Construction law info blog

Can a Licensed Home Improvement Contractor Enforce a Contract Entered into Under a Name Other Than the one on his License?

The New York Court of Appeals recently considered whether a licensed home improvement contractor is barred from enforcing a contract that was entered into in his individual name. The reason this became an issue was because the license was under his company’s name.

Anthony Marraccini, a licensed home improvement contractor entered into a contract with John and Pam Ryan to perform construction and maintenance work. He used his own name on the contract in spite of possessing a home improvement license under the name of  “Coastal Construction Development”. After the work was completed, a dispute arose between the parties about payment, and Marraccini sued John and Pam Ryan in his own name. John and Pam Ryan moved for summary judgment on the grounds that the home improvement license was under the company’s name and that the company was licensed to perform home improvement business, not Marraccini individually.

The Court held that although Marraccini may have violated Westchester County Code § 863.319 (1) (b), neither the Westchester County Code nor the common-law bar a violator of the County Code from bringing a lawsuit under a contract entered into under his individual name. It appeared that Coastal Construction Development and Marraccini were not separate legal entities. The case seems to indicate that the name, Coastal Construction Development, was simply a trade name. Therefore, there would be no forfeiture of the right to receive payment for the work done when the violation of the County Code seems to have been “inadvertent and harmless” and the other party was neither deceived nor prejudiced.

The Court distinguished its decision in B & F Bldg. Corp. v. Liebig (72 NY2d 689, 693) (1990) in which a contractor who was not licensed at the time the work was performed was barred from recovery. In the present case, Marraccini was already licensed when he did the work for the Ryans, and hence he is not barred from recovery. Marraccini v. Ryan, 17 N.Y.3d 83, 85, 2011 N.Y. Slip Op. 04543, 2 (2011).

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Amendment to New York Crane Inspector Regulations

New York Legislation: Crane Inspections: Amendment to the New York Crane Inspector Regulations We previously wrote on this blog about the recently enacted licensing regulations in New York for crane inspectors. See New Law for New York Crane Inspections. However, a June 2009 amendment to the law modifies the consequences of an inspector’s wrongdoing.

Previously, the law provided that a crane inspector could have his license revoked and be prohibited from receiving a new license in the event that he engaged in certain wrongdoing. The law now makes it illegal for an inspector to willfully engage in any of the following:

    (a) Failing to inspect a crane for which he filed a report;

    (b) Falsifying an inspection report;

    (c) Making material misstatements or omissions on an inspection report; and/or

    (d) Accepting a bribe.

The law, as revised, now provides for a specific civil remedy. Rather than address those same acts from simply an administrative and licensing standpoint, the amended law provides that a violator can be subject to a penalty of not less than $1,000.00, nor more than $5,000.00, per occurrence or transaction. The penalties are not exhaustive and apply retroactively to the law’s effectuation in November of 2008.

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New York City’s Regulations Governing Home Improvement Contractors

New York City has promulgated regulations relating to home improvement contractors, the purpose of which are presumably to protect consumers against contractors’ deceptive and fraudulent practices. However, the requirements go beyond such a prohibition and impose a number of precise requirements with which all home improvement contractors must comply. Home improvement is broadly defined under the law as “the construction, repair, replacement, remodeling, alteration, conversion, rehabilitation, renovation, modernization, improvement, or addition to any land or building, or that portion thereof which is used or designed to be used as a residence or dwelling place and shall include but not be limited to the construction, erection, replacement, or improvement of driveways, swimming pools, terraces, patios, landscaping, fences, porches, garages, fallout shelters, basements, and other improvements to structures or upon land which is adjacent to a dwelling house.” Home improvement does include the construction performed with respect to a new home or building.

