Withholding Payment or Having Your Payment Withheld Due to Disputes on Other Projects: Know Your Rights to Offset
January 04, 2021 —
Christopher C. Broughton, Jones Walker LLP - ConsensusDocsIntroduction
The right to offset refers to the common sense ability to reduce or eliminate your payment obligations to a party who owes you money on another contract. With offsets, common law largely tracks common sense. The right of offset is recognized by statute and court decisions in many states as well as under federal law and the U.S. Bankruptcy Code. The right to offset can also be established in the contract or subcontract.
But like many things that may seem simple, the right to offset can easily become complex. This article provides an overview of the extent and limits of the right to offset varies from state to state and with federal government contracts about the extent and limits of the right of offset. Construction trust fund statutes add another layer of complications.
These variations may not be obvious or intuitive, but they have a tremendous impact on your right to get paid or your right to withhold payment. Because of the variations, you must always confirm the law applicable to your contract or subcontract, which may not be where the project or you are located.
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Christopher C. Broughton, Jones Walker LLPMr. Broughton may be contacted at
cbroughton@joneswalker.com
Reconstructing the Francis Scott Key Bridge Utilizing the Progressive Design-Build Method
June 04, 2024 —
Lisa D. Love - The Dispute ResolverHaving awakened on the morning of March 26 to the devastating news of the collapse of Baltimore’s Francis Scott Key Bridge after being struck by the Dali, a 984 length /52 beam foot cargo container ship, I thought of the many times I crossed the bridge as a child growing up in Washington, D.C. I also recalled Montgomery Schyler’s comments on the opening of the Brooklyn Bridge, when he stated that “the work which is likely to be our most durable monument, and to convey some knowledge of us to the most remote posterity, is a work of bare utility; not a shrine, not a fortress, not a palace, but a bridge.”
I thought of the beauty of New York’s Mario Cuomo Bridge, a 3.1-mile cable-stayed twin-span bridge with eight traffic lanes, bicycle and pedestrian paths, six lookout points and room for future rapid transit. It was completed in 2018 and constructed under a design-build procurement model[i] at a cost of $3.98 billion. Accelerated bridge construction (ABC) techniques were utilized in its construction. ABC techniques employ innovative planning, design, materials, and construction methods in a safe and cost-effective manner to reduce the on-site construction time that occurs when building new bridges or replacing and rehabilitating existing ones. ABC techniques improve site constructability, total project delivery time, work-zone safety for the traveling public and traffic impacts, on-site construction time, and weather-related time delays.[ii]
I also thought of the gracefulness of Boston’s Leonard P. Zakim Bunker Hill Memorial Bridge, a 0.27-mile hybrid cable-stayed steel and concrete bridge with pedestrian and bicycle access that holds 10 lanes of traffic. The Zakim Bridge was completed in 2004 at a cost of approximately $100 million as part of the $24.3 billion Big Dig.[iii] Despite its elegant, streamlined appearance, the bridge was designed to be exceptionally strong, withstand winds over 400 miles per hour and endure a magnitude 7.9 earthquake.[iv]
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Lisa D. Love, JAMS
First-Time Buyers Home Sales Stagnates
October 22, 2014 —
Beverley BevenFlorez-CDJ STAFFDespite a rise overall in home sales, “first-time buyer share remained unchanged from the previous two months at 29%, far behind the historical average first-time buyer share of about 40%,” reported National Association of Home Builders’ Eye on Housing. However, “[e]xisting home sales increased to the highest level of the year, having posted gains for five of the last six months, despite weakness among first-time buyers. Existing home sales increased 2.4% in September, but remain 1.7% below the same period a year ago.”
According to Eye on Housing, existing sales is expected to continue to increase throughout the year, though the first-time buyer segment is “the weak spot.”
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Illinois Supreme Court Limits Reach of Implied Warranty Claims Against Contractors
April 10, 2019 —
Thomas Cronin - Gordon & Rees Construction Law BlogIn a recent decision, the Illinois Supreme Court held that a purchaser of a newly constructed home could not assert a claim for breach of the implied warranty of habitability against a subcontractor where the subcontractor had no contractual relationship with the purchaser. Sienna Court Condo. Ass’n v. Champion Aluminum Corp., 2018 IL 122022, ¶ 1. The decision overruled Minton v. The Richards Group of Chicago, which held that a purchaser who “has no recourse to the builder-vendor and has sustained loss due to the faulty and latent defect in their new home caused by the subcontractor” could assert a claim of a breach of the warranty of habitability against the subcontractor. 116 Ill. App. 3d 852, 855 (1983).
