Substituting Materials and Failure to Comply with Contractual Requirements
November 19, 2021 —
David Adelstein - Florida Construction Legal UpdatesIt is important to remember that if you are going to substitute materials from those specified, you need to make sure there is proper approval in doing so–make sure to comply with the contractual requirements to substitute materials. Otherwise, you could be in a situation where you are contractually required to remove the installed substituted materials and replace with the correct specified materials. This is not the situation you want to find yourself in because this is oftentimes a costly endeavor. This was the situation in Appeal-of-Sauer, Inc., discussed below, on a federal project. The best thing that you can do is comply with the contractual requirements if you want to substitute materials. If you are in the situation where it is too late, i.e., you already installed incorrect materials, you want to demonstrate the substituted materials are functionally equivalent to the specified materials and/or come up with an engineering solution, as required, that could be less costly then ripping out the installed material and replacing with the correct material. Even doing so, however, is not a “get out of jail free card” and does not necessarily mean there is not a strong basis to require you to install the correct specified material.
In Appeal of- Sauer, Inc., ASBCA 61847, 2021 WL 4888192 (ASBCA September 29, 2021), a federal project’s engineering requirements required cast iron piping for the above ground sanitary system. However, the prime contractor installed PVC piping instead of cast iron piping. The prime contractor believed it had the appropriate approval through its submittal. The government, through its contracting officer, directed the prime contractor to remove installed PVC piping to replace with cast iron. The government did not believe PVC piping was the functional equivalent of cast iron piping for the above ground sanitary system due to its concern with the noise level of waste materials flowing through the piping. The prime contractor submitted a claim for its removal and replacement costs which was denied by the contracting officer. On appeal with the Armed Services Board of Contract Appeals, the Board agreed with the contracting officer explaining: “While we agree that a design change could be approved by the designer of record and brought to the attention of the government before being incorporated into the design documents, the [prime contractor’s] task order required that such a design change meet the minimum requirements of the solicitation and accepted proposal. The plumbing submittal [the prime contractor] issued here, showing the use of PVC instead of cast iron for the above ground waste piping, did not meet the minimum requirements of the solicitation.” Appeal of-Sauer, Inc., supra.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Will the Hidden Cracks in the Bay Bridge Cause Problems During an Earthquake?
June 26, 2014 —
Beverley BevenFlorez-CDJ STAFFDespite a “no cracks” welding code and contract provision for the San Francisco-Oakland Bay Bridge, in 2008 Caltrans proceeded with the project despite welding cracks created by the Chinese firm hired to build the roadway, according to the Sacramento Bee. By the time the cracks had been discovered, the costs were at $6.5 billion and climbing, and fixing the cracks would be time-consuming and expensive.
However, there is some dispute as to rather the welding “cracks represent a hazard to the traveling public.”
“Examine history,” Brian Maroney, Caltrans’ chief engineer for the bridge, said in a recent interview by the Sacramento Bee. “… Caltrans reviewed major quakes around the globe and never found a case in which weld cracks caused bridge-roadway fractures.”
However, the Sacramento Bee reported that there was a case where welding cracks led to fractures. For instance, after the southern California earthquake in 1994 centered in Northridge, the Santa Clara River Bridge “suffered several fractures in steel girders. The breaks were traced to tiny cracks in welds, likely present before the quake, and worsened by vibrations of heavy trucks passing overhead. When the quake struck, the girders fractured.”
The Santa Clara bridge did not collapse. Sacramento Bee claimed it remained standing because the I-beam-shaped girders were “not fracture-critical.” However, the Bay Bridge’s “roadway consists of box-girder segments welded together. In effect, they create one contiguous, fracture-critical girder,” Abolhassan Astaneh-Asl, UC Berkeley engineering professor told the Sacramento Bee. “If welds crack and grow rapidly during a large quake, the entire roadway could fail.”
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To Bee or Not to Bee - CA Court Finds Denial of Coverage Based on Exclusion was Premature Where Facts had not been Judicially Determined
November 28, 2018 —
Philip B. Wilusz - Saxe Doernberger & Vita, P.C.While I typically discuss cases concerning pollution, today I will change a few letters around and discuss pollination. The case, Unigard Insurance Co. et al. v. George Perry and Sons Inc. et al., asks whether there is coverage for a lawsuit brought against a commercial farm that is alleged to have killed off bee colonies used for pollination. The farm, owned by George Perry & Sons Inc. (“Perry”), allegedly used a pesticide that killed off the bee colonies that Perry had hired from Gary Mattes (“Mattes”) pursuant to an oral agreement. The bees, operating well outside of their weight class, were hired to pollinate Perry’s crops of watermelons and pumpkins. Interestingly, the bees would be brought to the farm in either large hives or “nukes,” which are smaller versions of hives.
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Philip B. Wilusz, Saxe Doernberger & Vita, P.C.Mr. Wilusz may be contacted at
pbw@sdvlaw.com
Louisiana Court Holds That Application of Pollution Exclusion Would Lead to Absurd Results
October 21, 2019 —
Sergio F. Oehninger & Daniel Hentschel - Hunton Insurance Recovery BlogA Louisiana court recently denied an excess insurer’s bid for summary judgment, finding that the insurer’s interpretation of a pollution exclusion would lead to “absurd results.”
