How is Negotiating a Construction Contract Like Buying a Car?
March 01, 2017 —
Christopher G. Hill – Construction Law MusingsI know, you’re probably looking for a punchline, and likely thinking something along the lines of “only a construction attorney would be sitting in his office and come up with such an analogy,” but I really do think it’s a good one.
When you are buying a car, you look for priorities. Is the color what you want? Is the motor a hybrid or a v-6? Does it have Android Auto? What is the fuel mileage? All of these things may be more or less important to you. If you can get your priorities for a price that is attractive, you will likely let some other less important items, e. g. trunk space or rear seat leg room, slide and purchase the car anyway. Furthermore, you may use these minor items as negotiating points to either get one of the priorities or a lower price. Of course the dealership will want to get its priorities, likely a sale and a profit, when negotiating and will have certain items that it won’t move on just as you have terms that you won’t move on.
Much like when you walk onto the car lot, and particularly as a subcontractor looking at a contract from a general contractor, or a GC looking at the contract from the owner of a project, a construction contract presented to you is the starting point. When looking at the contract, be sure to have some non-negotiable items in mind when taking a critical eye to the terms of that contract. Some of these terms may be more or less negotiable depending on your experience with the other party to the construction contract. For instance, striking a pay if paid clause may be less important with a paying party with whom you have a 10 year history without payment problems. On the other hand, if it is your first contract with the other party, a stricter list may be required. So, much like a dealer that you know will stand behind its cars, you may be more willing to take more “risk” in entering a construction contract with a trusted/known owner or GC.
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Christopher G. Hill, The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Subsequent Purchaser Can Assert Claims for Construction Defects
October 17, 2022 —
David Adelstein - Florida Construction Legal UpdatesCan a subsequent purchaser pursue construction defect claims relating to the original construction of the property? This was the threshold issue on a motion for summary judgment by a drywall manufacturer against a subsequent purchaser of a home in Karpel v. Knauf Gips KG, 2022 WL 4366946 (S.D. Fla. 2022). This matter deals with the defective Chinese drywall that was installed in homes years ago. The plaintiffs, which were subsequent purchasers of a home, sued the manufacturer of the defective drywall for various theories including negligence, negligence per se, strict liability, breach of express and/or implied warranty, private nuisance, unjust enrichment, and Florida’s Deceptive and Unfair Trade Practices Act.
The trial court noted, from the onset, that Florida does NOT have a subsequent purchaser rule that prohibits subsequent purchasers from asserting construction defect claims. With this consideration in mind, the trial court went through the claims the plaintiff, as a subsequent purchaser, asserted against the manufacturer to determine whether they were viable claims as a matter of law.
Negligence Claim
The trial court found that a subsequent purchaser could sue in negligence. “Florida courts have long allowed subsequent purchasers to sue for negligence including in construction defect litigation.” Karpel, supra, at *2.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Two-Part Series on Condominium Construction Defect Issues
May 19, 2014 —
Beverley BevenFlorez-CDJ STAFFGregory L. Shelton, construction law attorney at Horack, Talley, Pharr & Lowndes, P.A., wrote a two-part series in the Charlotte Observer about condominium construction defect issues. The first part described “common defects and their consequences,” while the second part explained “how legal time limits can prevent the association or its owners from suing the parties responsible for defective construction.”
If interested in purchasing a condo unit, Shelton recommended hiring a building inspector, though he cautioned that “the inspector should be truly independent. His client should be you and not ‘the sale.’” In the second part, Shelton discussed the complexities of statutes of limitations and statutes of repose.
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No Indemnity Coverage Where Insured Suffers No Loss
November 05, 2014 —
Tred R. Eyerly - Insurance Law HawaiiThe insured subcontractor sought coverage under its Builder's Risk policy for loss despite already being paid under contract the amount sought under the policy. MKB Constr. v. Am Zurich Ins. Co., 2014 U.S. Dist. LEXIS 136096 (W.D. Wash. Sept. 24, 2014).
MKB contracted with the Lower Yukon School District (LYSD) to place gravel fill for a new building pad upon which a school building would be placed in Emmonak, Alaska. The project site was built on tundra that melted in the summer, becoming marshy and pocketed by pools of standing water. LYSD provided the bidding contractors with information stating that settlements of 3 to 9 inches could be expected in areas with 30 inches of fill.
The contract was awarded to MKB, who subsequently realized it had under bid the amount of gravel fill that would be required. The estimated difference in the amount bid and the amount that would be needed was 6,583 cubic yards. LYSD refused to increase the contract price.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Massachusetts Lawyers Weekly Honors Construction Attorney
November 20, 2013 —
CDJ STAFFMassachusetts Lawyers Weekly has named Grace V. B. Garcia one of its 2013 Top Women of the Law. She is an attorney at Morrison Mahoney LLP in Boston, and her practice focuses on construction law, product liability, premises liability, commercial litigation, and American with Disability Act cases.
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Damron Agreement Questioned in Colorado Casualty Insurance v Safety Control Company, et al.
February 10, 2012 —
CDJ STAFFSafety Control and EMC appealed the judgment in Colorado Casualty Insurance Company versus Safety Control Company, Inc., et al. (Ariz. App., 2012). The Superior Court in Maricopa County addressed “the validity and effect of a Damron agreement a contractor and its excess insurer entered into that assigned their rights to sue the primary insurer.” Judge Johnsen stated, “We hold the agreement is enforceable but remand for a determination of whether the stipulated judgment falls within the primary insurer’s policy.”
