When Is a Project Delay Material and Actionable?
January 11, 2022 —
Rick Erickson - Snell & Wilmer Real Estate Litigation BlogWelcome to 2022! This year, the construction industry will undoubtedly reflect on the last two years as unprecedented times plagued by construction project delays. The COVID-19 pandemic contributed to suspension of work and closure of construction projects worldwide in 2020. The end of 2021 brought additional delays caused by an inexplicable clog in the supply chain of construction materials. The combined impact of these events on project milestones and completion deadlines led our clients to ask, with unusual and particular urgency, who is liable for such delays and how do contracting parties lessen the consequences from such unexpected and uncontrollable delays.
Granted that project delays are nothing new or unusual. They were common enough before inflation caused shipping complications and pandemic decimated the construction labor force. All delays, whatever the source, variably cause loss to all players on a construction project. But not all delays matter when it comes to claims and remedies available to the contracting parties in dispute resolution, where the determinative focus is on material delays impacting the entire project and on delays the claimant can credibly prove.
Most, if not all, jurisdictions interpret actionable delays from the contract documents for the project. The contract is definitely where you should start before pursuing any delay remedies. Delay remedies may be a time extension only, or a time extension plus your additional general conditions. Some delay remedies may be barred by the contract’s express terms and may be enforced adversely by the courts when such contract terms are indisputable. See Quinn Constr. v. Skanska USA Bldg., Inc., 730 F. Supp. 2d 401, 411 (D.C. Pa. 2010) (enforcing the subcontractor’s contractual waiver of claims for delay and disruption damages). On the other hand, delay damages that are expressly allowed by the contract—like overtime necessitated by the delays—are usually actionable and recoverable. Id. However, not only the contract terms, but applicable law, may affect the outcome.
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Rick Erickson, Snell & WilmerMr. Erickson may be contacted at
rerickson@swlaw.com
Keeping Detailed Records: The Best Defense to Constructive Eviction
October 24, 2023 —
Ben T. Welch & Ken Brown - Snell & WilmerInevitably, commercial property owners and managers will be faced with a claim by a tenant of constructive eviction. This article is intended to describe what constructive eviction is and to suggest what owners and managers can do to prepare for, and ward off, such claims.
Constructive eviction occurs where a tenant’s “right of possession and enjoyment” of the leasehold is disrupted by the landlord in a manner that renders the premises “unsuitable for the purposes intended.”i Put another way, it is interference that is so “substantial nature and so injurious as to deprive the tenant of the beneficial enjoyment of a part or the whole of the demised premises.”ii Although easy to describe in theory, constructive eviction can be devilishly difficult to determine in the real world. In litigation, determining when interference crosses over the line to constructive eviction is intensely fact-sensitive and resists sweeping generalizations.iii
For instance, Utah courts have held that tenants have been constructively evicted when they have been subjected to continual harassment or insults by the landlord or the landlord’s agent,iv prevented or impaired in their access to the leased premises during operating hours,v or when a landlord fails to provide an operable elevator (or other essential commercial amenities) necessary for a tenant’s business operations.vi By contrast, claims of “discomfort” or “inconvenience” have been rejected as a basis for constructive eviction.vii The same goes for claims that a landlord wrongfully served a three-day notice to pay or quit.viii
Generally, constructive eviction is an affirmative defense made in response to a landlord’s lawsuit for nonpayment of rent.ix It is not, as is commonly supposed, a basis for a tenant’s premature abandonment of the premises. In other words, the defense is raised after the tenant has vacated as a result of being effectively “evicted.”x Further, the defense requires the tenant to actually abandon the premises and do so within a “reasonable time” after the alleged interference.xi A tenant cannot stay in possession and simply refuse to pay rent on the basis of constructive eviction.xii
The key consideration in preparing for, and responding to, a claim of constructive eviction is keeping good records. A tenant claiming constructive evicting likely must prove that the issue was raised in a timely manner and, despite multiple entreaties, was never resolved.xiii As such, it is critical that landlords acknowledge tenant complaints as well as document in writing their efforts to ameliorate those complaints. While a landlord does not carry the burden of proof for constructive eviction, detailed documentation can thwart a tenant’s claim that a landlord has been inattentive or unwilling to address the tenant’s concerns.
Detailed records are also useful in disputes where a tenant claims substantial interference. “The whole point of constructive eviction is that the landlord basically drove the tenant out through the landlord’s action or inaction.”xiv As such, a landlord that is unable to document the steps taken in response to complaints will be grossly disadvantaged whereas the tenant, which had control and knowledge of the premises, will have a much easier time describing how the alleged interference deprived them of enjoying the premises.