Central Crude, Inc., a crude oil transporter company, experienced an oil pipeline leak, allegedly causing damage to property belonging to Columbia Gas Transmission Company. Columbia Gas sued Central Crude seeking compensatory damages and injunctive relief to compel remediation of the site. Central Crude sought coverage under a CGL primary insurance policy issued by Liberty Mutual. The insurer initially agreed to cover Central Crude’s “reasonable and necessary costs” relating to the incident, but later refused to defend or indemnify Central Crude for any costs incurred from the incident. As a result, Central Crude brought suit against Liberty Mutual and its excess insurer, Great American, to enforce coverage.
Great American moved for summary judgment arguing coverage was excluded by the excess policy’s pollution exclusion, which precludes coverage for injury “arising out of a discharge of pollutants.” Central Crude responded arguing that the exclusion’s applicability was invalidated or at least rendered ambiguous by the Following Form Endorsements, which reflect an intent to mirror the coverage afforded under the primary Liberty Mutual policy, and because coverage appears to be specifically authorized through the Premises Operations Liability Endorsement.
Reprinted courtesy of
Sergio F. Oehninger, Hunton Andrews Kurth and
Daniel Hentschel, Hunton Andrews Kurth
Mr. Oehninger may be contacted at soehninger@HuntonAK.com
Mr. Hentschel may be contacted at dhentschel@HuntonAK.com
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Court Calls Lease-Leaseback Project What it is: A Design-Bid-Build Project
August 19, 2015 —
Garret Murai – California Construction Law BlogFirst there was “Prince.”
Then there was “The Artist Formerly Known as Prince.”
Then there was “The Artist Formerly Known as Prince (Because he Changed His Name to a Symbol), But Then Realized That No One Could Pronounce the Symbol (and What Good is a Symbol if Everyone Has to Wave Their Hands Wildly at You to Get Your Attention or Scream ‘Hey You!’), and So Changed His Name Back to Prince Again.”
Whatever name (or symbol) he was going by, everyone knew him as the guy who told us to party like it was 1999 (when 1999 still seemed like the distant future), who sang about a girl with a “pocket full of horses” (which totally flew past my junior high school brain at the time), and gave us such great metaphors as “if the elevator tries to bring you down, go crazy, punch a higher floor!”
Like Prince or his symbol, sometimes it doesn’t matter what label you put on something when everyone knows what that something is. In law, we call it looking at the “substance” rather than its “form.” And, in the next case, Davis v. Fresno Unified School District, the California Court of Appeals for the Fifth District made quick work of a purported “lease-leaseback” project – a project delivery method available to school districts whereby a school district leases property it owns to a developer for a minimum of $1, who in turns builds a school facility on the site and leases the facility and the site back to the school district, who in turn takes ownership of the facility and site at the end of the lease – and called it for what it was: a run-of-the-mill “design-bid-build” project.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
NYC Landlord Accused of Skirting Law With Rent-Free Months Offer
October 15, 2024 —
Natalie Wong - BloombergThe opening of Tower 28, one of the tallest residential towers in New York City outside Manhattan, brought rent-stabilized units to Long Island City roughly seven years ago, adding affordable listings to a neighborhood where soaring prices were increasingly squeezing out many renters.
Now, three tenants at the 58-story building have filed a class-action lawsuit alleging the landlord sought to evade New York City rent regulations in order to raise prices even higher over time.
The lawsuit against the limited liability company tied to 42-12 28th St. in Queens claims that the property owner recorded initial rents with the New York State Division of Housing and Community Renewal that were higher than what the first tenant was actually charged and paid. In doing so, any future rent increases were based off a higher figure, according to the lawsuit.
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Natalie Wong, Bloomberg
Brazil Builder Bondholders Burned by Bribery Allegations
October 22, 2014 —
Paula Sambo and Sabrina Valle – BloombergBrazil’s biggest construction companies are leaving bondholders with losses in the wake of allegations they bribed Petroleo Brasileiro SA to win contracts.
Queiroz Galvao SA’s $700 million of notes due 2019 have dropped 2.5 percent since Oct. 9, when the Department of Justice made available video in which former Petrobras head of refining Paulo Roberto Costa alleged that builders formed a cartel to overcharge for projects and divert money to politicians. OAS SA’s $875 million of 2019 notes have slumped 1.9 percent in that span, versus a 0.1 percent loss for emerging markets.
Ms. Sambo may be contacted at psambo@bloomberg.net; Ms. Valle may be contacted at svalle@bloomberg.net
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Paula Sambo and Sabrina Valle, Bloomberg
Arbitration is Waivable (Even If You Don’t Mean To)
February 16, 2016 —
Christopher G. Hill – Construction Law MusingsBe careful with how you act with arbitration clauses in your contracts. If you are not careful in how you act to enforce these clauses, you could find yourself stuck in court whether you like it or not.
As I stated in a recent update to a post last month, the Fourth Circuit Court of Appeals recently weighed in on the issue of a contractor’s waiver of its rights to arbitration under a contract. Briefly, the facts of Forrester v. Penn Lyon Homes, et. al., No. 07-2171 are as follows. The Forrester’s sued Penn Lyon and its warranty company alleging among other things a breach of express warranty based upon a warranty contract containing a mandatory arbitration clause. Instead of immediately alleging an affirmative defense based upon the arbitration clause, the defendants removed the case to federal court and litigated for 18 months before raising the arbitration defense for the first time.
The 4th Circuit (correctly in my opinion) affirmed the lower court and held that the defendants defaulted their right to arbitration because of their actions in defense of the court action and the prejudice to the plaintiffs caused by those actions.
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Christopher G. Hill, Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
