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 capital construction projects not funded by federal stimulus dollars.
The suit, filed on April 16 in state Supreme Court, alleges the state has violated construction contracts with hundreds of contractors on highway and bridge jobs by requiring them either to continue working without payment or to stop altogether. The suit claims that any firms that stop work could 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 governor feels that by having the contracting industry upset, pressure will be applied to the Legislature to acquiesce to his desire to get a budget done,” says coalition spokesman Ross Pepe, president of the Construction Industry Council. “It’s up to the Legislature to work [the budget] out, but it’s irresponsible to use contractors as bargaining chips.”
Paterson’s office did not return messages seeking comment.
On March 30, the state enacted an emergency spending measure, covering April 1 through April 11, but it did not include funds for contractors. The measure was extended first on April 12 and again 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 on April 1, the DOT said, “The Dept. 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.”
“The state needs to either allow the contractors to stop working with no penalty, or they need to get paid,” says former New York Lt. Gov. Al DelBello, the attorney for the coalition. “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 is Paterson who 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.
Arguments are scheduled to begin on April 30.