Even with meticulous records, however, owners and managers may still face claims of construction eviction. In such instances, counsel should be retained to properly advise on compiling, preserving, and employing the evidence necessary to refute the tenant’s claims.
i Gray v. Oxford Worldwide Grp., Inc., 139 P.3d 267, 269 (Utah Ct. App. 2006).
ii Gray, 139 P.3d at 270 (citing Neslen, 254 P.2d at 850) (internal formatting omitted).
iii See Gray, 139 P.3d at 269–70 (citing Thirteenth & Washington Sts. Corp. v. Neslen, 254 P.2d 847, 850 (Utah 1953)); Brugger v. Fonoti, 645 P.2d 647, 648 (Utah 1982).
iv See Gray, 139 P.3d at 270–71.
v Thirteenth & Washington Sts. Corp. v. Neslen, 254 P.2d 847 (Utah 1953).
vi See Richard Barton Enterprises, Inc. v. Tsern, 928 P.2d 368, 375, 378 (Utah 1996) (citing Union City Union Suit Co. v. Miller, 162 A.D.2d 101, 556 N.Y.S.2d 864 (1990)).
vii See Myrah v. Campbell, 163 P.3d 679, 682–84 (Utah Ct. App. 2007).
viii Barton v. MTB Enterprises, 889 P.2d 476, 477 (Utah Ct. App. 1995); see also Brugger, 645 P.2d at 648 (stating that the tenant’s complaints revolved around standard problems commonly associated with building maintenance and did not rise to the level of substantial interference); viv Reid v. Mutual of Omaha Ins. Co., 776 P.2d 896, 898–900 (Utah 1989) (upholding trial court’s findings of fact concerning insufficiency of disruption so as to justify claim for constructive eviction).
ix See Kenyon v. Regan, 826 P.2d 140, 142 (Utah Ct. App. 1992).
x See Kenyon, 826 P.2d at 142.
xi See Kenyon, 826 P.2d at 142; see also Barton v. MTB Enterprises, Inc., 889 P.2d 476, 477 (Utah Ct. App. 1995); Brugger, 645 P.2d at 648.
xii See Kenyon, 826 P.2d at 142 (citing Fernandez v. Purdue, 518 P.2d 684, 686 (Utah 1974)).
xiii See Brugger, 645 P.2d at 648 (noting that while the tenant had raised legitimate issues concerning state of the premises, the landorld had taken steps to remedy the problems within a reasonable time) (citing 49 Am.Jur.2d, Landlord and Tenant, § 617).
xiv Barton, 889 P.2d at 477.
Reprinted courtesy of
Ben T. Welch, Snell & Wilmer and
Ken Brown, Snell & Wilmer
Mr. Welch may be contacted at bwelch@swlaw.com
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The Power of Team Bonding: Transforming Workplaces for the Better
June 10, 2024 —
Alexa Stephenson & Brittney Aquino - Kahana FeldThe number of civil Complaints filed in California has been steadily rising over the last few years. When employees struggle daily to make a dent in what seems as an insurmountable to-do list, taking time away from work to chat with coworkers about their weekends or the latest Netflix drop seems counterintuitive. Yet recent studies suggest that taking even 30 minutes away from your workday to engage in team bonding has lasting benefits. Investing in team bonding activities is not just about having fun; it is about creating a cohesive, motivated, and high-performing team that can drive organizational success. As the evidence suggests, the return on investment for team bonding activities is substantial, making it a vital component of any successful workplace strategy.
Enhancing Communication and Collaboration
One of the primary benefits of team bonding is improved communication among team members. Effective communication is the bedrock of any successful team, and activities designed to foster relationships can significantly enhance this aspect. A study conducted by MIT’s Human Dynamics Laboratory found that teams with higher levels of social interaction outside of formal meetings performed better than those with limited interaction. These teams were more cohesive, coordinated, and ultimately more productive.
Bonding activities, as simple as group lunches or intensive as a weekend retreat, create opportunities for employees to interact in a relaxed setting. This helps break down barriers and encourages open communication, which translates into a more collaborative work environment. When employees feel comfortable sharing ideas and feedback, it leads to better problem-solving and innovation.
Reprinted courtesy of
Alexa Stephenson, Kahana Feld and
Brittney Aquino, Kahana Feld
Ms. Stephenson may be contacted at astephenson@kahanafeld.com
Ms. Aquino may be contacted at baquino@kahanafeld.com
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Construction Venture Sues LAX for Nonpayment
February 05, 2014 —
Beverley BevenFlorez-CDJ STAFFConstruction joint venture Walsh/Austin filed suit against the Los Angeles International Airport, claiming that “the airport failed to properly pay more than $2.4 million to an electrical subcontractor,” according to The Daily Breeze. Furthermore, SASCO, the electrical firm, alleged that they were “given inaccurate design documents that made it impossible for the company to carry out the work at the agreed-upon rate.”
The complaint, as reported by The Daily Breeze, cited “other lawsuits brought by an Orange County plastering firm and a Buena Park door company” and suggested that “eventually, all the litigation tied to nonpayment at LAX will end up in the same courtroom.”
