El Paso Increases Surety Bond Requirement on Contractors
April 25, 2011 —
Beverley BevenFlorez CDJ STAFFThe city of El Paso has recently increased surety bonds required of contractors from $10,000 to $50,000, according to the El Paso Times. Proponents of the increase believe it was necessary to protect homeowners from fly-by-night builders, while opponents argue that the increase will have an adverse effect on an industry in that is already suffering due to the economic slowdown.
Arguments for and against the increase have been flooding the blogosphere with their views. Christian Dorobantescu on the Small Business Entrepreneur Blog claims that “only about 15% of the city’s 2,500 contractors had been able to secure a higher bond to remain eligible for work after the new requirements were announced.” However, insurance companies have a different take. “From a surety broker standpoint, most contractors will be able qualify for the bond; some will just have to pay higher premium rates to obtain it,” a recent post on the Surety1 blog argues.
While the increased bond may help homeowners deal with construction defect claims, it is not clear what effect it will have on builders in El Paso.
Read more from the El Paso Times…
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Read more from the Surety1 Blog…
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Terminating Contracts for Convenience — “Just Because”
June 28, 2021 —
David Adelstein - Florida Construction Legal UpdatesTermination for convenience provisions are important provisions to include in construction contracts. These are provisions that allow a party to terminate the contract for ANY REASON. No cause is needed to exercise the termination for convenience provision. In other words, the terminating party does not have to demonstrate the other party breached the contract. A termination for convenience can be exercised “just because.”
Typically, the party providing the service should not get to terminate for convenience. However, the party receiving the service will want to be afforded this contractual right.
For example, an owner (receiving a service) will want to include a termination for convenience provision with its prime contractor (providing a service). And, a general contractor (receiving a service) will want to include a termination for convenience provision in its subcontract with its subcontractor (providing a service). However, a general contractor providing a service for an owner, or a subcontractor providing a service to a general contractor, should not be able to terminate the contract for their convenience “just because” a better opportunity comes along.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Delays and Suspension of the Work Under Fixed Price Government Contract
July 22, 2024 —
David Adelstein - Florida Construction Legal UpdatesHere is an interesting fact pattern and case decided by the Civilian Board of Contract Appeals dealing with (1) force majeure type events and epidemics (Covid-19); (2) suspension of the work; and (3) delays. These are three topics important to all contractors including federal contractors.
In Lusk Mechanical Contractors, Inc. v General Services Administration, 2024 WL 1953697, CBCA 7759 (CBCA 2024), a contractor entered into a fixed price contract with the government to repair, replace, and modernize site and building systems at a federal building. The contractor commenced work right before Covid-19. When Covid-19 hit, the government issued the contractor a two-week suspension of work notice on March 27, 2020. The suspension of work allowed off-site administrative work to continue but suspended on-site physical work. The government extended the suspension of work three more times. The contractor could resume work on the exterior on June 1, 2020, but was not permitted to resume work on the interior until July 20, 2020. On the same date that the contractor was able to commence interior work, it submitted a modification for delay caused by the suspension – 64 days for the time period the entire site shutdown, and 51 days for the interior work shutdown.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Where Breach of Contract and Tortious Interference Collide
July 18, 2022 —
Christopher G. Hill - Construction Law MusingsClaims for breach of contract are numerous in the construction law world. Without these claims we construction attorneys would have a hard time keeping the doors open. A 2021 case examined a different sort of claim that could arise (though, “spoiler alert” did not in this case) during the course of a construction project. That type of claim is one for tortious interference with business expectancy.
In Clark Nexsen, Inc. et. al v. Rebkee, the U. S. District Court for the Eastern District of Virginia gave a great explanation of the law of this type of claim in analyzing the following basic facts:
In 2018, Clark Nexsen, Inc. (“Clark”) and MEB General Contractors, Inc. (“MEB”) responded to Henrico County’s (“Henrico”) Request for Proposals (“RFP”) for the design and construction of a sport and convocation center (the “Project”). Henrico initially shortlisted Clark and MEB as a “design-build” team for the Project, but later restarted the search, issuing a second RFP. Clark and MEB submitted a second “design-build” proposal, but Henrico selected Rebkee Co. (“Rebkee”) for certain development aspects of the Project. MEB also submitted proposals to Rebkee, and Rebkee selected MEB as the design-builder for the Project. MEB, at Rebkee’s request, solicited proposals from three design firms and ultimately selected Clark as its design partner. From December 2019 to May 2020, Clark and MEB served as the design-build team to assist Rebkee in developing the Project. In connection therewith, Clark developed proprietary designs, technical drawings, and, with MEB, several cost estimates. In February 2020, MEB submitted a $294,334.50 Pay Application to Rebkee for engineering, design, and Project development work. Rebkee never paid MEB. Henrico paid MEB $50,000.00 as partial payment for MEB’s and Clark’s work. MEB then learned that Rebkee was using Clark’s drawings to solicit design and construction proposals from other companies. On July 23, 2020, Rebkee told MEB that Henrico directed it to cancel the design-build arrangement with MEB and Clark and pursue a different planning method. MEB and Clark sued and Rebkee for, among other claims, tortious interference with a business expectancy. Rebkee moved to dismiss the tortious interference claim.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Iowa Court Holds Defective Work Performed by Insured's Subcontractor Constitutes an "Occurrence"
July 28, 2016 —
Tred R. Eyerly – Insurance Law HawaiiThe Iowa Supreme Court held that property damage caused by a subcontractor's defective work was an "occurrence." Nat'l Sur. Corp. v. Westlake Invs., LLC, 2016 Iowa LEXIS 71 (Iowa June 10, 2016).
