Approaches in the Absence of a Differing Site Conditions Clause
April 10, 2019 —
Parker A. Lewton - Smith CurrieA contractor who has encountered unforeseen conditions will typically rely on the contract’s differing site conditions clause as a means to recovery. Most construction contracts address those issues directly. In ConsensusDocs Standard Agreement and General Conditions between Owner and Constructor, the starting point is § 3.16.2. But what if the contract does not contain a differing site conditions clause? Or, what if the contract does contain such a clause, but the contractor failed to provide adequate notice or satisfy other conditions or requirements of the contract? When reliance on a differing site conditions clause is impractical, a contractor still may seek recovery in certain instances under one or more of the following legal theories: misrepresentation; fraud; duty to disclose; breach of implied warranty; and mutual mistake.
Misrepresentation
Misrepresentation occurs when an owner “misleads a contractor by a negligently untrue representation of fact[.]” John Massman Contracting Co. v. United States, 23 Cl. Ct. 24, 31 (1991) (citing Morrison–Knudsen Co. v. United States, 170 Ct. Cl. 712, 718–19, 345 F.2d 535, 539 (1965)). A contractor may be able to recover extra costs incurred, under a theory of misrepresentation, if it can show that (1) the owner made an erroneous representation, (2) the erroneous representation went to a material fact, (3) the contractor honestly and reasonably relied on that representation, and (4) the contractor’s reliance on the erroneous representation was to the contractor’s detriment. See T. Brown Constructors, Inc. v. Pena, 132 F.3d 724, 728–29 (Fed. Cir. 1997). These four requirements can be satisfied, for example, through the use of deposition testimony detailing the owner’s representations and the contractor’s reliance thereon. See, e.g., C & H Commercial Contractors, Inc. v. United States, 35 Fed. Cl. 246, 256–57 (1996).
Read the court decisionRead the full story...Reprinted courtesy of
Parker A. Lewton, Smith CurrieMr. Parker may be contacted at
palewton@smithcurrie.com
Foreclosing Junior Lienholders and Recording A Lis Pendens
July 13, 2020 —
David Adelstein - Florida Construction Legal UpdatesWhen you foreclose on a construction lien, there are a couple of pointers to remember.
First, you want to make sure you include junior lienholders or interests you are looking to foreclose (or you want to be in a position to amend the foreclosure lawsuit to identify later). The reason being is you want to foreclose their interests to the property. “[J]unior interest holders are a narrow class of mortgagees whose interest in the underlying property is recorded after the foreclosing contractor’s claim of lien is filed. This class is routinely joined to the construction lien enforcement action under section 713.26 to allow the construction lienor to foreclose out the junior lienholder’s interest in the property encumbered by the construction lien.” See Decks N Sunch Marine, infra.
Second, you want to record a lis pendens with the lien foreclosure lawsuit. Failure to do so could be problematic because Florida Statute s. 713.22(1) provides in part, “A lien that has been continued beyond the 1-year period by the commencement of an action is not enforceable against creditors or subsequent purchasers for a valuable consideration and without notice, unless a notice of lis pendens is recorded.”
Read the court decisionRead the full story...Reprinted courtesy of
David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Drop in Civil Trials May Cause Problems for Construction Defect Cases
August 27, 2013 —
CDJ STAFFOver the last fifty years, the number of lawsuits that have been settled by trial have dropped sharply, according to Kenneth Childs, writing in the Idaho Business Review. Childs notes that in 1962, 11.5% of federal civil cases were resolved at trial, but in 2002, only 1.8 % percent went to trial. He makes the supposition that, due to their complexity, construction defect trials are even less likely to be resolved at trial.
Instead, they are being resolved in mandatory arbitration. Views on arbitration have changed over the years and the courts have gone from what he describes as “somewhat hostile to it” to embracing, encouraging, and even mandating it.
Childs notes there are some problems to this climate of arbitration. He notes that arbitrators can “operate by their own rules and according to their own standards.” The decisions made by arbitrators “are not subject to appellate review,” which allows arbitrators “to ignore the law entirely.”
Read the court decisionRead the full story...Reprinted courtesy of
Colorado Homebuyers Must be in Privity of Contract with Developer to Assert Breach of Implied Warranty of Suitability
May 03, 2017 —
Maggie Stewart - Colorado Construction Litigation On April 17, 2017, the Colorado Supreme Court announced its decision in Forest City v. Rogers, No. 15SC1089, 2017 CO 23 (Colo. Apr. 17, 2017). The Court held that privity of contract is necessary for a homebuyer to assert a claim for breach of implied warranty of suitability against a developer. In other words, one must be a party to a contract to pursue a claim for breach of any implied warranty of suitability therein.
Defendant Forest City was the developer of a mixed use property in Stapleton. Forest City subdivided the land and sold the vacant lot at issue to a professional builder, Infinity. Infinity then built a residence and sold it to the plaintiff, Tad Rogers. After moving into the home, Rogers came to believe that the water table beneath the house along with calcite leaching from the road material led to a buildup of calcite in the foundation drain, making the basement uninhabitable and causing the sump pump to work overtime. Rogers sued Forest City on various theories, including breach of the warranty of suitability. In particular, Rogers alleged that Forest City impliedly warranted to him that his lot was suitable for a home with a finished basement, when in fact it was not. He prevailed on this claim at the trial court level.
Read the court decisionRead the full story...Reprinted courtesy of
Maggie Stewart, Higgins, Hopkins, McLain & Roswell, LLCMs. Stewart may be contacted at
stewart@hhmrlaw.com
Pay-if-Paid Clauses, Nasty, but Enforceable
March 12, 2015 —
Craig Martin – Construction Contractor AdvisorI am preparing for a presentation this week on Troublesome Contract Clauses to the Construction Specifications Institute (“CSI”), Nebraska Chapter. One of the clauses we will be discussing is the dreaded Pay-if-Paid clause, a particularly nasty provision that places the risk of owner’s solvency squarely on the subcontractor’s shoulders. While pay-if-paid clauses can create tremendous problems for subcontractors, they are enforceable.
