committee Chair:
C. Allan Reeve, Esq.

Reeve Brown PLLC
Suite 200
3380 Monroe Avenue
Rochester, NY 14618-4726
Phone: (585) 310-1610
Email: careeve@reevebrownlaw.com

Vice-Chair and Editor:
Patricia A. Rooney, Esq.
Patricia Rooney, PC
394 South 15th Street
Lindenhurst, NY  11757
Phone: 631) 592-4405
Email: prlaw@prlaw.pro