{"id":901063,"date":"2023-04-18T15:42:38","date_gmt":"2023-04-18T21:42:38","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901063"},"modified":"2023-04-18T15:42:43","modified_gmt":"2023-04-18T21:42:43","slug":"pay-if-paid-provision-no-lien-rights","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/pay-if-paid-provision-no-lien-rights\/","title":{"rendered":"NY Appellate Court Enforces Pay-If-Paid Provision Against Party With No Lien Rights"},"content":{"rendered":"\n<p>Faith Simms | <a href=\"https:\/\/www.lexology.com\/library\/detail.aspx?g=69d381ec-795b-479e-aaf7-811ca0a911dd&amp;utm_source=Lexology+Daily+Newsfeed&amp;utm_medium=HTML+email+-+Body+-+General+section&amp;utm_campaign=Lexology+subscriber+daily+feed&amp;utm_content=Lexology+Daily+Newsfeed+2023-04-13&amp;utm_term=\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Troutman Pepper<\/a><\/p>\n\n\n\n<p><strong><em>Entech Engineering, P.C. v. Dewberry Engineers, Inc.<\/em><\/strong><strong>, 204 A.D.3d 467, 167 N.Y.S.3d 55 (1st Dep\u2019t 2022)<\/strong><\/p>\n\n\n\n<p>The New York Supreme Court Appellate Division recently affirmed a ruling enforcing a pay-if-paid provision.<\/p>\n\n\n\n<p>Defendant Dewberry Engineers, Inc. (Dewberry) contracted with the New York City Economic Development Corporations\u2019 Build-It- Back Hurricane Sandy Program to inspect homes for structural, asbestos, and lead paint issues. Dewberry retained Entech Engineering PC (Entech) to perform pre-construction lead paint inspections of homes. The subcontract contained a <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/pay-if-paid-clauses-virginia-joins-nc-sc\/\" target=\"_blank\" rel=\"noreferrer noopener\">pay-if-paid clause<\/a> that made the city\u2019s payment to Dewberry a condition precedent to Dewberry\u2019s obligation to pay Entech.<\/p>\n\n\n\n<p>Eventually, Dewberry terminated Entech. Entech sued to recover damages based on three unpaid invoices, including a cause of action for foreclosure on a public improvement lien. Despite a Virginia choice-of-law clause in the subcontract, Entech argued New York law applied, and the enforcement of the pay-if-paid provision violated New York public policy. The lower court dismissed Entech\u2019s cause of action for foreclosure on a public improvement lien, concluding that the pay-if-paid provision was enforceable under both New York law and then-existing Virginia law.<\/p>\n\n\n\n<p>The New York Supreme Court Appellate Division considered whether that conclusion was in error. The Appellate Division reiterated the general rule that&nbsp;<em>if<\/em>&nbsp;a subcontractor has a right to file a lien under New York\u2019s lien law, a pay-if paid clause \u201cforcing the subcontractor to assume the risk that the owner will fail to pay the general contractor is void and unenforceable against public policy.\u201d<\/p>\n\n\n\n<p>Here, Entech had no lien law rights. The lower court had dismissed its cause of action for foreclosure on a public improvement lien. Entech argued that it nevertheless had lien rights because it performed lead paint inspections with the consent of the private homeowners, and the lack of any contractual relationship with those homeowners did not bar it from filing a private mechanics\u2019 lien. But the Appellate Division concluded that home lead inspections do not constitute \u201clabor for the improvement of real property\u201d subject to a private mechanics\u2019 lien. Without any impediments to enforce the pay-if paid clause, the Appellate Division affirmed the decision.<\/p>\n\n\n\n<p><strong>NOTE:<\/strong>\u00a0Approximately 10 days after the court rendered this opinion, the Virginia General Assembly passed a bill banning pay-if-paid clauses in public and private construction contracts. The law requires that any construction contract between a general contractor and subcontractor include a provision obligating the higher-tier contractor to pay the lower-tier contractor within 45 days of satisfactory completion of the subcontract work or seven days after the higher tier contractor\u2019s receipt of payment for the subcontract work from the owner \u2014 which ever date is the earlier. The opinion above thus has no bearing on Virginia\u2019s current law.<\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Faith Simms | Troutman Pepper Entech Engineering, P.C. v. Dewberry Engineers, Inc., 204 A.D.3d 467, 167 N.Y.S.3d 55 (1st Dep\u2019t 2022) The New York Supreme Court Appellate Division recently affirmed a ruling enforcing a pay-if-paid provision. Defendant Dewberry Engineers, Inc. (Dewberry) contracted with the New York City Economic Development Corporations\u2019 Build-It- Back Hurricane Sandy Program&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/pay-if-paid-provision-no-lien-rights\/\">Continue reading <span class=\"screen-reader-text\">NY Appellate Court Enforces Pay-If-Paid Provision Against Party With No Lien Rights<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224,303,7568],"class_list":["post-901063","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","tag-new-york","tag-pay-if-paid-clause","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>NY Appellate Court Enforces Pay-If-Paid Provision Against Party With No Lien Rights - Advise &amp; 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