One such requirement is that all contractors need to be licensed in order to solicit, sell or perform home improvement services. Where a contractor performs home improvement services without a proper license, he may be deemed guilty of a misdemeanor and subject to imprisonment of not more than one year and/or a penalty not to exceed $1,000.00. Furthermore, a contractor who is not licensed to engage in home improvement services may also be precluded from recovering monies due and owing by a homeowner under a contract. In other words, if a homeowner does not pay, you can’t sue for unpaid monies. In New York City, the public policy underlying the license requirement is so strong that some courts have even precluded an unlicensed contractor from recovering under quasi-contract theories such as quantum meruit. In other words, contractors may as demonstrated in Nemard Construction Corp. v. Deafeamkpor not even be able to recover the reasonable value of the services they provided if they fail to comply with the licensing requirement.

In addition, where a violation of the New York City’s administrative regulations is found, the Commissioner of the Division of Consumer affairs may order the contractor to pay the owner treble damages.

Aside from the requirements that all contractors be licensed, the regulations also prohibit home improvement contractors from engaging in certain acts, including without limitation (a) deviating from the plans or specifications or terms of the contract without the written consent of the homeowner; (b) making a substantial misrepresentation or false promise to induce a homeowner to enter into the contract; or (c) making false statements in connection with advertising their services. Moreover, the regulations further require that a contractor provide written notice to the homeowner that he may cancel the contract at any time prior to midnight of the third night after either the contract was executed or such notice was provided, whichever is later. Again, where a contractor engages in any such prohibited acts, he may be deemed guilty of a misdemeanor and subject to imprisonment of not more than one year or a penalty not to exceed $1,000.00.

In addition to the New York City administrative regulations governing home improvement contractors, there are statutes in New York that also govern home improvement contractors. Specifically, the home improvement contractor must be registered in the municipality where the work is performed. As demonstrated in Price v. Close, a contractor is precluded from recovering unpaid monies from an owner because he is unlicensed. The definition of a home improvement is identical to the definition set forth in the New York City regulations.

Furthermore, New York also requires contracts that exceed the cost of $500.00 to be in writing and signed by both parties. In addition, the contract must be legible and in plain language and clearly describe the other documents that are to be incorporated into the contract. The contractor must provide the owner with a copy of the written contract before any of the work is performed. New York also requires that the contract contain certain information including (i) the name, address, telephone number and license number of the contractor; (ii) the estimated dates when the work will begin and be substantially completed; (iii) the contingencies that would materially change the approximate completion date; (iv) a description of the work to be done, the materials to be provided to the owner and the agreed upon consideration for the work and materials.

In addition, the New York statute governing home improvement contracts also requires that certain notices be provided in clear conspicuous bold face type notifying the owner, among other things, that he has three business days to cancel the contract. The statute sets out the specific language of these notices.

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New York Passes Net Energy Metering Law

Construction Law: New York Legislation: Renewable Energy: The governor of New York recently signed into law a bill that will allow businesses to earn credit for electricity they generate utilizing renewable resources. Under the “New York Net Energy Metering Law,” businesses that generate power from wind, solar and farm waste will be able to sell the power that they do not use back to their electric companies. Prior to the passage of this law, such a right was limited to residential property owners.

In addition to providing an energy credit for businesses that utilize renewable energy sources, the law also requires that electric companies “develop a model contract and file a schedule that establishes consistent and reasonable rates, terms and conditions for net energy metering to non-residential customers.” Electric companies are also required to establish standards that are necessary to conduct net energy metering and that will allow for the interconnection of the company’s system to a business’s solar electric generating equipment.

The law was one of a series of Bills seeking to encourage residents and businesses to invest in green energy installation and to take steps to improve efficiency. According to Governor Paterson, “these bills will help improve New York’s air quality, curb our dependency on fossil-fuel based energy sources, and create 'green' jobs while simultaneously leading to greater investment by homeowners, farms and businesses in facilities that will generate renewable energy power and allow them to sell their excess power back to the grid.” The State’s goal is to generate 25% of its electricity from renewable sources by 2015.

Allowing businesses to earn credit for unused energy produced by solar, wind and other renewable sources could result in substantial savings on energy costs for those businesses. For example, if a business generates solar power and only uses 25% of the solar power that it generates, that business can “sell” the extra 75% of unused solar power back to the electric company as a credit against its regular utility bill. By providing businesses with this ability to save on energy costs by generating renewable energy, the new law has the potential to open up the marketplace for renewable energy installations.
The new law is effective as of August 5, 2008.

