Navigating Threshold Arbitration Issues in Construction Contracts
April 29, 2024 —
Daniel D. McMillan and TJ Auner - The Dispute ResolverIncluding an arbitration clause in your construction contract may not mean that your dispute will be confined to arbitration. Instead, parties often find themselves in court litigating threshold issues related to the existence and/or enforceability of an arbitration clause. Common issues include whether the underlying contract containing the arbitration clause is valid, whether the dispute falls within the scope of the clause, whether the parties complied with contractual prerequisites to arbitration, whether issues related to arbitrability are decided by the court or arbitrator, and whether one of the parties has waived their right to arbitrate. This blog post highlights two recent construction cases addressing threshold issues that a party seeking to enforce—or oppose enforcing—an arbitration clause might face.
Seifert v. United Built Homes, LLC: Delegating Issues of Arbitrability to the Arbitrator
In Seifert, an owner sued a homebuilder in Texas federal court for breach of contract and sought damages and declaratory relief. No. 3:22-CV-1360-E, 2023 WL 4826206 (N.D. Tex. July 27, 2023). The builder moved to compel arbitration. The owner opposed and argued that: (1) there was no agreement to arbitrate because the underlying contract was null and void, and (2) its claim for declaratory relief fell outside the scope of the arbitration clause. The court did not address the merits of either argument. Instead, it determined that these were issues for the arbitrator to decide.
Reprinted courtesy of
Daniel D. McMillan, Jones Day and
TJ Auner, Jones Day
Mr. McMillan may be contacted at ddmcmillan@jonesday.com
Mr. Auner may be contacted at tauner@jonesday.com
Read the court decisionRead the full story...Reprinted courtesy of
United States Supreme Court Backtracks on Recent Trajectory Away from Assertions of General Jurisdiction in Mallory v. Norfolk Southern
August 01, 2023 —
Charles S. Anderson - Lewis BrisboisWashington, D.C. (June 28, 2023) – On June 27, 2023, the U.S. Supreme Court issued a sharply divided opinion that appears to backtrack on the Court’s steady trajectory away from assertions of general jurisdiction in recent years, e.g. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011), Daimler AG v. Bauman, 134 S. Ct. 746 (2014), BNSF Railway Co. v. Tyrrell, 2017, 137 S. Ct. 1549 (2017). Relying on a case from 1917, Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U. S. 93 (1917), Justice Gorsuch, writing on behalf of the plurality, (Justices Gorsuch, Thomas, Sotomayor, and Jackson) (Justice Alito concurring) found that Norfolk Southern “consented” to jurisdiction in Mallory via 42 Pa. Cons. Stat. §5301(a)(2)(i),(b) by registering to do business in Pennsylvania. This statute, 42 Pa. Cons. Stat. §5301, specifically permits jurisdiction over a corporation “incorporat[ed] under or qualifi[ed]as a foreign corporation under the laws of this Commonwealth … for any cause of action that may asserted against him, whether or not arising from acts enumerated in this section.”
In Pennsylvania Fire, the U.S. Supreme Court addressed the Due Process Clause of the U.S. Constitution in connection with a Missouri law that required an out-of-state insurance company desiring to transact any business in the state to file paperwork agreeing to (1) appoint a state official to serve as the company’s agent for service of process and (2) accept service on that official as valid in any suit. After more than a decade of complying with the law, Pennsylvania Fire was served with process and argued that the Missouri law violated due process. The Court unanimously found that there was “no doubt” that Pennsylvania Fire could be sued in Missouri because it had agreed to accept service of process in Missouri on any suit as a condition of doing business there.
Read the court decisionRead the full story...Reprinted courtesy of
Charles S. Anderson, Lewis BrisboisMr. Anderson may be contacted at
Charles.Anderson@lewisbrisbois.com
Autovol’s Affordable Housing Project with Robotic Automation
February 15, 2021 —
Aarni Heiskanen - AEC BusinessJust over two years since breaking ground, Autovol is now using automation in new ways as it nears completion of its first major affordable housing project. The project, Virginia Street Studios, will make high-quality apartment homes more affordable to seniors in San Jose, one of America’s 10 most expensive cities.
The 400,000 square foot Autovol factory has now successfully deployed its unique combination of construction trades and robotic automation. Autovol has hired more than 100 employees, which the company calls Solutioneers. Led by CEO Rick Murdock and co-developed by The Pacific Companies, Autovol is pioneering a new kind of modular construction.
Robotics lead into the future of housing
“Automation and robotics will lead the world into the future of housing,” Murdock said. “What we’re doing hasn’t been attempted before. Our investors and Solutioneers leaned in with lots of confidence, and now we’re seeing great results that prove they were right.”
Read the court decisionRead the full story...Reprinted courtesy of
Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
Bay Area Firm Offers Construction Consulting to Remodels
October 02, 2013 —
CDJ STAFFHomeowners sometimes aren’t too clear on questions of “building codes, permit process or where to find the right materials,” according to Benoni Mocanu, the owner of MB Development. He’s ready to step in an help by offering construction consulting to homeowners doing their own remodeling projects. In addition to providing the advice to help them through their projects, they’re ready to step in if a homeowner finds that they can’t finish the project.
