On August 6, 2024, Massachusetts Governor Maura Healey signed the Affordable Homes Act (the Act) into law. The Act aims to counter the rising cost of housing in the commonwealth by implementing new policies and providing funding for the construction of affordable housing. New policies include:

  • A requirement that municipalities permit the construction of accessory dwelling units (ADUs) on the same parcel as a primary dwelling.
  • A requirement that municipalities permit the construction of single-family residences on previously unbuildable lots held in common ownership with an adjacent residential lot.
  • The creation of a commercial property conversion program to support the conversion of commercial space into housing or mixed-use developments.

The Act also unlocks over $5.1 billion in new funding for the renovation of public housing, construction of new affordable housing developments, and various sustainable and green housing initiatives.

The Act amends Massachusetts General Law chapter 40A, § 3, to prevent municipalities from requiring zoning variances for the construction or rental of ADUs on parcels zoned for single-family homes and prevents any requirement that ADUs be owner-occupied. Municipalities may still require that ADUs comply with requirements for site-plan review, bulk and height limits, setbacks, and short-term rental bans. Municipalities are permitted to require an additional parking space for ADUs, except if the ADU is located within a half-mile from any commuter rail station, subway station, ferry terminal, or bus station.

The Act also amends Massachusetts General Law, Chapter 40A, § 6, to allow the construction of single-family homes on residential lots that are held in common ownership with an adjoining residential lot. Under prior law, a municipality was permitted to treat adjoining residential lots held in common ownership as a single lot for zoning purposes. As a result, owners of such lots were prevented from building an additional home on the vacant lot, even if the lot would be buildable if not held in common ownership. The Act now permits the construction of homes on these lots if the lot conformed with certain zoning requirements at the time of recording; the lot is not less than 10,000 square feet and has at least 75 feet of frontage, and the lot is in a single-family zoning district. Homes built on these adjoining lots are limited to 1,850 square feet of heated living area with a minimum of three bedrooms. The Act prohibits these homes from being used as seasonal or short-term rentals.

The Act creates an office conversion program that will support the conversion of certain commercial buildings from commercial-use to residential- or mixed-use developments. The new program will allow developers to apply for a “qualified conversion project” certification. Completed qualified conversion projects will then be eligible to apply for a tax credit of up to 10% of the development cost for the project’s residential portion.

The Act authorizes $5.16 billion in new spending for affordable housing initiatives over the next five years. Included in this new funding is $2 billion for capital improvements to the Commonwealth’s public housing; $800 million for the Affordable Housing Trust Fund, which supports the construction and preservation of housing for people with incomes that do not exceed 110% of the area median income; and $275 million for initiatives that accelerate new housing strategies, support transit-oriented housing, and support the creation of sustainable multi-family housing.

The passage of the Act promises to significantly impact affordable housing construction in coming years. Owners, developers, and contractors are encouraged to review the Act to determine how best to take advantage of the new policies and funding made available under it. 

The state of Rhode Island recently filed a lawsuit against 13 companies that provided design, construction, and inspection services over the past ten years (the extent allowed by the applicable statute of limitations) to the Washington Bridge, which carries I-195 between East Providence and Providence. The bridge was abruptly closed in December 2023 following the discovery of alleged fractured steel tie-downs critical to the bridge’s stability and additional deterioration in cantilever beams throughout the bridge. Before the closure, approximately 90,000 vehicles per day traveled over the bridge.

The complaint alleges that the defendants, the majority of which are experienced, industry-leading firms in their respective fields, were negligent and breached their respective contracts with the State. The State contends that every company that worked on the bridge over the past ten years missed the serious structural conditions alleged. The lawsuit also claims that the State has suffered millions of dollars of damages since the bridge was closed and seeks indemnity and contribution from all defendants to the extent that the State may be liable to third parties in the future.

