S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  3287

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                             March 13, 2009
                               ___________

Introduced  by  Sen. ADDABBO -- 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  prompt
  payment of construction contracts

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The general business law is amended by adding a new section
756-f to read as follows:
  S 756-F. PROMPT PAYMENT. 1. AS USED IN THIS SECTION:
  (A) "BILLING" MEANS, IN ACCORDANCE WITH THE TERMS AND  DEFINITIONS  OF
THE  APPLICABLE  CONTRACT,  ANY PERIODIC PAYMENT, FINAL PAYMENT, WRITTEN
APPROVED CHANGED ORDER OR REQUEST FOR RELEASE OF RETAINAGE.
  (B) "PRIME CONTRACTOR" MEANS A PERSON WHO CONTRACTS WITH AN  OWNER  TO
IMPROVE REAL PROPERTY.
  (C) "IMPROVE" MEANS: TO BUILD, ALTER, REPAIR OR DEMOLISH ANY STRUCTURE
UPON, CONNECTED WITH, ON OR BENEATH THE SURFACE OF ANY REAL PROPERTY; TO
EXCAVATE,  CLEAR,  GRADE,  FILL  OR  LANDSCAPE  ANY  REAL  PROPERTY;  TO
CONSTRUCT DRIVEWAYS AND PRIVATE ROADWAYS ON REAL  PROPERTY;  TO  FURNISH
CONSTRUCTION  RELATED  MATERIALS, INCLUDING TREES AND SHRUBBERY, FOR ANY
OF THE ABOVE PURPOSES; OR TO PERFORM ANY LABOR UPON A STRUCTURE, INCLUD-
ING ANY DESIGN, PROFESSIONAL OR SKILLED SERVICES FURNISHED BY AN  ARCHI-
TECT,  ENGINEER, LAND SURVEYOR OR LANDSCAPE ARCHITECT LICENSED OR REGIS-
TERED PURSUANT TO THE LAWS OF THIS STATE.
  (D) "STRUCTURE" MEANS ALL OR ANY PART OF A BUILDING AND OTHER IMPROVE-
MENTS TO REAL PROPERTY.
  (E) "OWNER" MEANS ANY PERSON, INCLUDING  ANY  PUBLIC  OR  GOVERNMENTAL
ENTITY,  WHO HAS AN INTEREST IN THE REAL PROPERTY TO BE IMPROVED AND WHO
HAS CONTRACTED WITH A PRIME CONTRACTOR FOR SUCH IMPROVEMENT TO BE  MADE.
"OWNER"  SHALL  BE  DEEMED TO INCLUDE ANY SUCCESSOR IN INTEREST OR AGENT
ACTING ON BEHALF OF AN OWNER.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04749-01-9

              

