Dispute Review Boards for Real-Time Dispute Avoidance and Resolution
August 20, 2019 —
Neal J. Sweeney, Esq. - ConsensusDocsThe use of dispute tribunals generally referred to as Dispute Review Boards or DRBs on major projects has matured. Use of a DRB cannot guarantee elimination of post-project litigation, but when used properly, a DRB can be an enormously effective tool to avoid and resolve disputes rapidly and during construction.
The modest out-of-pocket costs of a DRB can pay big dividends. DRBs offer the opportunity to shorten the life cycle of a dispute by requiring the principals to confront and address the merits of their dispute, rather than simply hunkering down and focusing on posturing and preparing for arbitration or litigation. Even when a DRB cannot immediately resolve a dispute, the process can still facilitate subsequent settlement and cost-effectively prepare both parties for formal adjudication. DRBs can also enhance communications and help the parties avoid and resolve problems before they spiral into disputes.
DRBs were first and are most widely used on big civil and infrastructure projects, but the benefits of a DRB extend equally to major building projects, particularly hospitals, and industrial projects and should be used in those sectors.
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Neal J. Sweeney, Esq., Jones Walker LLPMr. Sweeney may be contacted at
nsweeney@joneswalker.com
Governor Bob Ferguson’s Recent Executive Orders – A Positive Sign for Washington’s Construction Industry
January 21, 2025 —
Ryan Sternoff & Trygve Groh - Ahlers Cressman & SleightOn January 15th, in his first act as Washington’s Governor, Bob Ferguson signed three executive orders, two of which may have a direct impact by removing some of the “red tape” that stifles Washington’s construction industry. This appears to be a positive sign that the Governor’s office is focused on pragmatic action, rather than partisan politics.
Executive Order 25-02 is entitled “Assessing Regulatory Efficiency and Addressing Washington’s Affordable Housing Crisis” and directs all executive and small cabinet agencies (collectively, “State Agencies”) to review their rules and regulations and prepare a report for the Governor’s Office that identifies rules or regulations that impact the construction of new housing. The reports will also identify rules or regulations that are no longer necessary and can be rescinded, rules or regulations that can be amended to speed up housing construction. The reports will include descriptions of proposed amendments to such rules and regulations. The reports must be provided to the Governor’s Office within sixty days.
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Ryan Sternoff, Ahlers Cressman & SleightMr. Sternoff may be contacted at
ryan.sternoff@acslawyers.com
Design-build Trends, Challenges and Risk Mitigation
August 26, 2019 —
Bill Webb - Construction ExecutiveAs the commercial construction industry continues to evolve and grow, design-build methodologies are becoming increasingly popular for their ability to speed completion rates, control costs and produce an overall more efficient process under the guidance of the design-build contractor (DBC).
The Design-Build Institute of America (DBIA) predicts that “over half of owners have already or will use design-build in the next five years” due to the opportunities it provides for innovation and fast-tracking projects. The organization also expects that design build methodologies will account for approximately 45% of all nonresidential construction spending over the 2018 – 2021 forecast period.
Design-build provides many benefits to projects owners, however, holding contractual responsibility for both design and construction does accompany its fair share of challenges and risks for the DBC. Although basic risk management principles are inherent to design build through improved communication and collaboration, strong contractual language and proper insurance programs can greatly control risk exposures.
Reprinted courtesy of
Bill Webb, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Webb may be contacted at
Bill.Webb@rtspecialty.com
Road Project to Improve Access to Peru's Machu Picchu Site
June 04, 2024 —
C.J. Schexnayder - Engineering News-RecordReaching the Incan citadel of Machu Picchu is historically famous for its difficulty. The site’s remote location was a factor in the Spanish conquistadors overlooking it as they swept Peru for its riches. Archaeologist and politician Hiram Bingham had been seeking another “lost” Incan city when he happened across it in 1911.
