Pulling the Plug
December 13, 2022 —
Todd R. Regan - Construction ExecutiveAs a contractor, you may have wondered if your contract can be terminated by the owner for cause after the project has reached substantial completion. The answer is yes.
Under certain circumstances it may be permissible—or even necessary—for a project owner to terminate the contract for cause after the project has reached substantial completion. Although the rights of the parties in any case will depend in large part on the specific contract language, the fact that a project has reached substantial completion is not an absolute bar to termination for cause, particularly when the owner intends to pursue a performance-bond claim.
Completion Versus Performance
Following substantial completion, a contractor typically will have outstanding contractual obligations such as paying its subcontractors and suppliers, bonding off any mechanic’s liens, completing the punch list, remediating defective work, testing and commissioning equipment, providing manufacturer’s warranties and performing its own warranty obligations.
Reprinted courtesy of
Todd R. Regan, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Just When You Thought the Green Building Risk Discussion Was Over. . .
May 25, 2020 —
Christopher G. Hill - Construction Law MusingsAs a reader of Construction Law Musings, you no doubt realize that I am a big proponent of “green” or sustainable building. I have also been known to sound a bit like Eeyore when discussing the charge into the breach of green building without considering the potential risks. Thankfully, and despite some of the risk predictions made here (and elsewhere for that matter) there have not been but so many major court cases relating to these risks.
However, as a recent article in ENR Magazine warns, this lack of litigation does not mean that you should let your guard down. Just because the economy, warnings by attorneys and others, and possible lack of financial incentive to sue have kept the litigation numbers down does not mean that the risks have gone away. LEED requirements, time horizons and other risks that have become evident during the process of vetting green building contracts and practices still must be dealt with in contracts and insurance policies. These risks are well laid out in the ENR article and in other places here at Musings so I won’t outline them in detail here.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Mediation Clause Can Stay a Miller Act Claim, Just Not Forever
July 11, 2021 —
Christopher G. Hill - Construction Law MusingsIt seems to be Miller Act time here at Construction Law Musings, not to mention in the Federal District Courts here in Virginia. Last week I discussed what sort of work can form the basis for a Miller Act claim. This week I am discussing the effect of a mandatory mediation contract clause on the same type of claim. I have discussed both the benefits and the possible negative consequences of the inclusion of such a clause in your construction contract.
The recent case out of the Norfolk, Virginia Federal District Court recently explored the related question of whether such a clause can be enforced in the context of a Miller Act claim. In United States of America, for the use of Precision Air Conditioning of Brevard Inc. v. Cincinnati Insurance Company, the Court was confronted with a possible conflict between the legal requirement that any waiver of the right to pursue a Miller Act claim must be explicitly waived in writing and the clear contractual language between the general contractor and the plaintiff stating that mediation was a condition precedent to suit.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Don't Count On a Housing Slowdown to Improve Affordability
June 13, 2022 —
Conor Sen - BloombergAs mortgage rates continue to rise, all eyes are fixed on the housing market for signs of a potential slowdown. But any slowdown that does materialize won't affect the industry equally because it isn't going to be about fundamental problems with the housing market. Rather, it will be the result of the Federal Reserve intentionally increasing borrowing costs to cool off inflation.
The Fed's efforts are happening in the context of a supply-constrained market where homebuilders have been struggling to complete as many homes as they would like. Any negative impact of rising mortgage rates would be felt disproportionately where affordability problems already are the worst — high-cost coastal markets — and then in materials for the early part of the construction cycle, such as lumber.
Understanding the nature of the housing challenge is important so that you aren’t tempted to compare the situation with past downturns. For now, at least, there is no broad industry downturn as we’ve seen before in oil and gas or the technology sector that would lead to the housing market suffering in places like Houston or the San Francisco Bay Area. Homeowners haven't taken on too much debt, and there's no inventory glut — quite the opposite, in fact — that would lead to a broad-based downturn.
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Conor Sen, Bloomberg
Unlocking the Potential of AI and Chat GBT in Construction Management
September 11, 2023 —
Matthew DeVries - Best Practices Construction LawThe construction industry is one of the most complex and challenging sectors. Projects can be highly demanding and require a significant amount of planning and coordination to complete successfully. However, with advancements in technology, specifically the use of artificial intelligence (AI) and chat GBT, the construction industry can experience a transformation in how it operates.
One of the significant challenges in construction projects is the management of data. Information is collected from various sources and needs to be organized and analyzed to make informed decisions. AI can play a significant role in data analysis by providing real-time insights into the project’s progress. This can help in predicting potential delays, identifying areas where cost savings can be made, and even improve safety measures.