The State does not acknowledge any responsibility for any of the issues with the Washington Bridge despite having approved the original “one of a kind” design and first learning of potential problems with such design as far back as 1992. The Boston Globe reported that the State also hopes to avoid disclosing information regarding its responsibilities for the bridge, including a recently completed forensic analysis of the cause of the bridge failure. However, based on the allegations in the complaint, the lawsuit will likely open discovery of all Rhode Island Department of Transportation’s records related to the Washington Bridge back to its initial design in the mid-1960s. Such documents could undermine the broad allegations in the State’s complaint for the defendants who choose to fight rather than settle quickly.

The bridge will be demolished soon, and the recently issued initial solicitation to design and construct a new bridge has received no bids. This should come as no surprise, given the highly publicized and political nature of the lawsuit and the broad accusations against all the companies connected to the bridge in the past. Whatever the State hopes to recover in this lawsuit may be offset by the risk priced into the new project… if anyone ever bids on it.    

N.Y. Labor Law § 241(6) requires owners and contractors to provide reasonable and adequate protection and safety to persons employed at or lawfully frequenting a construction site. If a worker is injured on a construction site and establishes a violation of a specific and applicable Industrial Code regulation, both the owner and contractor will be held vicariously liable for the worker’s injury, without regard to their fault and even in the absence of control or supervision of the worksite. The Court of Appeals of New York recently addressed the broad scope of the Labor Law in the context of slipping hazards.

In Bazdaric v. Almah Partners, LLC, 41 N.Y.3d 310 (2024), the plaintiff, an injured painter, slipped and fell on a plastic covering placed over an escalator in an area he was assigned to paint. The plaintiff claimed that the plastic covering was a foreign substance for purposes of Industrial Code 12 NYCRR 23-1.7(d) because it was not part of the escalator. Industrial Code 12 NYCRR 23-1.7(d) states:

Slipping hazards. Employers shall not suffer or permit any employee to use a floor, passageway, walkway, scaffold, platform or other elevated working surface which is in a slippery condition. Ice, snow, water, grease and any other foreign substance which may cause slippery footing shall be removed, sanded or covered to provide safe footing.

The Court found that the plastic covering was a “foreign substance” under 12 NYCRR 23-1.7(d) after examining its relation to the work area and its uniform properties. The plastic covering was a “foreign substance” because it “was not a component of the escalator and was not necessary to the escalator’s functionality.” The plastic covering also had properties common to “ice, snow, water and grease,” materials that are slippery when in contact with an area where someone walks, seeks passage, or stands, and when the substance is present, would make it difficult if not impossible to use the work area safely.

The Court considered and rejected the “integral to the work” defense, which applies only when the dangerous condition is inherent to the task at hand. This defense applies to work assignments which, by their nature, are dangerous but still permissible, where the particular commands of the Industrial Code may not apply if they would make it impossible to conduct the work. It does not apply when a party’s negligence creates an avoidable danger without obstructing the work or imperiling the worker. In this case, the use of some covering was integral to the paint work, but the use of the specific plastic covering was not. The plastic covering created the slippery condition, which was avoidable without obstructing the work or endangering the worker because other types of coverings were available.

Notably, the concurring opinion identified a potential ambiguity in the Court’s holding. The majority’s opinion focused significant attention on whether the plastic covering was a foreign substance under 12 NYCRR 23-1.7(d) and determined such a foreign substance includes “any substance not part of the escalator,” rather than more narrowly considering it to be a substance that “shares the same qualities that make ‘ice, snow, water and grease’ hazardous when introduced into a qualifying work area.”

Below is an excerpt of an article published in ENR (Engineering News-Record) on August 7, 2024.

“The Massachusetts Legislature passed the state’s Prompt Pay Act 14 years ago to improve the downstream flow of money on most large-scale private construction projects. While the act established detailed protocols for administering applications for payment and other important construction phase processes, several questions about its interpretation and impact remained unanswered.

Over the years, I watched as a significant portion of the Massachusetts design and construction community either ignored the law’s exacting requirements or were unaware of their applicability. The first indication of how the act would be interpreted came in 2022, when the state appeals court decided Tocci Building Corp. v. IRIV Partners LLC. In that case, the court strictly construed the act. It held that an owner (and its agent) who failed to promptly advise the project’s general contractor of specific factual and legal reasons why it was withholding payment, coupled with a failure to certify that funds were being withheld in good faith, violated the law—making the contractor liable for the unpaid funds.