Read the court decisionRead the full story...Reprinted courtesy of
THE CALIFORNIA SUPREME COURT HAS RULED THAT THE RIGHT TO REPAIR ACT (SB800) IS THE EXCLUSIVE REMEDY FOR CONSTRUCTION DEFECT CLAIMS NOT INVOLVING PERSONAL INJURIES WHETHER OR NOT THE UNDERLYING DEFECTS GAVE RISE TO ANY PROPERTY DAMAGE in McMillin Albany LL
January 24, 2018 —
Chapman, Glucksman, Dean, Roeb, & BargerRICHARD H. GLUCKSMAN, ESQ.
GLENN T. BARGER, ESQ.
JON A. TURIGLIATTO, ESQ.
DAVID A. NAPPER, ESQ.
The Construction Industry finally has its answer. The California Supreme Court ruled that the Right to Repair Act (SB800) is the exclusive remedy for construction defect claims alleged to have resulted from economic loss, property damage, or both. Our office has closely tracked the matter since its infancy. The California Supreme Court’s holding resolves the split of authority presented by the Fifth Appellate District’s holding in
McMillin Albany LLC v. Superior Court (2015) 239 Cal.App.4th 1132, which outright rejected the Fourth Appellate District’s holding in
Liberty Mutual Insurance Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98.
By way of background, the Fourth District Court of Appeal held in
Liberty Mutual that compliance with SB800’s pre-litigation procedures prior to initiating litigation is only required for defect claims involving violations of SB800’s building standards that have not yet resulted in actual property damage. Where damage has occurred, a homeowner may initiate litigation under common law causes of action without first complying with the pre-litigation procedures set forth in SB800. Two years later, the Fifth District Court of Appeal, in
McMillin Albany, held that the California Legislature intended that all claims arising out of defects in new residential construction sold on or after January 1, 2003 are subject to the standards and requirements of the Right to Repair Act, including specifically the requirement that notice be provided to the builder prior to filing a lawsuit. Thus, the Court of Appeal ruled that SB800 is the exclusive remedy for all defect claims arising out of new residential construction sold on or after January 1, 2003.
After extensive examination of the text and legislative history of the Right to Repair Act, the Supreme Court affirmed the Fifth District Court of Appeal’s ruling that SB800 preempts common law claims for property damage. The Complaint at issue alleged construction defects causing both property damage and economic loss. After filing the operative Complaint, the homeowners dismissed the SB800 cause of action and took the position that the Right to Repair Act was adopted to provide a remedy for construction defects causing only economic loss and therefore SB800 did not alter preexisting common law remedies in cases where actual property damage or personal injuries resulted. The builder maintained that SB800 and its pre-litigation procedures still applied in this case where actually property damages were alleged to have occurred.
The Supreme Court found that the text and legislative history reflect a clear and unequivocal intent to supplant common law negligence and strict product liability actions with a statutory claim under the Right to Repair Act. Specifically the text reveals “…an intent to create not merely
a remedy for construction defects but
the remedy.” Additionally certain clauses set forth in SB800 “…evinces a clear intent to displace, in whole or in part, existing remedies for construction defects.” Not surprisingly, the Court confirmed that personal injury damages are expressly not recoverable under SB800, which actually assisted the Court in analyzing the intent of the statutory scheme. The Right to Repair Act provides that construction defect claims not involving personal injury will be treated the same procedurally going forward whether or not the underlying defects gave rise to any property damage.
The Supreme Court further found that the legislative history of SB800 confirms that displacement of parts of the existing remedial scheme was “…no accident, but rather a considered choice to reform construction defect litigation.” Further emphasizing how the legislative history confirms what the statutory text reflects, the Supreme Court offered the following summary: “the Act was designed as a broad reform package that would substantially change existing law by displacing some common law claims and substituting in their stead a statutory cause of action with a mandatory pre-litigation process.” As a result, the Supreme Court ordered that the builder is entitled to a stay and the homeowners are required to comply with the pre-litigation procedures set forth in the Right to Repair Act before their lawsuit may proceed.
The seminal ruling by the California Supreme Court shows great deference to California Legislature and the “major stakeholders on all sides of construction defect litigation” who participated in developing SB800. A significant win for builders across the Golden State, homeowners unequivocally must proceed via SB800 for all construction defect claims arising out of new residential construction sold on or after January 1, 2003. We invite you to contact us should you have any questions.