S. 3287                             2

  (F) "PRIME RATE" MEANS THE BASE  RATE  ON  CORPORATE  LOANS  AT  LARGE
UNITED STATES MONEY CENTER COMMERCIAL BANKS.
  (G)  "REAL PROPERTY" MEANS THE REAL ESTATE THAT IS IMPROVED UPON OR TO
BE IMPROVED UPON.
  (H) "SUBCONTRACTOR" MEANS ANY PERSON WHO  HAS  CONTRACTED  TO  FURNISH
LABOR,  MATERIALS  OR OTHER SERVICES TO A PRIME CONTRACTOR IN CONNECTION
WITH A CONTRACT TO IMPROVE REAL PROPERTY.
  (I) "SUBSUBCONTRACTOR" MEANS ANY PERSON WHO HAS CONTRACTED TO  FURNISH
LABOR, MATERIALS OR OTHER SERVICES TO A SUBCONTRACTOR IN CONNECTION WITH
A CONTRACT TO IMPROVE REAL PROPERTY.
  2.  (A)  IF  A  PRIME  CONTRACTOR HAS PERFORMED IN ACCORDANCE WITH THE
PROVISIONS OF A CONTRACT WITH THE OWNER AND THE BILLING FOR THE WORK HAS
BEEN APPROVED AND CERTIFIED BY  THE  OWNER  OR  THE  OWNER'S  AUTHORIZED
APPROVING  AGENT,  THE  OWNER  SHALL  PAY  THE  AMOUNT  DUE TO THE PRIME
CONTRACTOR FOR EACH PERIODIC PAYMENT, FINAL PAYMENT OR RETAINAGE  MONIES
NOT  MORE  THAN THIRTY CALENDAR DAYS AFTER THE BILLING DATE, WHICH FOR A
PERIODIC BILLING SHALL BE THE PERIODIC BILLING  DATE  SPECIFIED  IN  THE
CONTRACT. THE BILLING SHALL BE DEEMED APPROVED AND CERTIFIED TWENTY DAYS
AFTER THE OWNER RECEIVES IT UNLESS THE OWNER PROVIDES, BEFORE THE END OF
THE  TWENTY-DAY  PERIOD,  A WRITTEN STATEMENT OF THE AMOUNT WITHHELD AND
THE REASON FOR WITHHOLDING PAYMENT, EXCEPT THAT IN THE CASE OF A  PUBLIC
OR GOVERNMENTAL ENTITY THAT REQUIRES THE ENTITY'S GOVERNING BODY TO VOTE
ON  AUTHORIZATIONS FOR EACH PERIODIC PAYMENT, FINAL PAYMENT OR RETAINAGE
MONIES, THE AMOUNT DUE MAY BE APPROVED AND CERTIFIED AT THE NEXT  SCHED-
ULED  PUBLIC MEETING OF THE ENTITY'S GOVERNING BODY, AND PAID DURING THE
ENTITY'S SUBSEQUENT PAYMENT CYCLE,  PROVIDED  THIS  EXCEPTION  HAS  BEEN
DEFINED IN THE BID SPECIFICATIONS AND CONTRACT DOCUMENTS.
  (B) IF A SUBCONTRACTOR OR SUBSUBCONTRACTOR HAS PERFORMED IN ACCORDANCE
WITH THE PROVISIONS OF ITS CONTRACT WITH THE PRIME CONTRACTOR OR SUBCON-
TRACTOR AND THE WORK HAS BEEN ACCEPTED BY THE OWNER, THE OWNER'S AUTHOR-
IZED  APPROVING  AGENT,  OR THE PRIME CONTRACTOR, AS APPLICABLE, AND THE
PARTIES HAVE NOT OTHERWISE AGREED IN WRITING, THE PRIME CONTRACTOR SHALL
PAY TO ITS SUBCONTRACTOR AND THE SUBCONTRACTOR SHALL PAY TO ITS  SUBSUB-
CONTRACTOR  WITHIN  TEN  CALENDAR  DAYS  OF THE RECEIPT OF EACH PERIODIC
PAYMENT, FINAL PAYMENT OR RECEIPT OF RETAINAGE MONIES, THE  FULL  AMOUNT
RECEIVED  FOR THE WORK OF THE SUBCONTRACTOR OR SUBSUBCONTRACTOR BASED ON
THE WORK  COMPLETED  OR  THE  SERVICES  RENDERED  UNDER  THE  APPLICABLE
CONTRACT.  IN  THE  CASE  OF  ONGOING WORK ON THE SAME PROJECT FOR WHICH
PARTIAL PAYMENTS ARE MADE, THE AMOUNT OF MONEY  OWED  FOR  WORK  ALREADY
COMPLETED SHALL ONLY BE PAYABLE IF THE SUBCONTRACTOR OR SUBSUBCONTRACTOR
IS PERFORMING TO THE SATISFACTION OF THE PRIME CONTRACTOR OR SUBCONTRAC-
TOR, AS APPLICABLE.
  (C) IF A PAYMENT DUE PURSUANT TO THE PROVISIONS OF THIS SECTION IS NOT
MADE  IN  A  TIMELY MANNER, THE DELINQUENT PARTY SHALL BE LIABLE FOR THE
AMOUNT OF MONEY OWED UNDER THE CONTRACT, PLUS INTEREST AT A  RATE  EQUAL
TO  THE  PRIME  RATE PLUS ONE PERCENT, BUT IN NO EVENT SHALL INTEREST BE
LESS THAN TWELVE PERCENT. INTEREST  ON  AMOUNTS  DUE  PURSUANT  TO  THIS
SECTION  SHALL BE PAID TO THE PRIME CONTRACTOR, SUBCONTRACTOR OR SUBSUB-
CONTRACTOR FOR THE PERIOD  BEGINNING  ON  THE  DAY  AFTER  THE  REQUIRED
PAYMENT  DATE  AND  ENDING ON THE DAY ON WHICH THE CHECK FOR PAYMENT HAS
BEEN DRAWN. THE PROVISIONS OF THIS PARAGRAPH  SHALL  NOT  APPLY  TO  ANY
TRANSPORTATION  PROJECT IF THAT PROJECT RECEIVES FEDERAL FUNDING AND THE
AWARDING AGENCY HAS BEEN NOTIFIED BY THE FEDERAL GOVERNMENT THAT IT WILL
BE CLASSIFIED AS A HIGH RISK GRANTEE.
  (D) A PRIME CONTRACTOR, SUBCONTRACTOR OR SUBSUBCONTRACTOR  MAY,  AFTER
PROVIDING  SEVEN  CALENDAR  DAYS' WRITTEN NOTICE TO THE PARTY FAILING TO