Reprinted courtesy of
C.J. Schexnayder, Engineering News-Record
Mr. Schexnayder may be contacted at schexnayderc@enr.com
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New California "Construction" Legislation
November 08, 2018 —
Richard H. Glucksman, Esq. & Chelsea L. Zwart, Esq. - Chapman Glucksman Dean Roeb & BargerGovernor Jerry Brown signed two potentially impactful Senate Bills relating to the construction of apartment buildings late last month. These Bills, discussed further below, were introduced, in part, in response to the Berkeley balcony collapse in June 2015, which was determined by the California Contractors State License Board to be caused by the failure of severely rotted structural support joists the repair of which were deferred by the property manager, despite indications of water damage.
SENATE BILL 721 ESTABLISHES HEIGHTENED “LOAD-BEARING” INSPECTION REQUIREMENTS
On August 21, 2018, the California State Senate passed SB 721, one of two bills by Senator Jerry Hill introduced this year seeking to address the safety of multifamily rental residences. Now that the Governor has signed the Bill, a new section will be added to the California Health and Safety Code, requiring that every 6 years, destructive testing be performed on at least 15% of each type of load-bearing, wood framed exterior elevated element (such as balconies, walkways, and stair landings) in apartment buildings with 3 or more units. Interestingly, prior to being passed by the State Senate, SB 721 was revised in June 2018, such that the inspection requirements do not apply to common interest developments (i.e., condominiums).
As set forth in the new Health and Safety Code Section 17973:
"the purpose of the inspection is to determine that exterior elevated elements and their associated waterproofing elements are in a generally safe condition, adequate working order, and free from any hazardous condition caused by fungus, deterioration, decay, or improper alteration to the extent that the life, limb, health, property, safety, or welfare of the public or the occupants is not endangered."
The inspection must be paid for by the building owner and performed by a licensed contractor, architect, or civil or structural engineer, or a certified building inspector or building official from a recognized state, national, or international association. Emergency repairs identified by the inspector must be made immediately. For non-emergency repairs, a permit must be applied for within 120 days and the repair completed within 120 days of the permit’s issuance. If repairs are not completed within 180 days, civil penalties of $100-$500 per day may be imposed.
The required inspection must be completed by January 1, 2025 and every 6 years thereafter, unless an equivalent inspection was performed during the 3 years prior to January 1, 2019, the effective date of the new law. For a building converted to condominiums that will be sold after January 1, 2019, the inspection required by Health and Safety Code Section 17973, must be performed prior to the first close of escrow.
SENATE BILL 1465 SETS CONTRACTOR REPORTING REQUIREMENTS
The Governor also signed SB 1465, adding Sections 7071.20, 7071.21, and 7071.22 to the California Business and Professions Code. The new law requires that a contractor licensed with the Contractors’ State License Board "report to the registrar in writing within 90 days after the licensee has knowledge of any civil action resulting in a final judgment, executed settlement agreement, or final arbitration award in which the licensee is named as a defendant or crossdefendant, filed on or after January 1, 2019," that meets certain and specific criteria, including that it is over $1 million and arises out of an action for damages to a property or person allegedly caused by specified construction activities of the contractor on a multifamily rental residential structure.
Where more than one contractor was named as a defendant or cross-defendant, each of the contractors apportioned more than $15,000 in liability must report the action. Importantly, the new statute also imposes similar reporting requirements on insurers of contractors. SB 1465 also addresses an impacted party’s failure to comply with the reporting requirements.
COMMENT
Both SB 721 and SB 1465 are potentially significant and seek “legislative reform” to address construction issues by placing a greater burden on apartment owners as well as builders and subcontractors. How pragmatic and what impact they will have on the industry is obviously developing. If you are interested in receiving further detail concerning the Bills, please contact us. We are analyzing the new legislation and its intent and will be providing our ongoing comments.