In 2002, the insureds, the developers and general contractor, began construction on an apartment complex. While the complex was still under construction, it was purchased by Westlake Investments, LLC.
During construction, numerous problems surfaced, including visible water penetration issues in several buildings. In February 2008, Westlake sued the insureds, seeking to recover lost profits, repair costs, and other damages under tort and contract theories. Arch Insurance Group defended under the primary policy. A settlement was eventually reached whereby a consent judgment for $15,600,000 was entered against the insureds and in favor of Westlake. Arch contributed its policy limits of $1,000,000 to the settlement. Other third party defendants contributed $1,737,500, leaving $12,762,500 of the judgment unsatisfied. The insureds assigned rights under their excess policy with National Surety Corporation (NSC) to Westlake. NSC's policy was a following-form policy.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Commonwealth Court Holds That Award of Attorney's Fees and Penalties is Mandatory Under the Procurement Code Upon a Finding of Bad Faith
October 29, 2014 —
William J. Taylor and Michael Jervis – White and Willams LLPIn a decision regarding a payment claim by a highway contractor against the City of Allentown, the Commonwealth Court of Pennsylvania has held that an award of attorney's fees and penalties is mandatory under the terms of the Pennsylvania Procurement Code, 62 Pa.C.S. § 3901 et seq., upon a finding of bad faith by the non-paying government agency, even though the statute only states that a court “may” award such fees and penalties.
In A. Scott Enterprises, Inc. v. City of Allentown, Cmwlth. Ct. No. 2163 C.D. 2013, the plaintiff, A. Scott Enterprises, Inc. (Scott), won a contract with the City of Allentown (City) to construct a one mile roadway. Several weeks after commencing work, Scott learned that soil at the construction site was potentially contaminated with arsenic, and was instructed by the City to suspend its work. Because of the soil contamination, additional work would be required to complete the project and Scott submitted proposals for the additional work plus its suspension costs. However, the City never approved the additional work and the project was never completed. The City never paid Scott for costs incurred due to the suspension of the work and Scott filed suit to recover its losses. The jury found that the City had breached the contract with Scott and had acted in bad faith in violation of the Procurement Code, and awarded damages to Scott for its unreimbursed suspension costs. However, the trial court denied Scott’s request for an award of attorney's fees and penalty interest. Both Scott and the City appealed the final judgment to the Commonwealth Court, which reversed the trial court’s refusal to award attorney's fees and penalties.
Reprinted courtesy of
William J. Taylor, White and Williams LLP and
Michael Jervis, White and Williams LLP
Mr. Taylor may be contacted at taylorw@whiteandwilliams.com; Mr. Jervis may be contacted at jervism@whiteandwilliams.com
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Evaluating Construction Trends From 2023 and Forecasting For 2024
February 12, 2024 —
Jason Feld & Dominic Donato - Kahana FeldAs we begin 2024, it is informative to evaluate what transpired in 2023 in the construction industry, and especially the use of construction technology. 2023 ushered in a variety of newly implemented construction technologies including 3D printed entire houses, improved wearables that detect all aspects of the construction worker from location to temperature to heart rate, increased use of modular construction for entire apartments, hotels, and condominium projects, and eco-friendly and conservation minded technologies to minimize carbon footprint, water preservation and sustainable construction methods, to name a few.
2023 also identified some significant issues in the construction industry. First and foremost, the labor shortages and hiring of skilled and qualified workers continued to be an issue resulting in increased delays, construction accidents, and project mismanagement. The skyrocketing interest rates, decline in commercial/office projects, supply chain issues, material price fluctuation and increase changes in scope of projects all negatively impacted the construction industry in 2023. There is also the demand for renewable and infrastructure projects put strain on construction resources as the projects became “mega” with larger and more complex construction leading to multi-party, high dollar, and more complex claims. Finally, there is a growing trend of construction claims and litigation being financed by third party litigation funding sources for personal/bodily injury claims and construction defect claims.
Reprinted courtesy of
Jason Feld, Kahana Feld and
Dominic Donato, Kahana Feld
Mr. Feld may be contacted at jfeld@kahanafeld.com
Mr. Donato may be contacted at ddonato@kahanafeld.com
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OSHA’s Multi-Employer Citation Policy: What Employers on Construction Sites Need to Know
September 09, 2019 —
Phillip C. Bauknight - Construction ExecutiveMulti-employer worksites are a frequent occurrence in the construction industry as employees from various companies often occupy the same site while a project is being completed. While the need for employees from different companies may be necessary to perform the various tasks required by a project, the presence of multiple employers, and their employees, on the same worksite can result in an increased risk of safety hazards.
Companies performing construction work should be, and generally are, aware of OSHA’s ability to issue citations for workplace safety violations. What many companies may not know, however, is that OSHA’s ability to cite employers is not limited to workplace conditions that are unsafe only to that employer’s direct employees. Rather, OSHA also has the ability to cite an employer, and often does issue such citations, for conditions that could result in injury or death to another company’s employees.
The policy which provides OSHA with this citation ability is CPL 02-00-124 and is called the Multi-Employer Citation Policy (the “Policy”). Under the language of the Policy, OSHA has the ability to cite multiple employers for violations of the Occupational Safety and Health Act for the same hazardous workplace condition. Critically, responsibilities under the Policy do not depend on the employer’s job title but are determined by the employer’s role.
Reprinted courtesy of
Phillip C. Bauknight, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Bauknight may be contacted at
pbauknight@fisherphillips.com