But Tocci left unanswered the question of whether a payor who innocently fails to comply with the act also loses its right to later argue that the payee is not entitled to the funds it seeks because, among other reasons, it performed defective work. These questions are also important to design professionals who, while performing construction phase services for an owner, may fail to strictly comply with the act’s requirements.

Massachusetts’ highest tribunal, the Supreme Judicial Court, answered that question this past June in Business Interiors Floor Covering Business Trust v. Graycor Construction Co. Inc., et.al.”

The Court’s analysis credited the amicus brief I wrote on behalf of my client and the act’s original author, the Associated Subcontractors of Massachusetts, Inc. Read the article.

A common question from clients, when a dispute arises on a construction project, is whether they can recover their attorney’s fees from the other side if they pursue a case and win. More often than not, such fees are not recoverable. As a general rule (commonly known as the “American Rule”), each party to a dispute must bear their own attorney’s fees unless there is some statutory provision or contractual agreement between the parties allowing otherwise. Since most construction disputes involve claims for breach of contract and/or negligence, no realistic statutory provision often allows for attorney’s fees. Many construction contracts do not typically provide a prevailing party the right to collect attorney’s fees from the other side. However, even if the American Rule applies, there may be another path to recovering attorney’s fees if the parties agree to arbitrate their dispute under the American Arbitration Association (AAA) rules.

The AAA Construction Industry Arbitration Rules allow parties another opportunity to put attorney’s fees back on the table when faced with the American Rule.  Rule R-49 Scope of Award, subsection (d) allows an Arbitrator to include “an award of attorneys’ fees if all parties have requested such an award or it is authorized by law or their arbitration agreement.” Attorney’s fees are possible if all parties request them, even when such an award is not authorized by law or in the underlying construction agreement. It’s unclear whether Rule R-49 requires the parties to formally agree to allow the arbitrator to award attorney’s fees to the winning party or if both parties simply need to request attorney’s fees in their respective filings. Rule R-49 Scope of Award, subsection (c) also authorizes an Arbitrator to assess administrative fees, arbitration expenses, and the arbitrator’s compensation against the parties in such amounts as the arbitrator determines is appropriate. If the parties in a construction dispute have agreed to arbitrate under AAA rules, the possibility of recovering attorney’s fees and other costs under the AAA rules may be enough to persuade a client wary of incurring potentially large legal costs into pursuing a claim in the first place.

In NASDI, LLC v. Skanska Koch Inc. Kiewit Infrastructure Co. (JV), 2024 WL 1270188 (2d Cir. Mar. 26, 2024), the U.S. Court of Appeals for the Second Circuit affirmed the District Court’s grant of summary judgment dismissing a subcontractor’s delay claim against a general contractor on a public project in New York state.  The Court enforced a typical no-damages-for-delay provision to bar the subcontractor’s breach of contract claim.  The no-damages-for-delay provision in the subcontract at issue provided:

NO DAMAGE FOR DELAY. Except as otherwise provided …, Subcontractor agrees that it shall have no Claim against Contractor for any loss or damage it may sustain through delay, disruption, suspension, stoppage, interference, interruption, compression, or acceleration of Subcontractor’s Work (‘Delay Damages’) caused or directed by Contractor for any reason, and that all such Claims shall be fully compensated for by Contractor’s granting Subcontractor such time extensions as it is entitled to as a result of any of the foregoing.

The Second Circuit enforced this clause under well-established New York state law.  The Court also examined two exceptions to the enforcement of no-damages-for-delay provisions previously recognized by New York state law, which the Court made clear involve a heavy burden on plaintiffs to successfully invoke.  The subcontractor in NASDI sought to avoid the clause by asserting that the delays on the subject project were (1) uncontemplated and (2) so unreasonable that they constitute an intentional abandonment of the contract.

