What Should I Do If My New York Construction Claim Is Denied?

If you have a construction claim filed in New York State, it is important to understand your rights and how the state's construction claims process works. Depending on the type of claim you have, there are different remedies available if you disagree with the construction claim decision made by the Insurance Board. What types of construction claims does the New York law cover? Under New York State law, there are two main types of construction claims that are covered under the State's statutory scheme – payment bond claims and performance and payment bond claims.

These construction claims are sometimes referred to as Miller Act claims because the law is named after the former New York State Attorney General Frank L. Miller who sponsored the 1936 statute that created them. For both types of construction claims, a claimant may sue on either a tort or contract theory. A payment bond claim is the type of claim that arises out of the failure of a contractor to fully perform a contract for which he has been paid.

Generally, a payment bond claim alleges that the contractor failed to perform the contract in a timely and workmanlike manner and did not pay the subcontractors who provided labor and materials on the project in a timely manner. In addition, these claims typically allege that the contractor did not comply with other provisions in the contract, such as complying with building and safety codes or completing a certain percentage of the project by a specific date. Performance and payment bond claims arise out of the contractor's failure to pay laborers and materialmen who provided labor or materials used in the construction of the project.

These types of claims generally allege that the contractor failed to pay its subcontractors even though they had performed services or supplied materials on the project as required by the contract. These claims also allege that the contractor failed to comply with other provisions of the contract that required it to pay its subcontractors promptly upon receiving payment from the owner. In both types of claims, if the contractor becomes insolvent, the claimant has the option to file a claim with the State Insurance Fund known as the "Insurance Board" to obtain a performance bond or a payment bond to ensure payment of all unpaid liens, claims, and costs for the project.

Payment Bond Claims A payment bond claim arises out of the failure of a contractor to fully perform a contract for which he has been paid. These types of claims usually allege that the contractor failed to perform the contract in a timely and workmanlike manner and did not pay the subcontractors who provided labor and materials on the project in a timely manner. In addition, these claims typically allege that the contractor did not comply with other provisions in the contract, such as complying with building and safety codes or completing a certain percentage of the project by a specific date. If the contractor fails to fulfill any of these obligations set forth in the contract, the contractor may be liable to the owner for breach of contract and breach of the implied covenant of good faith and fair dealing.