Pay-if-Paid clauses eliminate the obligation to pay the subcontractor until the general contractor is paid by the owner. Pay-if-paid clauses usually contain something akin to the following phrases:
- payment to subcontractors are “expressly and unequivocally contingent upon receipt of payment from the Owner for the Subcontract Work.”
- the subcontractor “expressly acknowledges that it relies on payment under the Subcontract on the creditworthiness of Owner, not that of the General Contractor.”
- the owner’s acceptance of the work and payment to the General Contractor are “conditions precedent to any obligation of the General Contractor to pay the subcontractor.”
Read the court decisionRead the full story...Reprinted courtesy of
Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
Liability Cap Does Not Exclude Defense Costs for Loss Related to Deep Water Horizon
May 01, 2019 —
Tred R. Eyerly - Insurance Law HawaiiThe Texas Supreme Court found that Lloyd's endorsement imposing a cap on liability for a joint venture did not exclude coverage for defense costs. Anadarko Petroleum Corp. v. Houston Cas. Co. et al., 2019 Texas LEXIS 53 (Texas Jan. 25 2019j.
Pursuant to a joint venture agreement, Anadarko held a 25% ownership interest in the Macondo Well in the Gulf of Mexico. When the well blew out, numerous third parties filed claims against BP entities and Anadarko. Many of the claims were consolidated into a multi-district litigation (MDL). The MDL court granted a declaratory judgment finding BP and Anadarko jointly and severally liable. BP and Anadarko reached a settlement in which Anadarko agreed to transfer its 25% ownership interest to BP and pay BP $4 billion. In exchange, BP agreed to release any claims it had against Anadarko and to indemnify Anadarko against all other liabilities arising out of the Deepwater Horizon incident. BP did not agree, however, to cover Anadarko's defense costs.
Anadarko had a policy through Lloyd's. The policy provided excess-liability coverage limited to $150 million per occurrence. Lloyd's paid Anadarko $37.5 million (25% of the $150 million limit) based upon Anadarko 25% ownership in the joint venture. Anadarko argued that Lloyd's still owed all of Anadarko's defense expenses, up to the $150 million limit.
Read the court decisionRead the full story...Reprinted courtesy of
Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Environmental Roundup – April 2019
May 06, 2019 —
Anthony B. Cavender - Gravel2GavelBesides showers, this April brought a number of notable new environmental decisions issued by the federal courts. Before your mind turns to May and its flowers, here’s a summary:
1.
DC Circuit. On April 23, 2019, the U.S. Court of Appeals for the DC Circuit decided the case of State of New York, et al. v. EPA. In the Clean Air Act amendments of 1990, the Congress established the Northeast Ozone Transport Region, composed of the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, the District of Columbia and a portion of Virginia. Recently, several of these states requested EPA to expand this region to include the “upwind states” of Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee, West Virginia, and the remaining portions of Virginia. Doing so would assist the “downwind” states in complying with EPA’s 2008 Ozone standard. EPA rejected this request, which was then appealed to the DC Circuit by the states of Connecticut, Delaware, Maryland, Massachusetts, New York, Pennsylvania, Rhode Island and Vermont. Because of its unique properties, ozone created by emissions in the upwind states can be transported to the downwind states, thus allegedly hampering their ability to cope with EPA ozone standards. The court agreed that EPA has the authority to expand the Northeast Transport Ozone Transport Region, but it also has the ability to exercise its reasonable discretion not to do so. In addition, the agency’s decision to rely instead on the remedies available to it in in the Clean Air Act’s “Good Neighbor” provision was reasonable and adequately justified, and the court accordingly upheld the agency’s decision. The court also noted that other remedies may be available to the downwind states, just not this one.
2.
DC Circuit. The Court also decided on April 23, 2019 the case of Air Transport Association of America v. Federal Aviation Administration. The FAA held that the payments made by the City of Portland’s airport’s utility city charges for offsite stormwater drainage and Superfund remediation was not an “impermissible diversion” of airport revenues or in violation of the “Anti-Head Tax Act,” which is codified at 49 USC Section 40116(b) and which prohibits collecting a tax on persons travelling in air commerce. Here, the charges are assessed against the airport for the use by the airport of the city’s water and sewage services. The Superfund assessment is based on the fact that the Willamette River which runs through downtown Portland could make the city a Superfund potentially responsible party, and the cty is assessing all rate payers—including the airport—a Superfund assessment. The airport is federally funded and is owned and operated by the Port of Portland, and the Port pays a combined sewer, stormwater /water bill with multiple line items including these contested items. The court notes that federal law, in particular 49 USC Section 47107(k)(2), authorizes airport revenues to be used for the operating costs of the airport receiving federal funding, and the FAA could reasonably determine that these general expenses are authorized airport “operating costs” even though the city services are provided outside the boundaries of the airport.
Read the court decisionRead the full story...Reprinted courtesy of
Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Update: New VOSH Maximum Penalties as of July 1
July 26, 2017 —
Christopher G. Hill - Construction Law MusingsAs those who read Construction Law Musings know, as a construction attorney, I want to assure that not only are my clients successful in their litigation/dispute resolution endeavors, but that they stay out of trouble. I take my problem solving and advising roles quite seriously.
As part of this role as advisor, I want to let those that read Musings know that as of July 1, 2017 the Virginia Occupational Safety and Health Administration increased their maximum penalties for safety violations.
Read the court decisionRead the full story...Reprinted courtesy of
Christopher G. Hill, The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