In response to the subcontractor’s claim that the delay on the project was uncontemplated, the Court recognized a total delay to the project of 19 months but found that such a delay was not uncontemplated because New York courts have recognized that lengthy delays are generally foreseeable on complex construction projects.  The Court cited cases where no-damages-for-delay clauses were enforced against claims for delays of 20 to 32 months. Thus, without some other extenuating circumstances, the length of the delay alone will most likely not defeat a no-damages-for-delay provision under the uncontemplated delay exception.

The Court followed the same reasoning in rejecting the subcontractor’s second claim that the delays were so unreasonable that they constitute an intentional abandonment of the contract.  The length of the delay alone was insufficient to make them unreasonable under New York law.  The subcontractor also claimed a cardinal change had occurred on the project but failed to provide sufficient evidence to support such a claim.

A no-damages-for-delay provision provides significant protection against delay claims under New York law.  In addition to the two exceptions addressed in this case, New York law recognizes two additional exceptions: (1) delays caused by bad faith or willful, malicious, or grossly negligent conduct and (2) delays resulting from the breach of a fundamental obligation of the contract.  However, as the NASDI Court made clear, exceptions to no-damages-for-delay provisions are rarely successful.  When faced with a no-damages-for-delay provision under New York law, a subcontractor would be well-advised to include in its claim time-related damages arising from a cause other than the delay covered in such provision. 

This post was co-authored by Abby M. Warren and Christohper A. Costain who are members of Robinson+Cole’s Labor, Employment, Benefits + Immigration Group.

In June 2024, the Equal Employment Opportunity Commission (EEOC) issued guidance tailored to the construction industry concerning harassment in the workplace or at the jobsite. The guidance is important for construction industry leaders and employers to understand how to prevent and remedy harassment in the workplace — more than a third of all EEOC discrimination charges filed between 2019 and 2023 asserted harassment. The guidance represents the EEOC’s latest effort in executing its Strategic Enforcement Plan for Fiscal Years 2024 to 2028, which, in part, focuses on combatting systemic harassment and eliminating barriers in recruitment and hiring, particularly for underrepresented groups in certain industries, including women in construction, through the EEOC’s enforcement efforts. In this article, we highlight key principles and practices from this guidance

Leadership and Accountability

          The guidance reiterates that consistent and demonstrated leadership is critical to creating and maintaining a workplace culture where harassment is unacceptable and strictly prohibited. Worksite leaders, including project owners, crew supervisors, and union stewards, are each expected to regularly communicate that harassment is intolerable through several suggested efforts.

          Project owners and general contractors, who play a vital role in oversight and project execution, are expected to be leaders in creating a culture of collaboration and professionalism. General contractors are expected to share critical information regarding their expectations of a harassment-free workplace with subcontractors and to refer those who may require assistance complying with anti-discrimination and harassment laws to the EEOC’s various resources for employers. To that end, the EEOC recommends that anti-harassment policies be included in contractor bids for projects and in agreements between general contractors and subcontractors so that clear expectations of a harassment-free jobsite are set before a project begins.

          General contractors are encouraged to engage in the following harassment-prevention measures:

          • Determine the scope and substance of training for the project.
          • Monitor and enforce subcontractor compliance with anti-harassment policies.
          • If applicable, coordinate with unions, tradeswomen organizations, and apprenticeship programs to form a committee tasked with identifying and preventing harassment and collaborating to develop solutions.
          • Verify that subcontractors are implementing and enforcing anti-harassment policies and monitoring the effectiveness of subcontractor efforts to mitigate harassment.
          • Assist subcontractors in addressing and finding solutions to harassment concerns, especially when harassment occurs between workers from different employers.
          • When circumstances warrant, work with a subcontractor’s management or site supervision team to remove harassers from the worksite.
          • As appropriate, acknowledge and thank workers for preventing or addressing workplace harassment on behalf of themselves or others.

          General contractors are also encouraged to solicit and share feedback (including through anonymous surveys) from workers at the jobsite regarding the efficacy of the collective anti-harassment effort to remedy shortcomings or reiterate expectations.

