How Does Your Construction Contract Treat Float
November 08, 2017 —
David Adelstein - Florida Construction Legal UpdatesAlthough there are different types of construction schedule float and more technical definitions, the definition that makes sense to me is that float is the amount of time a particular activity can be delayed without that activity delaying the project’s completion date (substantial completion date). In looking at a construction schedule, this determination is made from looking at the difference between the early start date for an activity and the late start date for that activity or the difference between the early finish date for that activity and the late finish date for that activity in your CPM schedule (which should be the same amount of time). This is often referred to as “total float” and is the float that I usually focus on since it may pertain to a delay to the substantial completion date of the project and can trigger either the assessment of liquidated damages and/or the contractor’s extended general conditions, whatever the case may be.
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David Adelstein, Florida Construction Legal UpdatesMr. Adelstein may be contacted at
Dadelstein@gmail.com
To Sea or Not to Sea: Fifth Circuit Applies Maritime Law to Offshore Service Contract, Spares Indemnity Provision from Louisiana Oilfield Indemnity Act
March 29, 2017 —
Richard W. Brown & Afua Akoto – Saxe Doernberger & Vita, P.C.Faced with the issue of whether maritime or state law should be applied to determine the validity of an indemnity clause in a Master Services Contract (MSC), the Fifth Circuit affirmed that where there is no historical treatment of the contract in question (1), it would consider six factors established in Davis (2).
In Doiron, the Apache Corporation and STS (3) entered a broad-form blanket MSC, under which STS agreed to perform flow-back services, a process designed to dislodge solid objects from inside a well, on Apache’s well located off shore of Louisiana. The MSC also contained an indemnification provision, which required STS to defend and indemnify Apache and its company groups against all claims of property injury or bodily injury. During the flow-back operation, Larry Doiron Inc. (LDI), one of the Apache Company groups, supplied a crane barge for use by STS employees. Subsequently, the crane knocked over an STS employee, causing him to suffer severe injuries. LDI then made a formal demand to STS for defense and indemnification. STS rejected the demand and argued that the Louisiana Oilfield Indemnity Act applied to the MSC instead of maritime law. Pursuant to the Act, indemnity clauses in agreements pertaining to wells for oil, gas or water are void as against public policy. But, under maritime law, the enforcement of such provisions is not barred. Therefore, if the MSC was construed under the Act, STS had no duty to defend or indemnify LDI.
Reprinted courtesy of
Richard W. Brown, Saxe Doernberger & Vita, P.C. and
Afua S. Akoto, Saxe Doernberger & Vita, P.C.
Mr. Brown may be contacted at rwb@sdvlaw.com
Ms. Akoto may be contacted at asa@sdvlaw.com
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CGL Coverage for Liquidated Damages and the Contractual Liability Exclusion
October 09, 2023 —
Stu Richeson - The Dispute ResolverLiquidated delay damages are common in construction contracts and are generally imposed when a contractor fails to achieve substantial completion within the time required by the contract. While contracts like the AIA A201-2017 have provisions for extending the time to achieve substantial completion when delays are caused by circumstances beyond the contractor’s control, delays can result from factors other than improper management or planning and the like, for which the owner is not required to give the contractor additional time. Courts are split on whether there is ever coverage under a CGL policy for contractually agreed upon liquidated delay damages.
Liquidated delay damages are often excluded under the contractual liability exclusion of most CGL policies. The contractual liability exclusion excludes coverage for “liability for which the Insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement.” Courts often find the contractual liability exclusion in a CGL policy precludes coverage for liquidated delay damages, because such damages are contractual in nature and are triggered by the failure to bring the contract to substantial completion by a fixed deadline, regardless of the cause of the delay. However, some courts will look to the cause of the delay and find that there is coverage under a CGL policy for liquidated delay damages that are the result of property damage caused by an accident or occurrence.
