Be Careful When Walking Off of a Construction Project
November 24, 2019 —
Christopher G. Hill - Construction Law MusingsI am truly grateful that my buddy Craig Martin (@craigmartin_jd) continues his great posts over at The Construction Contractor Advisor blog. He is always a good cure for writer’s block and once again this week he gave me some inspiration. In his most recent post, Craig discusses a recent Indiana case relating to the ever present issue of termination by a subcontractor for non-payment. In the Indiana case, the court looked at the payment terms and determined that the subcontractor was justified in walking from the project when it was not paid after 60 days per the contract.
This result was the correct, if surprising. Why do I say surprising? Because I am always reluctant to recommend that a subcontractor walk from a job for non payment if it is possible to continue. This is not so much for legal reasons (not paying a sub is a clear breach of contract by a general contractor) but practical ones. The practical effect of walking from the job is that the subcontractor is put on the defensive. Instead of arguing later that it performed but was not paid, that subcontractor is put in the position of arguing that the general contractor cannot collect its completion related and other damages because it breached first. This is a more intuitively difficult argument and one that is not as strong as the first.
Of course, all of this is contingent on the language in your contract (is there a “pay if paid” or language like that in the Indiana case?).
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
New Research Shows Engineering Firms' Impact on Economy, Continued Optimism on Business Climate
October 28, 2024 —
The ACEC Research InstituteWASHINGTON – The ACEC Research Institute – the leading source of original research for the business of engineering – released the results of two important studies on the current and future state of the engineering industry, and its role in the overall U.S. economy.
The reports, the
2024 Economic Assessment of the Engineering & Design Services Industry and the
Engineering Business Sentiment Report for 2024 Q4, both point to continued optimism for the industry and its firms, though somewhat softened compared to previous quarters.
"This research shows the outsized impact the engineering industry has on the American economy," said ACEC Research Institute Chair Mike Carragher. "As the engineering industry's contributions grow year over year, the Institute's research helps firm executives position their businesses for a successful future."
All told, the industry added $656 billion to the U.S. GDP in 2023, supported well over five million jobs directly or indirectly, and contributed $92 billion to federal tax coffers, with an additional $44 billion in state and local taxes.
Overall, the report found that the engineering and design services industry has continued to build on its year-over-year post-COVID gains, growing 5.5% in 2023 to $436 billion, with much of that growth driven by infrastructure projects. Non-residential and non-building construction, flush with government funding through the IIJA and Inflation Reduction Act, remained on an upward trajectory.
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Insurers' Motion to Knock Out Bad Faith, Negligent Misrepresentation Claims in Construction Defect Case Denied
August 27, 2013 —
Tred Eyerly - Insurance Law HawaiiHaving previously decided that construction defect claims did not arise from an occurrence and were consequently not covered under Hawaii law, the Hawaii Federal District Court refused to dismiss the insured's second amended counterclaim alleging various claims for relief. Ill. Nat'l Ins. Co. v. Nordic PCL Construc., Inc., 2013 U.S. Dist. LEXIS 108932 (D. Haw. July 31, 2013).
In earlier proceedings, the court determined that the Nordic's allegedly deficient performance on construction contracts was not an "occurrence." The court also rejected Nordic's argument that the Hawaii legislature's Act 83 required the court to deviate from the Ninth Circuit's opinion in Burlington Ins. Co. v. Oceanic Design & Constr., Inc., 383 F.3d 940 (9th Cir. 2004) or the Hawaii Intermediate Court of Appeals' decision in Group Builders, Inc. v. Admiral Ins. Co., 123 Haw. 142, 231 P.3d 67 (Haw. Ct. App. 2010).
Admiral now moved for summary judgment on its complaint and for dismissal of Nordic's second amended counterclaim, alleging bad faith and negligent misrepresentation, among other counts. Summary judgment as to the Safeway claim was denied.
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Tred EyerlyTred Eyerly can be contacted at
te@hawaiilawyer.com
Ninth Circuit Finds No Coverage for Construction Defects Under California Law
April 05, 2017 —
Tred R. Eyerly – Insurance Law HawaiiThe Ninth Circuit, applying California law, affirmed the district court's decision finding there was no coverage for construction defects. Archer W. Contractors v. Nat'l Union Fire Ins. Co., 2017 U.S. App. LEXIS 3796 (9th Cir. March 2, 2017).
Archer Western Contractors (AWC) was the general contractor for the San Diego County Water Authority's emergency water storage project. The pump house and turbine generators suffered property damage. The damage flowed from AWC's allegedly defective work on the property.