          Comprehensive and Clear Harassment Policies

            The guidance recommends that robust and clear anti-harassment policies be prepared with input by the supervisors and managers responsible for implementing them. Employers in the construction industry should also consider soliciting feedback from workers at all levels to ensure that the policies are clear and understandable, that policies are consistent with workers’ native languages, and that they routinely communicate about the relevant policies. Such policies should be accessible and posted in a central and accessible location. The EEOC also encourages general contractors to make their own anti-harassment policies or a model policy available for subcontractors to adopt. 

            An Effective and Accessible Harassment Complaint System

              Generally, the complaint procedure is a crucial aspect of any harassment policy. The EEOC recognizes the complexity of a multiple employer/entity environment that is typical in the construction industry and recommends that while each onsite employer may have its own complaint reporting procedure, the general contractor of the construction project should make supplemental complaint channels available for all workers regardless of their employer of record. Further, general contractors should coordinate such complaint procedures across projects and subcontractors. The EEOC guidance includes several best practices about complaint procedures. 

              Effective Harassment Training

                In its guidance, the EEOC recommends that comprehensive, interactive, and live (if possible) anti-harassment training be provided to all workers with input from jobsite leaders and other workers at various project seniority levels to ensure that the training is tailored to the workforce and the dynamics of the worksite. The guidance suggests that the training include industry-specific topics, examples, and risk factors in the construction industry.

                Construction Industry Harassment Risk Factors

                The EEOC’s guidance identifies certain construction industry risk factors and provides that employers should remain extra vigilant of potential harassment as a result:

                • A homogenous workforce (e.g., it states that women comprise just 11% of the construction workforce even though they represent 47% of the labor force. African American workers made up nearly 13% of the labor force in 2023 but represented less than 7% of the construction workforce).
                • Pressure to conform to traditional stereotypes.
                • Decentralized workplaces.
                • Worksites with multiple employers present.
                • The cyclical, project-based work of the construction industry.

                ***

                The issuance of this guidance may signal an increase in the EEOC’s enforcement efforts in the construction industry. Therefore, employers in the construction industry should consider reviewing the principles and best practices in the guidance in comparison to their own policies and practices and implementing changes with the assistance of competent counsel. 

                On June 6, 2024, Connecticut Governor Ned Lamont signed into law Public Act 24-151 (H.B. 5524) (Bill 5524). Bill 5524 authorized and adjusted bonds of the state and provisions related to state and municipal tax administration, as well as addressed school building projects. Notably, Bill 5524 removed the ban on construction managers self-performing work on public school construction projects, effective July 1, 2024. Allowing construction managers to self-perform certain portions of the work, such as general trades, subject to the standard bidding requirements, is a common industry practice that, theoretically, reduces total project costs by reducing the amount of subcontracted work. However, proponents of banning self-performance argue that construction managers have too much information to bid fairly and competitively.

                On July 1, 2024, Governor Lamont signed into law S.B. 501 (Bill 501), which was brought to the Connecticut General Assembly floor during the June 2024 Special Session. Bill 501 is an omnibus bill that addresses motor vehicle assessments for property taxation, innovation banks, the interest on certain tax underpayment, the assessment on insurers, the South-Central Connecticut Regional Water Authority charter, specific state historic preservation officer procedures, and, again, school building projects. Due to political fallout, Bill 501 reinstates the ban on construction managers self-performing work on public school construction projects. By signing Bill 501 into law on July 1, 2024, the same day that the allowance of self-performance in Bill 5524 was to be made effective, Governor Lamont and the state legislature ensured that no construction manager may self-perform work on public school construction projects.

                Earlier this year, the Associated Subcontractors of Massachusetts hired Robinson+Cole attorney Joseph Barra to submit an amicus brief to the Massachusetts Supreme Judicial Court for consideration in the appeal pending before it in Business Interiors Floor Covering Business Trust v. Graycor Construction  Co., Inc. In its June 17, 2024 decision in that case, the Court interpreted the Massachusetts Prompt Pay Act, which applies to private construction projects and “requires that parties to a construction contract approve or reject payment within” an allotted time period and in compliance with certain procedures else such payments will be deemed approved. Two years ago, the Massachusetts Appeals Court, in Tocci Building  Corp. v. IRIV Partners, LLC , decided that an owner who fails to timely advise its general contractor of the reasons as to why it was withholding payment, coupled with failure to certify that such funds are being withheld in good faith, violates the Prompt Pay Act and makes the owner liable for funds owed.[1] However, the Tocci Building Court left open the question of whether one who violates the Prompt Pay Act forfeits its substantive defenses to non-payment, such as fraud, defective work, or breach of material obligation of the contract.

