Four New York State trade associations representing heavy construction contractors are suing the state over Gov. David Paterson�s announcement in March that the New York Dept. of Transportation would halt payments on all statewide capital construction projects not funded through federal stimulus dollars.
The suit, filed on April 16 in state Supreme Court, alleges that the state has violated construction contracts with hundreds of contractors working highway and bridge jobs by requiring them to either continue working without payment or stop working altogether. According to the suit, any firms deciding to stop work could themselves be charged with breach of contract, jeopardizing their chance to bid on future state jobs.
A statement issued by the coalition of associations – which includes the General Contractors Association of New York, the Associated General Contractors of New York State, the Construction Industry Council and the Long Island Contractors Association – accuses Paterson and the DOT of putting the construction industry unwittingly “in the crossfire” between Paterson and lawmakers as they attempt to hammer out a budget.
The suit, according to coalition spokesman, Ross Pepe, president of the Construction Industry Council, “seeks, ultimately, to make whole the construction companies economically harmed by this illegal pay freeze [but] it will not restart crucial work on our state’s infrastructure.”
On March 30 the state enacted an emergency spending measure that ran from April 1 through April 11 that did not include funds for contractors. That measure was extended on April 12 and a third time on April 19. An estimated 500 construction projects across the state have been affected by the freeze.
A DOT spokeswoman declined to comment on the lawsuit or the allegations made by the coalition.
In a memo sent out to contractors after they were informed that payments would be stopped starting April 1, the DOT said, “The Department has not issued a stop work order. Contractors and consultants will need to assess the level of risk they can and/or are willing to take on during this … emergency period.”
“These contractors are being used as pawns right now but in a very difficult way,” says former New York Lt. Gov. Al DelBello, the attorney for the coalition. “They have jobs underway that cost them enormous amounts of money every day and they’ve been told that the state won’t pay them for the work they’re doing. Meanwhile, there’s no stop work order. They need to either allow them to stop working with no penalty or they need to get paid. You can’t leave them in this abyss.”
Acting DOT Commissioner Stanley Gee and the department’s CFO, Ronald Epstein, are the two defendants named in the suit. But DelBello says it’s Paterson that has put the contractors in an untenable situation.
“I don’t think the governor fully understands the predicament he’s put these contractors in,” he says.
Paterson’s office did not immediately return messages seeking comment.
Arguments are scheduled to begin on April 30th.