In Clark Const. Grp., Inc. v. Eagle Amalgamated Serv., Inc., 01-2478-DV, 2005 WL 2092998, at *1 (W.D. Tenn. Aug. 24, 2005) a general contractor entered a contract for the renovation of the convention center in Memphis. Part of the project included the demolition of a structure attached to the convention center. The demolition work was improperly performed by a subcontractor and resulted in damage to the convention center.
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Stu Richeson, PhelpsMr. Richeson may be contacted at
stuart.richeson@phelps.com
Construction Litigation Roundup: “A Less Than Valiant Effort”
June 21, 2024 —
Daniel Lund III - LexologyA Miller Act claimant in federal court in New Jersey in relation to a VA medical center project found itself on the wrong end of the law and was sent packing by the court.
The claimant had supplied products for the project to general contractor Valiant Group, LLC, pursuant to a purchase order from the GC. The general contractor allegedly refused to pay the supplier, leading to the claim against the GC and its payment bond surety in the amount of $126,900. The supplier also sought recovery under the federal Prompt Payment Act, 31 U.S.C. §§ 3901-07. State law claims were asserted as well.
Chipping away at the federal law claims – the claims forming the asserted basis for federal court jurisdiction for the case – the court first dispensed with the Prompt Payment Act claim. According to the court, allegations that the general contractor had “wrongfully and improperly withheld remuneration… despite [having] ‘received payment from the U.S. Department of Veterans Affairs’" – whether or not accurate – did not trigger the Act. The court wrote:
“The Prompt Payment Act was enacted ‘to provide the federal government with an incentive to pay government contractors on time by requiring agencies to pay penalties . . . on certain overdue bills . . . [and] was later amended to include provisions applicable to subcontractors.’… Absent from the Act, however, are ‘any explicit provisions for subcontractor enforcement if the prime contractor fails to make timely payment.’… This is because the Act ‘merely requires that the prime contractor's contract with the subcontractor include the specified payment clause. [It] does not require the prime contractor to actually make payments to the subcontractor[.]’… The Act, therefore, does not ‘give subcontractors an additional cause of action for an alleged breach by a general contractor of a subcontract.’”
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Daniel Lund III, PhelpsMr. Lund may be contacted at
daniel.lund@phelps.com
Design-Assist, an Ambiguous Term Causing Conflict in the Construction Industry[1]
December 02, 2019 —
John P. Ahlers - Ahlers Cressman & Sleight PLLC“Design-Assist” is one of the recent cost-saving trends being touted for construction projects and, in particular, construction projects utilizing alternative procurement methods. If an internet search for the term, “design-assist” is made, the result will be numerous construction industry articles and white papers lauding “design-assist” as a recent cost-saving trend in construction procurement. From a legal perspective, however, the term “design-assist” is notably absent from court opinions and most state licensing laws. With the exception of the ConsensusDocs, few standard form contracts even include the term “design-assist” in their text.
The ConsensusDocs agreement provides examples of the Constructor’s obligations to perform “assisting activities” (the term “design-assist” is not used) and states that, notwithstanding the performance of such “assisting activities” by the Constructor, the responsibility of the design remains with the Designer unless otherwise stated in the Contract:
- Article 4.5 DESIGN PROFESSIONAL’S RESPONSIBIITIES The Designer shall furnish or provide all design and engineering services necessary to design the Project in accordance with the Owner’s objectives … the Designer shall draw upon the assistance of Constructor and others in developing the design, but the Designer shall retain overall responsibility for all design decisions….
- Article 4.6 CONSTRUCTOR’S RESPONSIBILITIES [T]he Constructor shall assist the Designer in the development of the Project Plan and Project Design but shall not provide professional services which constitute the practice of architecture or engineering unless the Constructor needs to provide such services in order to carry out its responsibilities … or unless specifically called for by the Contract Documents.