Reprinted courtesy of Chapman Glucksman Dean Roeb & Barger attorneys
Richard Glucksman,
Glenn Barger,
Jon Turigliatto and
David Napper
Mr. Glucksman may be contacted at rglucksman@cgdrblaw.com
Mr. Barger may be contacted at gbarger@cgdrblaw.com
Mr. Turgliatto may be contacted at jturigliatto@cgdrblaw.com
Mr. Napper may be contacted at dnapper@cgdrblaw.com
Read the court decisionRead the full story...Reprinted courtesy of
Dorian’s Wrath: How Event Cancellation Insurance Helps Businesses Recoup Losses from Severe Weather
December 16, 2019 —
Sergio F. Oehninger, Andrea DeField & Daniel Hentschel - Hunton Insurance Recovery BlogAs the 2019 hurricane season peaks, the Bahamas and the Southeast United States have already endured a catastrophic storm. Hurricane Dorian not only tragically caused loss of life and substantial property damage, but it also led to the cancellation or postponement of major events, resulting in considerable economic losses for affected companies.
For instance, Hurricane Dorian forced the cancellation of one of the Rolling Stones’ concerts at Hard Rock Stadium in Miami, as well as the cancellation of R&B singer Chris Brown’s concert in Fort Lauderdale. Dorian also affected the college football game between Florida State University and Boise State University in Jacksonville. Having sold 45,000 tickets to the game, officials were forced to move the game inland to Tallahassee at great expense and effort.
The planners, headliners, teams and fans of these and similar events were not the only ones affected by the cancellations and schedule changes. Hotels, restaurants and businesses relying on tourism also were severely impacted by the schedule changes resulting from Hurricane Dorian over Labor Day weekend. Other programming that may have been affected includes conventions and meetings, fairs and festivals, trade shows and exhibitions, or any other corporate events planned to take place outdoors, requiring travel or with ticket-paying audiences.
Reprinted courtesy of Hunton Andrews Kurth attorneys
Sergio F. Oehninger,
Andrea DeField and
Daniel Hentschel
Mr. Oehninger may be contacted at soehninger@HuntonAK.com
Ms. DeField may be contacted at adefield@HuntonAK.com
Mr. Hentschel may be contacted at dhentschel@HuntonAK.com
Read the court decisionRead the full story...Reprinted courtesy of
Buy America/Buy American, a Primer For Contractors
March 23, 2020 —
John P. Ahlers - Ahlers Cressman & Sleight PLLCPresident Trump has promoted his campaign agenda—bringing manufacturing jobs back to the United States (especially jobs relating or pertaining to the steel industry.) To do this, he has strengthened domestic preferences through the Buy America and Buy American Acts.[1]
1. Buy America Act:
The Buy America Act refers to a collection of domestic contract restrictions pertaining to the U.S. Department of Transportation/Federal Highway Administration projects (highway, mass transit and other transportation projects). The USDOT grants provided to state and local governments prohibit the federal government from obligating funds unless the steel, iron and manufactured products used in the projects are produced in the U.S. Generally, Buy America applies to projects where USDOT provides part of the funding, applies to steel, iron and manufactured products, and requires that “all manufacturing processes, including application of a coating, for these materials…occur in the United States.”
- Buy American:
Buy American is critical for construction contractors because FAR 52.225-9 requires that all federal construction contracts under approximately $7 million[2] contain a clause which mandates that contractors use “only domestic construction material in performing [the] contract.” [Note: This requirement is not limited to steel and steel products, as the Buy America Act is.]
Read the court decisionRead the full story...Reprinted courtesy of
John P. Ahlers, Ahlers Cressman & Sleight PLLCMr. Ahlers may be contacted at
john.ahlers@acslawyers.com
Illusory Insurance Coverage: Real or Unreal?
August 24, 2017 —
David Adelstein - Florida Construction Legal UpdatesIn insurance coverage declaratory relief actions, there are times an insured will argue that the insurance policy coverage is illusory. Typically, an insured will raise this illusory argument if its insurer is denying coverage based on an exclusion or limitation in the policy. If a court agrees and deems the coverage illusory, the court will construe the policy to afford coverage to the insured. This is the obvious value of the argument: coverage!
“A policy is illusory only if there is an internal contradiction that completely negates the coverage it expresses to provide.” The Warwick Corp. v. Turetsky, 42 Fla.L.Weekly D1797a (Fla. 4th DCA 2017). Thus, if a policy grants coverage in one section but then excludes the same coverage in another section, the coverage would be deemed illusory. Id. quoting Tire Kingdom, Inc. v. First S. Ins. Co., 573 So.2d 885, 887 (Fla. 3d DCA 1990). An illusory policy was found in the following examples: (a) a policy covered certain intentional torts but then excluded intended acts; (b) a policy covered advertising injury but elsewhere excluded advertising injury; and (c) a policy covered parasailing but excluded watercrafts. Id. (citations omitted). In all examples, coverage in the policy was completely swallowed up by an exclusion rendering the coverage illusory. Stated differently, coverage was completely contradicted by an exclusion in the policy rendering the policy absurd.
Read the court decisionRead the full story...Reprinted courtesy of
David Adelstein, Florida Construction Legal UpdatesMr. Adelstein may be contacted at
Dadelstein@gmail.com
