Waive Your Claim Goodbye: Louisiana Court Holds That AIA Subrogation Waiver Did Not Violate Anti-Indemnification Statute and Applied to Subcontractors
May 23, 2022 —
Gus Sara - The Subrogation StrategistIn 2700 Bohn Motor, LLC v. F.H. Myers Constr. Corp., No. 2021-CA-0671, 2022 La. App. LEXIS 651 (Bohn Motor), the Court of Appeals of Louisiana for the Fourth Circuit (Court of Appeals) considered whether a subrogation waiver in an AIA construction contract was enforceable and, if so, whether the waiver also protected subcontractors that were not signatories to the contract. The lower court granted the defendants’ motion for summary judgment based on the subrogation waiver in the construction contract. The plaintiffs appealed the decision, arguing that the subrogation waiver violated Louisiana’s anti-indemnification statute. The plaintiffs also argued that even if enforceable, the subrogation waiver did not apply to the defendant subcontractors since they were not parties to the contract. The Court of Appeals ultimately held that the subrogation waiver did not violate the anti-indemnification statute because the waiver did not shift liability, which the statute was intended to prevent. In addition, the Court of Appeals found that the contract sufficiently satisfied the required elements for the defendant subcontractors to qualify as third-party beneficiaries of the contract.
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Gus Sara, White and WilliamsMr. Sara may be contacted at
sarag@whiteandwilliams.com
Warning! Danger Ahead for Public Entities
July 30, 2019 —
Michael J. Baker - Snell & Wilmer Under Construction BlogPublic entities are known to assert False Claims actions “to up the ante” to intimidate and aggressively address contractor construction claims. This strategy in the case of John Ross of Industrial Sheet Metal, Inc. (JRI) V. City of Los Angeles Department of Airports (LAWA), 29 Cal. App. 5th 378 (2018), backfired on the public entity, LAWA, in a big way and should serve as a warning to public entities about expanding claims to include False Claim actions. In this case, LAWA was awarded $1 in contract damages, its California False Claims Act (CFCA) claim was rejected by the jury as were JRI’s claims against LAWA. Despite losing on the substantive contract claims, the trial court found that JRI “prevailed in the action” under the relevant CFCA fee provision, Government Code 12652, subd. (g)(9)(B), regardless of JRI’s failure to prevail in the action as a whole. The California Appellate Court (hereinafter “Court”) affirmed the trial court’s finding.
The CFCA is analogous to the federal False Claims Act (FFCA; 31 U.S.C. 3729 et seq.). Since the CFCA is patterned on similar federal legislation, it was appropriate for the Court to look to precedent construing this similar federal act in interpreting the CFCA provisions. Accordingly, the Court looked at the False Claims Act cases for guidance in upholding the trial court’s decision in its determination that JRI was the “prevailing party” for determining an attorney’s fees award against LAWA.
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Michael J. Baker, Snell & WilmerMr. Baker may be contacted at
mjbaker@swlaw.com
Federal Miller Act Payment Bond Claim: Who Gets Paid and Who Does Not? What Are the Deadlines?
September 16, 2019 —
William L. Porter - Porter Law GroupWhen working on federal public works construction projects there are no Stop Payment Notice or Mechanics Lien remedies available to protect subcontractors’ and suppliers’ right to payment. Instead, unpaid subcontractors and suppliers must resort to making a claim for payment under a federal law known as the AMiller Act@ (40 USCS 3131 et seq.). Many claimants however, do not realize that the right to make a Miller Act claim is not available to all subcontractors and suppliers. Before committing to performing work on a federal project it is important for subcontractors and suppliers to understand whether or not a Miller Act claim will be available. For those who have no Miller Act rights, careful consideration must be given to whether it is worth the risk to take on the project. For those who have valid Miller Act claim rights, important deadlines must be considered.
Who Gets Paid Under a Miller Act and Who Does Not
For federal projects in excess of $100,000, contractors who have a contract directly with the Federal Government must obtain Miller Act Payment Bond intended for the protection of Subcontractors, laborers and material suppliers to the project.
As a general rule, every subcontractor, laborer, or material supplier who deals directly with the prime contractor and is unpaid may bring a lawsuit for payment against the Miller Act Payment Bond. Further, every unpaid subcontractor, laborer, or material supplier who has a direct contractual relationship with a first-tier subcontractor may bring such an action. The deadlines for these claims are described below.
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William L. Porter, Porter Law GroupMr. Porter may be contacted at
bporter@porterlaw.com
Pennsylvania Supreme Court: Fair Share Act Does Not Preempt Common Law When Apportioning Liability
March 09, 2020 —
Mark T. Caloyer & Joelle Nelson - Lewis Brisbois NewsroomOn February 19, 2020, the Pennsylvania Supreme Court issued a long awaited opinion in the matter of Roverano v. John Crane, Inc., No. 26 EAP 2018, No. 27 EAP 2018 (Pa. 2020). The Court’s opinion is a must-read for anyone involved in asbestos litigation in Pennsylvania.
In Roverano, the Court ruled that Pennsylvania’s Fair Share Act (42 Pa.C.S. § 7102) does not preempt Pennsylvania common law favoring per capita apportionment of liability to strict liability defendants. In addition, the Court ruled that bankruptcy trusts, that are either joined as third-party defendants or that have entered into a release with the plaintiff, may be included on the verdict sheet for purposes of liability.
