Suing the Lowest Bidder on Public Construction Projects
September 17, 2015 —
Craig Martin – Construction Contractor AdvisorThe California Court of Appeals has allowed the second lowest bidders on public construction projects to sue the lowest bidder where it appears that the lowest bidder was only the lowest because it paid its employees less than the established prevailing wage. This is a novel theory for recovery, but may provide for an opportunity to challenge improperly low bids.
Background
Between 2009 and 2012, American Asphalt outbid two asphalt companies on 23 public works projects, totaling nearly $15 million. The two asphalt companies sued American Asphalt alleging that they were the second lowest bidder all 23 construction projects and they would have been the lowest had American Asphalt paid its employees the required prevailing wage. Importantly, the municipality awarding the contracts was not sued by the second lowest bidders. Instead, the second lowest bidders alleged that American Asphalt intentionally interfered with a business expectancy and sought damages from American Asphalt, specifically the profit that they lost by not performing these contracts.
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Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
Payment Bond Surety Entitled to Award of Attorneys’ Fees Although Defended by Principal
February 01, 2023 —
Garret Murai - California Construction Law BlogFor contractors involved in California public works projects the scenario is not uncommon: The general contractor awarded the public works project is required to obtain a payment bond for the benefit of subcontractors and suppliers and the payment bond surety issuing the payment bond requires the general contractor to defend and indemnify the surety from and against any claims against the payment bond.
In
Cell-Crete Corporation v. Federal Insurance Company, 82 Cal.App.5th 1090 (2022), the 4th District Court of Appeal examined whether a payment bond surety, who prevails in a claim against the payment bond, is entitled to statutory attorneys’ fees when the party actually incurring the attorneys’ fees was the general contractor, pursuant to its defense and indemnity obligations, as opposed to the surety itself.
The Cell-Crete Case
General contractor Granite Construction Company was awarded a public works contract issued by the City of Thermal known as the Airport Boulevard at Grapefruit Boulevard and Union Pacific Railroad Grade Separation Project. We’ll just call it the “Project.” Subcontractor Cell-Crete Corporation entered into a subcontract with Granite for lightweight concrete and related work.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Appellate Court of Maryland Construes Notice Conditions of A312 Performance Bond in Favor of Surety
January 02, 2024 —
Joel P. Williams - White and Williams LLPThe Appellate Court of Maryland issued a reported opinion in a case construing an American Institute of Architects (“AIA”) A312 performance bond. In Wildewood Operating Company, LLC v. WRV Holdings, LLC, et al. 2023 Md. App. LEXIS 720 (Oct. 30, 2023), the Appellate Court of Maryland held that a performance bond surety was discharged from liability where the owner/obligee failed to give the surety notice of the contractor’s default termination until after a third party had completed the work.
The project concerned the construction of an assisted living facility in St. Mary’s County, Maryland. The owner, Wildewood Operating Company, LLC, entered into an A312-2010 performance bond with Clark Turner Construction, LLC, as contractor, and First Indemnity of America Insurance Company, as surety. When Clark Turner failed to complete certain stormwater management work adjacent to the site, Wildewood, Clark Turner, and other parties entered into a Work Agreement to address completion of the work. The surety was not a party to the Work Agreement.
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Joel P. Williams, White and Williams LLPMr. Williams may be contacted at
williamsj@whiteandwilliams.com
Using Lien and Bond Claims to Secure Project Payments
March 01, 2021 —
Jonathan Cheatham - Construction ExecutiveWhile suing in court for payment on a construction project is nothing new, the very notion of non-payment tends evokes images of hard-working contractors and subcontractors, working with tight margins, owed payment for services rendered and materials. Fortunately, for general contractors and subcontractors in the construction industry, there are better remedies for securing payment on a project before it becomes a bigger issue.
Construction projects, especially large public ones, usually include a dizzying array of general contractors, subcontractors and independent contractors, sometimes numbering more than a hundred entities. The inter-connected groups of companies working toward the goal of project completion require competent construction management in order to stay on time and on budget for completion. One of the project owner’s key tools used to ensure the process runs smoothly is the use of payment bonds and surety bonds.
Payment Bonds
Payment bonds ensure that contractors and subcontractors get paid for work performed in accordance with contract conditions. Disputes can occur before, during and even after the completion of work. Injunctive lawsuits, which contemplate the stoppage of work, would be detrimental to completing a public or private construction project of substantial size. Rather than having such minor disputes derail the entire project, the aggrieved party’s remedy is to file a claim against the payment bond, which offers a solution designed to keep the issue separate from the project’s completion. The payment bond also allows the project owner to transfer risk.
Reprinted courtesy of
Jonathan Cheatham, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Reduce Suicide Risk Among Employees in Remote Work Areas
November 24, 2019 —
Sandra Moran - Construction ExecutiveIn the construction industry, a disturbing and unnerving trend has been developing over the past few decades. Construction and resource extraction have the highest rate of deaths by suicide compared to any other industry. This phenomenon is not limited to a single country. The statistics from three developed countries with strong construction and resource extraction industries (United States, United Kingdom and Australia), reflect the same pattern.
A major risk factor that has not been given much attention and scrutiny is the requirement for many workers to be away from their homes for long periods of time, based in remote locations and basecamps. This isolation contributes to loneliness and disconnectedness that increases the vulnerability to employees at risk due to underlying mental health disorders, such as depression and anxiety, or those with suicidal ideations or prior attempts. Basecamps or remote work locations remove workers from the support networks of family, friends, and even medical and psychological caregivers.