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RICHARD H. GLUCKSMAN, ESQ. CHELSEA L. ZWART, ESQ., CGDRBChelsea L. Zwart may be contacted at
czwart@cgdrblaw.com
New York Appeals Court Rekindles the Spark
March 16, 2017 —
Lian Skaf - White and Williams LLPIn John Trimble, et al. v. City of Albany, et al., 2016, 144 A.D.3d 1484; 42 N.Y.S. 3d 432 (N.Y. App. Div.), the Supreme Court of New York, Appellate Division, addressed the issue of governmental immunity for municipal fire companies. The court held that the plaintiff, John Trimble (Trimble), had sufficient evidence related to the four-pronged test for establishing a “special relationship” between a municipality and a citizen for liability to attach. In addition, the court held that the defendants were not entitled to summary judgment on the issue of governmental immunity. Specifically, regarding the latter holding, the court stated that, when there is no actual choice made on the part of the government, the government’s actions cannot be considered discretionary and immunity will not apply.
In the case at hand, a fire occurred at Trimble’s home on the evening of February 2, 2013. Trimble called 911 and the Department of Fire and Emergency Services for the City of Albany (the Department) responded. After extinguishing the fire, the Department conducted an investigation and cleared the home. The Department’s investigators then told Trimble that the fire was extinguished and it was safe to enter the home. Trimble did so, removing some items so that he could stay with relatives that night. Several hours later, there was a rekindle and the rekindled fire destroyed the home.
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Lian Skaf, White and Williams LLPMr. Skaf may be contacted at
skafl@whiteandwilliams.com
You May Be Able to Dodge a Bullet, But Not a Gatling Gun
November 16, 2020 —
Garret Murai - California Construction Law BlogIn the days before cable, and long before Netflix, I watched my fair share of spaghetti westerns on lazy weekend afternoons. Bullets zinging past cowboys, knocking off hats, and ricocheting off rocks. But while you might get lucky and dodge a bullet, not so with a Gatling gun.*
In the next case, C. W. Johnson & Sons, Inc. v. Carpenter, Case No. B300187 (August 7, 2020), a contractor who was unlicensed during a portion of a project dodged a bullet. However, I’m not so sure that he’s going to be able to dodge the hail of bullets that are coming after.
The C. W. Johnson & Sons Case
As cases go, the C. W. Johnson & Sons case is pretty straightforward. In March 2016, Contractor C. W. Johnson & Sons, a family owned flooring company, was contracted to install flooring at Randall Carpenter’s house for a total contract price of $68,343. Work was performed between March and September 2016 including some warranty, repair and corrective work after September 2016.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Reconciling Prompt Payments and Withholding of Retention Payments
March 30, 2016 —
Eric J. Rollins, Esq. – Newmeyer & Dillion, LLPIt is common in California for the owners of a project to make monthly payments to a contractor for work as it is completed, but withhold a certain percentage as a guarantee of future satisfactory performance. Contractors almost always pass these withholdings on to their subcontractors. Unsurprisingly, disputes can arise regarding when the withheld retentions must be paid.
Civil Code section 8814, subdivision (a), states that a direct contractor must pay each subcontractor its share of a retention payment within ten days after receiving all or part of a retention payment. However, an exception exists -- a direct contractor may withhold from the retention paid to a subcontractor an amount not in excess of 150 percent of the estimated value of the disputed amount, whenever a “good faith dispute exists between the direct contractor and a subcontractor.” (See Cal. Civ. Code, § 8814, subd. (c).) The problem with the statute is that it offers no help in defining a “good faith dispute,” and the California courts have historically not provided much guidance either. Can a “good faith dispute” be any dispute between the contracting parties, e.g., a dispute regarding change orders, mismanagement, etc.? Or must the dispute relate specifically to the retention? Unfortunately for California litigants, the answer may depend on the appellate district in which the parties find themselves.
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Eric J. Rollins, Esq., Newmeyer & Dillion, LLPMr. Rollins may be contacted at
eric.rollins@ndlf.com