Chat GBT, a natural language processing tool, can assist in project management by acting as a virtual assistant to construction managers. The software can be programmed to answer questions about the project, provide updates on the progress, and even suggest solutions to potential problems. This can help in reducing the workload of the project manager and allow them to focus on other critical tasks.
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Matthew DeVries, Burr & Forman LLPMr. DeVries may be contacted at
mdevries@burr.com
Appraisal Ordered After Carrier Finds Loss Even if Cause Disputed
April 04, 2022 —
Tred R. Eyerly - Insurance Law HawaiiThe court ordered an appraisal when the parties differed on the amount of loss to the dwelling even when the carrier contended the dispute was over the cause of the loss. Khaleel v Amguard Ins. Co., No. 21 C 992, Memorandum Opinion and Order (N.D. Ill. Feb. 11, 2022). The order is here.
Plaintiffs home was damaged by wind and hail. A claim was submitted to Amguard for damage to the roof. Amguard found there was hail damage to the soft metal vents on the roof and estimated repair costs to be $3,815.16. Amguard found no damage to the roof itself. Plaintiffs contended there was additional damage to the roof. Plaintiffs demanded an appraisal. Amguard rejected the appraisal demand, claiming that the damage to the roof was due to wear and tear, and therefore constituted an excluded cause under the Policy.
Plaintiff filed suit. After Amguard answered, plaintiffs moved for judgment on the pleadings.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
New Insurance Case: Owners' Insurance Barred in Reimbursement Action against Tenant
April 17, 2019 —
Jason Adams - Gibbs GidenThe Western Heritage Ins. Co. v. Frances Todd, Inc. (2019 Cal.App. LEXIS 299 / 2019 WL 1450731) case has potential implications for insurance carriers, policyholders, condominium associations, unit owners, landlords and tenants.
The case involves a fire at a commercial condominium complex (the “Association”). The Association’s CC&Rs required the Association to purchase a master fire insurance policy for the benefit of the Association and owners, with a waiver of subrogation endorsement that stated the insurance company could not seek reimbursement from the Association, its officers, owners or occupants of the units in the event of a covered fire. The CC&Rs also prohibited individual owners from obtaining their own fire insurance. The Association purchased the required fire insurance policy from Western Heritage Insurance Company (“Western Heritage”).
One of the owner’s tenants, Frances Todd, Inc. (“Frances Todd”), allegedly caused a fire that damaged several units. Although the unit owner was covered as an additional named insured under the Western Heritage fire policy, the tenant, Frances Todd, was not. Western Heritage paid for the common area fire damage caused by Francis Todd, and then sued Frances Todd in a subrogation action to recover the amounts paid.
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Jason M. Adams, Gibbs GidenMr. Adams may be contacted at
jadams@gibbsgiden.com
DC Circuit Upholds EPA’s Latest RCRA Recycling Rule
September 23, 2019 —
Anthony B. Cavender - Gravel2GavelOn July 2, 2019, the U.S. Court of Appeals for the District of Columbia Circuit decided the case of California Communities Against Toxics, et al. v. EPA. In this decision, the court rejected the latest petition to strike or vacate EPA’s 2018 revisions to the Resource Conservation and Recovery Act (RCRA) hazardous waste recycling rules. In 1985, EPA promulgated a new regulatory definition of “solid waste,” which is the linchpin of the agency’s very stringent hazardous waste management rules. (See the rules located at 40 CFR Sections 260-268.) Unless a material is a “solid waste” as defined by the rules, it cannot also be a hazardous waste.
The 1985 rules grappled with the challenges posed by recycling practices, and attempted to distinguish between legitimate recycling which is not subject to hazardous waste regulation, and other more suspect forms of recycling. The rules are complex and replete with nuance. In doing so, EPA was adhering to RCRA’s statutory mandate that it develop appropriate rules to govern the treatment, storage and disposal of hazardous waste, while also promoting “properly conducted recycling and reuse.” The DC Circuit reviewed the 1985 rules in the seminal case of American Mining Congress v EPA, 824 F.2d 1177 (1987), (AMC) and stressed that only those materials that were truly discarded could be regulated as solid waste; for instance, those materials that were destined for immediate recycling or recovery in an ongoing production process were not discarded and hence were not solid waste. Over the years, the court has struggled to clarify the basic holding of AMC in numerous cases while EPA has frequently revised and amended the RCRA rules, and in particular the definition of solid waste, in an attempt to balance the policies mandated by the statute.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