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John P. Ahlers, Ahlers Cressman & Sleight PLLCMr. Ahlers may be contacted at
john.ahlers@acslawyers.com
How Drones are Speeding Up Construction
July 26, 2017 —
Aarni Heiskanen - AEC BusinessDrones, or unmanned aerial vehicles (UAVs), are being used in many industries, e.g. agriculture, construction, mining, oil & gas, mapping, and surveying. In construction, drones have proven to be quite disruptive, offering huge productivity increases.
Gartner’s famous Hype Cycle for Emerging Technologies, 2016, positioned drones as just entering the Peak of Inflated Expectations. Gartner claims that, “Smart machine technologies will be the most disruptive class of technologies over the next 10 years due to radical computational power, near-endless amounts of data, and unprecedented advances in deep neural networks.”
Commercial UAVs are one of the smart machine technologies in question, together with smart robots, autonomous vehicles, cognitive expert advisors, and others.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
info@aepartners.fi
Arizona Supreme Court Upholds Constitutionality of Provision Relating to Statutory Authority for Constructing and Operating Sports and Tourism Complexes
June 18, 2019 —
Amanda Z. Weaver - Snell & WilmerIn an opinion published February 25, 2019, the Arizona Supreme Court held that Maricopa County’s surcharge on car rental agencies to fund a stadium and other sports- and tourism-related projects did not violate either the dormant Commerce Clause of the United States Constitution or the anti-diversion provision of the Arizona Constitution, art. 9, § 14. Saban Rent-a-Car LLC v. Ariz. Dep’t of Revenue.
In 2000, the Arizona Legislature created the Arizona Tourism and Sports Authority (the Authority) to build and/or operate a variety of sports-related facilities, including Major League Baseball spring training facilities, and youth and amateur sports and recreation centers. Taxes and surcharges, approved by voters, are the sole funding for the Authority’s construction projects, including the challenged surcharge in Maricopa County. This surcharge is based on the income from car rental companies leasing vehicles to customers for less than one year, and is the greater of $2.50 per rental or 3.25% of the company’s gross proceeds or income. A.R.S. § 5-839. The state treasurer deposits $2.50 per rental transaction into the Maricopa County Stadium District, as it has since 1991, and the remaining amount of the difference between $2.50 per transaction and 3.25% of the company’s gross income or proceeds is distributed to the Authority. Rental car companies often pass this surcharge on to their customers.
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Amanda Z. Weaver, Snell & WilmerMs. Weaver may be contacted at
aweaver@swlaw.com
Why Federal and State Agencies are Considering Converting from a “Gallons Consumed” to a “Road Usage” Tax – And What are the Risks to the Consumer?
August 26, 2015 —
Roger Hughes – California Construction Law Blog“‘We’re going to have to find another way to finance the upkeep of the roads,’ Gov. Jerry Brown said earlier this year in rolling out his 2015 budget. Governor Brown gave no specifics, but last fall he signed a law that set up a commission to study a ‘road usage charge’ with a call to ‘establish a pilot program by Jan. 1, 2017…'” – San Jose Mercury News, January 27, 2015
This Change, It’s a Coming (Maybe)
Many states and the federal government are seriously considering converting from a “gallons consumed” tax levy to a “miles driven” program for determining gasoline tax. There are several compelling reasons for such a change. First, our roads are falling apart while revenue from current highway taxes fall woefully short of our current and projected needs. In the meantime, the number of miles driven by all-electric cars that pay no gas tax, is increasing rapidly; and by hybrids that pay substantially reduced tax; and worse for the taxing authorities, by increasingly efficient gas-powered cars. All of this means rapidly dropping gas tax revenues. Seeing this trend, local, state and the federal governments are making a major push to convert from a consumption based tax to a “miles driven” tax. This a good thing for those of us that believe increased investment in our transportation infrastructure is of high national concern.
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Roger Hughes, Wendel Rosen Black & Dean LLPMr. Hughes may be contacted at
rhughes@wendel.com