Employers placing employees in remote work locations should be mindful that simply wanting to work in a remote location does not necessarily equate to being able to cope well in such an environment—unless appropriate supports are provided. Companies need to become proactive to lead employees to become true teams to help reduce the risk of suicide among their workers.
Reprinted courtesy of
Sandra Moran, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Legal Matters Escalate in Aspen Condo Case
January 28, 2014 —
Beverley BevenFlorez-CDJ STAFFOn January 3rd of this year, Chad Abraham reported in the Aspen Daily News that the Ute City building—a condominium on Hopkins Avenue in Aspen, Colorado—“lacks proper entryways to apartments and a basement-level nightclub space for both tenants and the disabled.”
The owners, Michael Sedoy and Natalia Shvachko, have been sued by the city after refusing “to allow access to an eastside staircase and elevator for other building residents and disabled patrons of a basement restaurant,” according to the Aspen Daily News. “Their stance has forced the other tenants and the disabled to use a westside, alleyway service entrance, according to the city.”
Sedoy and Schvachko’s attorney retorts in court documents “that the city approved of a building map and declarations that allow access through the westside entry in the alley.”
Furthermore, in another article by Abraham published in the Aspen Daily News on January 25th, he relates that the owners had filed more than “more than 30 noise complaints with the police and the city’s environmental health department about eateries and bars around their home on Restaurant Row. That led to a trial for the Aspen Brewing Co., which a jury acquitted in about 10 minutes last week.”
In addition, the couple is being sued by Mountain Home Window Fashions, the Ute City building general contractor. According to the lawsuit as reported by the Daily Aspen News, Mountain Home claims they are owed $12,332. The owners have counter-sued, alleging “that there were defects in Mountain Home Window Fashions’ work” and that one of the employees “made unauthorized charges on Sedoy’s credit card.”
Read the full story, January 3rd article ...
Read the full story, January 25th article ...
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Privette: The “Affirmative Contribution” Exception, How Far Does It Go?
August 10, 2020 —
Courtney Arbucci, Peter A. Dubrawski & Austin F. Smith - Haight Brown & BonesteelIn Horne v. Ahern Rentals, Inc. (No. B299605, filed 6/10/2020 ord. publ. 6/10/2020), Plaintiffs filed a wrongful death action against Defendant Ahern Rentals, Inc. (“Ahern”) arising out of the fatal incident involving Ruben Dickerson (“decedent”), while employed by independent contractor 24-Hour Tire Service, Inc. Decedent was ultimately crushed on Ahern Rentals, Inc.’s property when a forklift that was improperly placed on uneven ground collapsed as decedent laid under the raised forklift as he performed tire maintenance.
Plaintiffs’ suit would normally be barred by the Privette line of decisions which arise out of the foundational principle that an independent contractor’s hirer presumptively delegates to the contractor its tort law duty to provide a safe workplace for the contractor’s employees. (Privette v. Superior Court (1993) 5 Cal.4th 689 (Privette).) The Privette rule is subject to a number of exceptions including the “peculiar risk” exception, the “nondelegable duty” exception and the “affirmative contribution” exception. (See Privette, supra.) Here, Plaintiffs’ claimed that their suit against Ahern arose out of the “affirmative contribution” exception to Privette as defined by Hooker v. Department of Transportation (2002) 27 Cal.4th 198, 202 (Hooker). Hooker allows suits otherwise barred by Privette to go forward if the hirer of the independent contractor “exercised control over safety conditions at the worksite in a way that affirmatively contributed to the employee’s injuries.”
Reprinted courtesy of Haight Brown & Bonesteel attorneys
Courtney Arbucci,
Peter A. Dubrawski and
Austin F. Smith
Ms. Arbucci may be contacted at carbucci@hbblaw.com
Mr. Dubrawski may be contacted at pdubrawski@hbblaw.com
Mr. Smith may be contacted at asmith@hbblaw.com
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Force Majeure Under the Coronavirus (COVID-19) Pandemic
March 08, 2021 —
Lindsay T. Watkins - Ahlers Cressman & Sleight PLLCAs COVID-19 disrupts work and life as we know it, the question many contractors have is what protections are available against the inevitable project impacts and delays? Generally, construction contracts require a contractor to timely perform work until project completion or potentially face damages (liquidated or actual) and possible termination. When events occur, however, that are beyond our control (such as a national pandemic), it is important to review and understand what contract provisions or avenues are available for potential relief.
1.
Review Your Contract For A Force Majeure Provision.
A
“force majeure” contract provision is commonly included in construction contracts, service agreements, purchase orders, etc. It typically covers events or conditions that can be neither anticipated nor controlled. These provisions, however, will vary greatly from contract to contract and may not include the language “force majeure” but rather may be included in general delay or impact clauses. For example, some common provisions include:
- Washington State Department of Transportation Clause (2018 Standard Specifications for Road, Bridge and Municipal Construction): The Contractor shall rebuild, repair, restore, and make good all damages to any portion of the permanent or temporary Work occurring before the Physical Completion Date and shall bear all the expense to do so, except damage to the permanent Work caused by: (a) acts of God, such as earthquake, floods, or other cataclysmic phenomenon of nature, or (b) acts of the public enemy or of governmental authorities; or (c) slides in cases where Section 2-03.3(11) is applicable; Provided, however, that these exceptions shall not apply should damages result from the Contractor’s failure to take reasonable precautions or to exercise sound engineering and construction practices in conducting the Work.
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Lindsay T. Watkins, Ahlers Cressman & Sleight PLLCMs. Watkins may be contacted at
Lindsay.Watkins@acslawyers.com