In this case, Mr. Roverano sued 30 defendants in strict liability and Defendant Crane filed a joinder complaint against Johns-Manville Personal Injury Trust. The case proceeded to trial against eight defendants in the Court of Common Pleas of Philadelphia County. At trial, some of the defendants filed motions in limine seeking a ruling that the Fair Share Act applied to asbestos cases. The trial court denied the motion, concluding that asbestos exposure cannot be quantified, and held that that it would apportion liability on a per capita basis consistent with the Court’s opinion in Baker v. AC&S, 755 A.2d 664 (Pa. 2000).
Reprinted courtesy of
Mark T. Caloyer, Lewis Brisbois and
Joelle Nelson, Lewis Brisbois
Mr. Caloyer may be contacted at Mark.Caloyer@lewisbrisbois.com
Ms. Nelson may be contacted at Joelle.Nelson@lewisbrisbois.com
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Construction Litigation Roundup: “I Never Had a Chance”
May 29, 2023 —
Daniel Lund III - Lexology“I never had a chance.”
Such was the plea of a general contractor to a Maryland federal court after having been terminated for failure to perform.
“The Agreement provides no express right to cure,” found the court, weighing in on the contractor’s wrongful termination claim. Indeed, the contract was also very clear on termination, allowing for termination for cause on numerous bases, including a common catchall: if the contractor “persistently fails to perform the provisions of this Agreement.”
In advance of the actual date of termination, the owner wrote to the contractor, in accordance with the contract: “Notice is also given that seven days from the date of this correspondence, [owner] will exercise its [termination] rights under Section 13.2.2.2 of the Contract." The communication from the owner contained no discussion of allowing the contractor an opportunity to cure its alleged default.
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Daniel Lund III, PhelpsMr. Lund may be contacted at
daniel.lund@phelps.com
US Secretary of Labor Withdraws Guidance Regarding Independent Contractors
June 21, 2017 —
Tanya Salgado - White and Williams LLPThe United States Secretary of Labor has withdrawn an informal guidance regarding independent contractors issued in 2015. We reported on the 2015 Administrator’s Interpretation here. The 2015 Interpretation provided a detailed explanation of the economic realities test, which is used to determine whether a worker is to be classified as an independent contractor or an employee under the Fair Labor Standards Act (FLSA).
While the 2015 Interpretation did not change existing case law on independent contractor status, it was seen as sending a signal from the Department of Labor (DOL) regarding the agency’s focus. The DOL concluded the 2015 Interpretation with the statement, “most workers are employees under the FLSA’s broad definitions…” Just as the DOL’s 2015 Interpretation did not change existing case law, the DOL’s withdrawal of the Interpretation does not change the law in any way. The economic realities test remains the legal standard for determining independent contractor status under the FLSA.
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Tanya Salgado, White and Williams LLPMs. Salgado may be contacted at
salgadot@whiteandwilliams.com
Traub Lieberman Partner Jonathan Harwood Obtains Summary Judgment Determining Insurer Has No Duty to Defend or Indemnify
February 27, 2023 —
Jonathan R. Harwood - Traub LiebermanTraub Lieberman Partner Jonathan Harwood obtained summary judgment in favor of the Plaintiff determining that it had no duty to defend or indemnify an insured in a personal injury action, in a case brought in the Eastern District of New York.
The Plaintiff, an insurance provider (“the Insurer”), issued a General Commercial Policy (the “Policy”) to the Defendant, a commercial property owner (the “Property Owner”). In the underlying action, a former employee (the “Employee”) of a concrete vendor sued the Property Owner, and others, in New York Supreme Court, Queens County, for an injury that occurred on the street in front of the Property Owner’s premises during the course of repairs of sewer pipes that serviced the Property Owner’s premises.
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Jonathan R. Harwood, Traub LiebermanMr. Harwood may be contacted at
jharwood@tlsslaw.com
Parties to an Agreement to Arbitrate May be Compelled to Arbitrate with Non-Parties
February 28, 2022 —
Paul R. Cressman Jr. - Ahlers Cressman & Sleight PLLCIn a recent case decided by Division III of the Washington Court of Appeals, David Terry Investments, LLC – PRC v. Headwaters Development Group LLC,[1] the court held that parties to an arbitration agreement can be compelled to arbitrate related claims with non-parties to the agreement based on the doctrine of equitable estoppel.
The case involved six joint venture agreements to develop three separate properties in Spokane, two joint venture agreements per property. One entity, David Terry Investments, LLC – PRC (“DTI”), owned by David Terry, was a partner in each of the six joint venture agreements. DTI joint ventured with S.G. Spady Consulting (“SGSC”) and with Headwaters Development Group LLC (“HDG”) separately for each of the three properties. HDG owned the three properties, and SGSC was to provide construction management advice. Steve Spady was the principal of both HDG and SGSC. Stoneridge was a licensed general contractor, the principal of which was also Steve Spady.
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Paul R. Cressman Jr., Ahlers Cressman & Sleight PLLCMr. Cressman may be contacted at
paul.cressman@acslawyers.com