Nancy Castles, a spokeswoman for Los Angeles World Airports, told The Daily Breeze that “the agency does not comment on pending litigation.”
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Back Posting with Thoughts on Lien Waivers
May 20, 2015 —
Christopher G. Hill – Construction Law MusingsAfter a week of being unable to post due to the rigors of my solo construction practice, I’m back on the blogging train. For those of you that missed my new musings this past week, I hope that you had a chance to look through some of the past Guest Post Friday posts for some good stuff to read.
During the course of my busy week last week, a question came up regarding the mechanic’s lien waivers that commercial construction companies routinely execute as part of the payment process. The waiver forms vary, but each essentially states that in exchange for payment the payee, whether a subcontractor or supplier (or even general contractor) waives its future rights to record a mechanic’s lien for the work that is covered by the payment received. Most if not all of these forms further require a certification that the funds paid will either be used to pay suppliers or that suppliers have already been paid. This general description is not the reason for this post.
As is always the case in the Commonwealth of Virginia where the contract is king and a court is unlikely to reinterpret any written contractual document, the devil is in how that waiver is worded. Some waivers are worded in such a way that they essentially require a payee to certify receipt of the funds prior to payment being received. These same forms require the same pre-payment certification that all suppliers and subcontractors of the payee have already been paid. In short they require a payee to both place complete trust in the payor that the check will be paid and that the check will not bounce while in many cases (often with an unstated “wink and nod”) claiming payment was already made when all know the likelihood is that it has not.
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Christopher G. Hill, Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
Insurance Client Alert: Mere Mailing of Policy and Renewals Into California is Not Sufficient Basis for Jurisdiction Over Bad Faith Lawsuit
January 28, 2015 —
Valerie A. Moore and Christopher Kendrick – Haight Brown & Bonesteel LLPIn Greenwell v. Auto-Owners Ins. Co. (No. C074546, filed 1/27/15), a California appeals court held that the use of a mailing address to send policies and renewals into California did not support jurisdiction for a California resident's bad faith lawsuit against a Michigan insurer over property coverage for a fire loss to a building in Arkansas.
In Greenwell, the insured was a California resident engaged in real estate investment. He purchased an apartment building in Little Rock, Arkansas. Using the services of an insurance broker in Little Rock, he purchased a package of general liability and commercial property insurance for the building from Auto-Owners Insurance Company, a Michigan insurer not licensed in California. The policy listed the insured's business address in California, the policy was mailed there, and renewed three times via the insured's California address.
Reprinted courtesy of
Valerie A. Moore, Haight Brown & Bonesteel LLP and
Christopher Kendrick, Haight Brown & Bonesteel LLP
Ms. Moore may be contacted at vmoore@hbblaw.com, Mr. Kendrick may be contacted at ckendrick@hbblaw.com
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Register and Watch Partner John Toohey Present on the CLM Webinar Series!
October 11, 2021 —
Dolores Montoya - Bremer Whyte Brown & O'Meara LLPBremer Whyte Brown & O’Meara is proud to announce that Partner John Toohey was invited to speak on a panel for the CLM Webinar Series alongside Attorney Rembold Hirschman, and Senior Claims Examiner Brett Reuter. John and his industry peers recently presented on the topic Handling Construction Defect Cases in Arbitration: The Good and the Bad.
About the webinar: Unfortunately, many construction projects end in dispute and the parties frequently find themselves in the middle of uncharted territory – arbitration! Subscribe and watch as they explore the pitfalls, debunk the myths, and discuss the benefits of arbitration in construction disputes.
About John Toohey: John H. Toohey is a Partner for Bremer Whyte Brown & O’Meara, LLP. Mr. Toohey is an A.V. Preeminent rated attorney with a practice focused on contract negotiation and litigation, complex product liability, and construction. He has successfully represented hundreds of clients in alternative dispute resolution and trial, including multiple cases to jury verdict.
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Dolores Montoya, Bremer Whyte Brown & O'Meara LLP
Contractor’s Charge Of Improvements To Real Property Not Required For Laborers To Have Lien Rights
June 13, 2018 —
Matt T. Paxton - Ahlers Cressman & Sleight PLLC BlogIn Washington, persons furnishing labor, professional services, material, or equipment for improvements of real property are generally entitled to a lien on that property, but only if their labor is furnished at the direction of the owner or the owner’s “construction agent.”[1] Whether a lien attaches, therefore, can turn on whether the person directing work is the owner’s construction agent. Washington’s mechanic’s lien statute defines “construction agent” as “any registered or licensed contractor, registered or licensed subcontractor, architect, engineer, or other person having charge of any improvement to real property, who shall be deemed the agent of the owner for the limited purpose of establishing the lien created by this chapter.”[2]
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Matt T. Paxton, Ahlers Cressman & Sleight PLLCMr. Paxton may be contacted at
matt.paxton@acslawyers.com