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© 2008 Nissenbaum Law Group, LLC

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Master Electrician Licensing Regulations

Construction Law: New York Legislation: Licensing Requirements: New York legislators recently amended the County Law governing master electrician licensing in order to provide Dutchess County with the authority to establish a board of examiners for master electricians. Pursuant to this law, the board has the authority to promulgate regulations governing the licensing of master electricians. The County Master Electrician Licensing Law previously only provided this authority to Westchester County.

It is important to keep in mind that New York City already has administrative regulations in place that govern the licensing of master electricians and the performance of electrical work for buildings located in New York City. Specifically, the New York City Electric Code provides that any entity or sole proprietorship who engages in the business of providing electrical work should have at least one licensed master electrician affiliated with the business. Without limitation, to obtain a master electrician licensing, the regulations mandate that the individual pass certain examinations. In addition, the master electrician must be of a certain age and have certain years and/or hours of past experience in performing certain electrical work.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

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New Law for New York Crane Inspections

New York Legislation: Crane Inspections: In light of a number of recent crane accidents in New York, the State legislature has enacted a new law aimed at ensuring integrity in crane inspections. The law, which becomes effective November 1, 2008, has two different prongs: one aimed at someone impairing the inspection licensing process; and the other applicable to the licensed crane inspector himself.

The new law makes it a crime to impair “the integrity of a government licensing examination, when with the intent to obtain a benefit for himself, . . .” he engages in certain acts. These include the alteration of the applicant’s grade on the licensing exam; causing a false grade to be entered in the government registry; providing “answers, with an intent to wrongfully benefit another, to current questions on a pending government licensing examination”; or providing an applicant with a copy of the current test. In other words, the law has made it a felony to assist in cheating in the inspection licensing process.

The other new provision of the law is aimed at those who have already been licensed. That section provides for a civil penalty and revocation of a license for an inspector who willfully: fails to inspect a crane for which he submitted a report; falsifies an inspection report; makes material misstatements or omission on a report; or accepts a bribe. However, before the penalties can be assessed the inspector has the right to a “hearing on the merits” with regard to these allegations. The law specifically states that the civil penalty is not the exclusive remedy, and that it will not bar criminal prosecution.

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New York Legislature Amends Safety and Insurance Requirements for Construction, Excavation and Demolitions Operations

Construction Law:  The New York legislature amended the administrative code of the City of New York with respect to safety requirements during excavation and insurance obligations for construction or demolition operations.  The amendments were approved and made effective as of August 28, 2007.

Previously, distinctions were made based on whether or not the excavation was more or less than ten feet.  The new law applies equally to all excavations.  As amended, this regulation provides that whenever the safety of any adjoining building is or may be affected by an excavation, the person causing the excavation must provide safe support for the building, regardless of the depth of the excavation. To fulfill this duty, this person must, without limitation:

• Support the vertical load of the adjoining structure by proper foundations, underpinning or other equivalent means where the level of the foundations of the adjoining structure is at or above the level of the bottom of the new excavation;
• Support any increased vertical or lateral load on the existing adjoining structure by the new construction where the existing structure is below the level of the new construction; and
• Modify the foundation of the existing structure where the new construction will result in a decrease in the frost protection level for the existing structure such that it will fall below the established regulatory minimum.

The newly amended regulation also mandates that any person who obtains a permit for construction or demolition operations must, at his own expense, procure and maintain insurance to cover, for the duration of the operations, any and all adjacent property owners and their lawful occupants for all risks of loss, damage to property and injuries to or death of such persons arising out of the performance of the construction or demolition.

We therefore recommend that any individual or corporation undertaking construction, excavations or demolition operations in the City of New York make certain that they comply with the necessary support provisions and obtain proper insurance, in accordance with the amended regulations, prior to commencing operations.

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