The Opinion provides some facts and procedural history regarding the claim. “The Arizona Department of Transportation (“ADOT”) hired DBA Construction Company (“DBA”) to perform a road-improvement project on the Loop 101 freeway. Safety Control Company, Inc. was one of DBA’s subcontractors. As required by the subcontract, Safety Control purchased from Employer’s Mutual Casualty Company (“EMC”) a certificate of insurance identifying DBA as an additional insured on a policy providing primary coverage for liability arising out of Safety Control’s work.”
A collision occurred on site, injuring Hugo Roman. Roman then sued ADT and DBA for damages. “Colorado Casualty tendered DBA’s defense to the subcontractors, including Safety Control. Safety Control and EMC rejected the tender. Roman eventually settled his claims against DBA and ADOT. DBA and ADOT stipulated with Roman for entry of judgment of $750,000; Roman received $75,000 from DBA (paid by Colorado Casualty) and $20,000 from ADOT, and agreed not to execute on the stipulated judgment. Finally, DBA, ADOT and Colorado Casualty assigned to Roman their rights against the subcontractors and other insurers.”
Colorado Casualty attempted to recover what “it had paid to defend DBA and ADOT and settle with Roman. However, Roman intervened, and argued that “Colorado Casualty had assigned its subrogation rights to him as part of the settlement agreement.” The suit was not dismissed, but the Superior Court allowed Roman to intervene. “Roman then filed a counterclaim against Colorado Casualty and a cross-claim against the subcontractors.”
All claims were settled against all of the defendants except Safety Control and EMC. “The superior court ruled on summary judgment that EMC breached a duty to defend DBA and that as a result, ‘DBA was entitled to settle with Roman without EMC’s consent as long as the settlement was not collusive or fraudulent.’ After more briefing, the court held the stipulated judgment was neither collusive nor procured by fraud and that EMC therefore was liable to Roman on the stipulated judgment and for his attorney’s fees. The court also held Safety Control breached its subcontract with DBA by failing to procure completed-operations insurance coverage and would be liable for damages to the extent that EMC did not satisfy what remained (after the other settlements) of the stipulated judgment and awards of attorney’s fees.” Safety Control and EMC appealed the judgment.
Four reasons were given for the decision of the ruling. First, “the disagreement between Roman and Colorado Casualty does not preclude them from pursuing their claims against EMC and Safety Control.” Second, “the settlement agreement is not otherwise invalid.” Third, “issues of fact remain about whether the judgment falls within the EMC policy.” Finally, “Safety Control breached the subcontract by failing to procure ‘Completed Operations’ coverage for DBA.”
In conclusion, the Superior Court affirmed in part, reversed in part, and remanded . “Although, as stated above, we have affirmed several rulings of the superior court, we reverse the judgment against EMC and remand for further proceedings consistent with this Opinion to determine whether the stipulated judgment was a liability that arose out of Safety Control’s operations. In addition, we affirm the superior court’s declaratory judgment against Safety Control but remand so that the court may clarify the circumstances under which Safety Control may be liable for damages and may conduct whatever further proceedings it deems appropriate to ascertain the amount of those damages. We decline all parties’ requests for attorney’s fees pursuant to A.R.S. § 12-341.01 without prejudice to a request for fees incurred in this appeal to be filed by the prevailing party on remand before the superior court.”
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Wells Fargo Shuns Peers’ Settlement in U.S in Mortgage
May 13, 2014 —
Andrew Zajac – BloombergFollowing two years in which its big-bank peers paid almost $2 billion to resolve fraud accusations by the Federal Housing Administration, Wells Fargo & Co. (WFC) has decided it isn’t giving up so easily.
Wells Fargo was one of five banks that agreed in 2012 to a nationwide, $25 billion settlement with the Justice Department over mortgage wrongdoing that included botched foreclosures. The FHA then took additional action against four of the banks, including Wells Fargo, for related housing-crisis wrongdoing. Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. decided to settle those matters. San Francisco-based Wells Fargo, which argued the nationwide settlement should have blocked the new FHA claims against it, chose to fight.
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Andrew Zajac, BloombergMr. Zajac may be contacted at
azajac@bloomberg.net
Strategy for Enforcement of Dispute Resolution Rights
May 30, 2018 —
Whitney Judson - Smith CurrieArbitration and litigation each offer their own benefits and drawbacks to litigants looking to resolve a construction dispute. A careful analysis of these benefits and drawbacks may be helpful in determining whether to avoid or pursue either dispute resolution process. Arbitration is oftentimes regarded as the more economically feasible dispute resolution option and is therefore attractive to many construction dispute litigants. Although arbitration may prove to be less expensive than litigation in the long run, some litigants may prefer to file a case in court because the upfront filing fees in litigation are less expensive than the filing fees of arbitration.
Litigants may also prefer the decision makers of one process for dispute resolution over another. Arbitrators in a construction dispute oftentimes have a background in the construction industry, whereas a judge or jury may not. Strategy may dictate whether the preferable decision maker should have experience within the construction industry or be free of any construction industry knowledge and possible biases. The finality of decisions may also be a reason to strategically choose one dispute resolution process over another. Arbitration decisions are overturned only under very narrow and specific circumstances. The losing party in litigation however, has a right to appeal decisions to a higher court and has more options for recourse when the findings of the court are not supported by the evidence or the law.
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Whitney Judson, Smith CurrieMs. Judson may be contacted at
wtjudson@smithcurrie.com