S. 3287                             3

MAKE THE  REQUIRED  PAYMENTS,  SUSPEND  PERFORMANCE  OF  A  CONSTRUCTION
CONTRACT  WITHOUT  PENALTY  FOR  BREACH  OF  CONTRACT, UNTIL THE PAYMENT
REQUIRED PURSUANT TO THIS SECTION IS MADE, IF  THE  CONTRACTOR,  SUBCON-
TRACTOR OR SUBSUBCONTRACTOR: IS NOT PAID AS REQUIRED BY THIS SECTION; IS
NOT  PROVIDED  A WRITTEN STATEMENT OF THE AMOUNT WITHHELD AND THE REASON
FOR THE WITHHOLDING; AND THE PAYOR IS NOT ENGAGED IN A GOOD FAITH EFFORT
TO RESOLVE THE REASON FOR THE WITHHOLDING. THE PROVISIONS OF THIS  PARA-
GRAPH  SHALL  NOT  APPLY  TO  ANY TRANSPORTATION PROJECT IF THAT PROJECT
RECEIVES FEDERAL FUNDING AND THE APPLICATION  OF  THIS  PROVISION  WOULD
JEOPARDIZE  THE  FUNDING  BECAUSE  THE  OWNER COULD NOT MEET THE FEDERAL
STANDARDS FOR FINANCIAL MANAGEMENT SYSTEMS.
  (E)(1) THE RIGHTS, REMEDIES OR PROTECTIONS PROVIDED  BY  THIS  SECTION
FOR  PRIME CONTRACTORS, SUBCONTRACTORS AND SUBSUBCONTRACTORS SHALL BE IN
ADDITION TO OTHER REMEDIES PROVIDED PURSUANT TO ANY OTHER  PROVISION  OF
LAW.  TO  THE EXTENT THAT THE PROVISIONS OF THIS SECTION PROVIDE GREATER
RIGHTS, REMEDIES OR PROTECTIONS FOR  PRIME  CONTRACTORS,  SUBCONTRACTORS
AND  SUBSUBCONTRACTORS  THAN  OTHER PROVISIONS OF LAW, THE PROVISIONS OF
THIS SECTION SHALL SUPERSEDE THOSE OTHER PROVISIONS.
  (2) NO PROVISION OF THIS SECTION SHALL BE CONSTRUED AS RESTRICTING  IN
ANY WAY THE RIGHTS OR REMEDIES PROVIDED BY ANY OTHER APPLICABLE STATE OR
FEDERAL  LAW  TO  AN OWNER WHO IS A RESIDENT HOMEOWNER OR PURCHASER WITH
RESPECT TO THE REAL PROPERTY BEING IMPROVED.
  (F) ALL CONTRACTS FOR THE IMPROVEMENT OF STRUCTURES ENTERED INTO AFTER
THE EFFECTIVE DATE OF THIS SECTION BETWEEN  OWNERS,  PRIME  CONTRACTORS,
SUBCONTRACTORS  OR SUBSUBCONTRACTORS SHALL PROVIDE THAT DISPUTES REGARD-
ING WHETHER A PARTY HAS FAILED TO MAKE  PAYMENTS  REQUIRED  PURSUANT  TO
THIS SECTION MAY BE SUBMITTED TO A PROCESS OF ALTERNATIVE DISPUTE RESOL-
UTION.  ALTERNATIVE  DISPUTE  RESOLUTION PERMITTED BY THIS SECTION SHALL
NOT APPLY TO DISPUTES CONCERNING THE BID SOLICITATION OR AWARD  PROCESS,
OR  TO  THE  FORMATION OF CONTRACTS OR SUBCONTRACTS. IN ANY CIVIL ACTION
BROUGHT TO COLLECT PAYMENTS PURSUANT TO THIS SECTION, THE  ACTION  SHALL
BE CONDUCTED WITHIN THIS STATE AND THE PREVAILING PARTY SHALL BE AWARDED
REASONABLE COSTS AND ATTORNEY FEES.
  S  2.  This  act shall take effect immediately, but shall not apply to
contracts for the improvement of structures  entered  into  before  such
effective date.