After settling a construction defect lawsuit brought against it by the Water Authority, AWC filed this case against National Union for failing to indemnity portions of the settlement agreement.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Real Estate & Construction News Round-Up 04/20/22
May 02, 2022 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogConstruction defects emerge in pandemic-era buildings, investor confidence is improving in China’s real estate market, the proptech field continues to show significant signs of growth, and more.
- Investor confidence in China’s real estate market is improving, with bond trading volumes and prices rising over the last few weeks, but the market is not projected to resume its high growth rate of the past. (Weizhen Tan & Evelyn Cheng, CNBC)
- The economic shock caused by soaring mortgage rates over the past few weeks has dramatically increased mortgage payments for new homebuyers. (Lance Lambert, Fortune)
- With the metaverse economy projected to be worth between $8 and $13 trillion by 2030, blockchain technology serves as a key driver for virtual real estate sales, allowing for “true” ownership of a property. (Robert Koonin, Dan Jasnow, & Kinnon McDonald, TFL)
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A Primer on Suspension and Debarment for Federal Construction Projects
August 10, 2020 —
Hal J. Perloff - Construction ExecutiveWe’ve all heard the expression that those who deal with the government must turn square corners. This is because the government has a broad array of tools at its disposal to motivate, coax and cajole contractors and federal grant recipients to play by the rules. Those tools include harsh measures such as criminal prosecution and civil false claims act enforcement on the one hand and poor CPARS ratings on the other. A seemingly less severe administrative option available to the government is suspension and debarment. However, any entity that has been suspended or debarred knows that these measures can prove harsh and disruptive.
While the numbers of suspensions and debarments have declined from the all-time high in 2011, there is still significant activity. In its FY 2018 report, the Interagency Suspension and Debarment Committee reported 2444 referrals, 480 suspensions, 1542 proposed debarments and 1334 debarments. The number of referrals for suspension and debarment in FY 2018 is almost exactly the same as the number of GAO bid protests filed that year.
WHAT IS SUSPENSION AND DEBARMENT?
Suspension and debarment are the government’s tools to avoid entities it views as a high risk for poor performance, fraud, waste and abuse. Suspension and debarment preclude a business entity or individual from contracting with the government or from receiving grants, loans, loan guarantees or other forms of assistance from the government. A suspension is a temporary exclusion when the government determines immediate action is necessary pending the completion of an investigation or legal proceeding. A debarment is an exclusion for a defined, reasonable period of time—often three years.
Reprinted courtesy of
Hal J. Perloff, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Perloff may be contacted at
hal.perloff@huschblackwell.com
In Oregon Construction Defect Claims, “Contract Is (Still) King”
April 25, 2012 —
CDJ STAFFWriting in Oregon’s Daily Journal of Commerce, David Anderson looks at the aftermath of the case Abraham v. T. Henry Construction, Inc. In that case, Anderson notes that “the homeowners hired a contractor to build their house, and subsequently discovered extensive water damage” “after expiration of the time to sue for breach of contract.” The homeowners claimed negligence. Oregon’s Supreme Court concluded that “homeowners only had to prove that the contractor negligently caused reasonably foreseeable harm to the homeowner’s property.”
Anderson views this decision as leading to two risks for contractors. “First, contractors can be held liable in tort for breaching building code standards; second, they can be held liable for violating the often-difficult-to-define ‘reasonable care’ standard.” But here, “contract can be king.” The Oregon Supreme Court noted that the contractor “could have avoided exposure to the general ‘reasonable care’ standard by more carefully defining its obligations in the original construction contract.”
He notes that contractors who fail to define their obligations or use generic definitions “may be exposing themselves to a more vague scope of liability.”
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Leaky Wells Spur Call for Stricter Rules on Gas Drilling
September 17, 2014 —
Jim Snyder, Jim Polson and Bradley Olson – BloombergA study that found natural gas drilling polluted drinking water is fueling calls for stricter standards for well construction that could increase costs for energy companies.
The analysis by academic researchers backed the oil and gas industry in one respect: the authors said “fracking” wasn’t to blame for harmful methane seeping into groundwater studied in Texas and Pennsylvania. Some environmentalists contend that by blasting underground rock with a mix of water, chemicals and sand, producers can force the gas into drinking water near the surface.
The bigger concern, according to the analysis published yesterday by the peer-reviewed Proceedings of the National Academy of Sciences, are leaks in the steel-and-cement casings surrounding the well bore. They let gas escape before it gets to the surface, making water undrinkable and in some cases explosive.
Reprinted courtesy of Bloomberg journalists
Jim Snyder,
Jim Polson and
Bradley Olson
Mr. Snyder may be contacted at jsnyder24@bloomberg.net; Mr. Polson may be contacted at jpolson@bloomberg.net; Mr. Olson may be contacted at bradleyolson@bloomberg.net
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