                The facts of Business Interiors involve a general contractor, Graycor, which subcontracted Business Interiors to perform certain flooring work for a movie theatre in Boston’s North End. When Graycor failed to formally approve, reject, or certify, in good faith, its withholding of payment of three of Business Interiors’ applications for payment as prescribed by the Prompt Pay Act, Business Interiors brought suit alleging, among other things, breach of contract. Business Interiors then moved for summary judgement arguing that Graycor’s failure to comply with the Act rendered it liable for the unpaid invoices.

                Graycor argued to the Court that it had a common law defense (of impossibility, due to the project’s shut-down during the pandemic), and that the Prompt Pay Act should not preclude a general contractor from asserting common-law defenses to a breach of contract claim based on failure to pay. Noting that the Prompt Pay Act does not address common-law defenses, the Court found that it does not preclude all common-law defenses categorically. The Act does, however, require that payment of approved (or deemed approved) invoices must be made before such defenses can be raised. And because Graycor had not made payment before attempting to raise its defenses in litigation, the Prompt Pay Act did not permit the trial court to consider Graycor’s defenses to Business Interiors’ claims.

                Practically speaking, the Court’s decision will allow parties to a construction contract to maintain the flow of project funds necessary to keep the project moving and compels the parties who dispute payment to raise those objections in a timely matter in accordance with the Prompt Pay Act.

                This post was authored by Erica Whaley, candidate juris doctor, Roger Williams University School of Law. Erica is not yet admitted to practice law.

                [1] Attorney Barra also submitted an amicus brief in Tocci Building.

                The Connecticut Appellate Court recently provided guidance on what does not constitute property damage under a typical contractor’s Commercial General Liability (CGL) insurance policy in Westchester Modular Homes of Fairfield County, Inc. v. Arbella Protection Ins. Co., 224 Conn App. 526 (2024). In this case, the contractor defended construction defect claims brought by an owner and then sued its insurer to recover $500,000 in defense costs for failing to provide a defense under the contractor’s policy. In Connecticut, an insurer is obligated to provide a defense based on what is alleged in a complaint and if it has actual knowledge of any facts establishing a reasonable possibility of coverage. The contractor provided extrinsic evidence for two defects claimed by the owner: (1) windows were installed improperly such that water was collecting and will continue to collect in the window soffit areas and eventually rot the wall, and (2) the vapor barrier was not installed in the second-floor ceiling which will result in water condensation and water damage to the roof structure if not remedied.

                The insurer relied on typical provisions included in most CGL policies. The insurer has no duty to defend the insured against any suit seeking damages for property damage to which the insurance does not apply. The term “property damage” is defined as “physical injury to tangible property, including all resulting loss of use of that property.” Under well-established Connecticut law, the phrase “physical injury” unambiguously connotes damage to tangible property, causing an alteration in appearance, shape, color, or some other material dimension. It is also well-established that claims for property damage caused by defective work are covered under a CGL policy but claims for repair of the defective work itself are not. The insurer denied any duty to defend because no coverage was triggered under the liability policy. Both parties moved for summary judgment.

                The Appellate Court affirmed the superior court’s decision to grant summary judgment in favor of the insurer. The Appellate Court confirmed that the contractor failed to allege that construction defects caused damage to other non-defective property and rejected the contractor’s extrinsic evidence of potential future damage from the water intrusion. Allegations that a contractor’s faulty workmanship could lead to future property damage if not remedied do not constitute a claim for property damage covered under the contractor’s CGL insurance policy. Nor is notification of the mere presence of water, without some corresponding physical damage, sufficient to provide an insurer with actual knowledge of the facts establishing a reasonable possibility of coverage required to trigger an insurance company’s duty to defend.