In Sienna Court Condo. Ass’n, the plaintiff alleged that the condo building had several latent defects which made individual units and common areas unfit for habitation. 2008 IL 122022 at ¶ 3. The Court rejected the plaintiff’s argument that privity should not be a factor in determining whether a claim for a breach of the warranty of habitability can be asserted. Id. at ¶ 19. The Court also rejected the plaintiff’s argument that claims for a breach warranty of habitability should not be governed by contract law but should instead be governed by tort law analogous to application of strict liability. Id.
The Court reasoned that the economic loss rule, as articulated in Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69, 91 (1982), refuted the plaintiff’s argument that the implied warranty of habitability should be covered by tort law. 2008 IL 122022 at ¶ 20. Under the economic loss rule, a plaintiff “cannot recover for solely economic loss under the tort theories of strict liability, negligence, and innocent misrepresentation.” National Tank Co., 91 Ill. 2d at 91. The Court explained that the rule prevented plaintiffs from turning a contractual claim into a tort claim. 2008 IL 122022 at ¶ 21. The Court further noted that contractual privity is required for a claim of economic loss, and an economic loss claim is not limited to strict liability claims. Id. Because the plaintiff’s claim was solely for an economic loss, it was a contractual claim in nature; therefore, the Court concluded that “the implied warranty of habitability cannot be characterized as a tort.” Id. at ¶ 22.
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Thomas Cronin, Gordon & Rees Scully MansukhaniMr. Cronin may be contacted at
tcronin@grsm.com
Failure to Comply with Sprinkler Endorsement Bars Coverage for Fire Damage
July 31, 2013 —
Tred Eyerly, Insurance Law HawaiiDespite its application stating otherwise, the insured's failure to install a sprinkler system in its building barred coverage for extensive damage caused by fire.American Way Cellular, Inc. v. Travelers Prop. Cas. Co. of Am., 2013 Cal. App. LEXIS 425 (Cal. Ct. App. May 30, 2013).
American Way contacted a broker, A&J, regarding liability and property coverage. A&J sent American Way an application for a policy with Travelers. The application indicated American Way had a sprinkler system and fire detectors in its building.
Travelers issued a policy with a Protective Safeguards Endorsement For Sprinkler Locations and Restaurants. The endorsement stated that as a condition of the insurance, the insured was required to maintain a sprinkler system. An exclusions section said the insurer would not pay for loss caused by fire if there was no sprinkler system.
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Tred EyerlyTred Eyerly can be contacted at
te@hawaiilawyer.com
Extreme Flooding Overwhelms New York Roadways, Killing 1 Person
July 24, 2023 —
Associated Press - BloombergNEW YORK (AP) — Heavy rain spawned extreme flooding in New York’s Hudson Valley that killed at least one person, swamped roadways and forced road closures on Sunday night, as much of the rest of the Northeast U.S. braced Monday for potentially punishing rains.
As the storm moved east, the National Weather Service extended flash flood warnings into Connecticut, including the cities of Stamford and Greenwich, before creeping into Massachusetts. Forecasters said some areas could get as much as 5 inches (12 centimeters) of rain.
In New York's Hudson Valley, rescue teams found the body of a woman in her 30s who drowned after being swept away while trying to evacuate her home, Orange County Executive Steven Neuhaus told WABC-TV. Officials were waiting for the medical examiner's office to arrive, he said.
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Bloomberg
4 Ways to Mitigate Construction Disputes
March 20, 2023 —
Bill Shaughnessy - ConsensusDocsResolving construction disputes in litigation (court or arbitration) can be expensive and may drag on for years. Most disputes could have been avoided, or at least mitigated, had the parties (both owners and contractors) identified contract risks during negotiations and been more proactive in communicating the risks during execution of the work. This article highlights four practical risk management approaches that help all parties focus on their mutual interest in close coordination and clear communication at the beginning of the project as well as throughout performance:
- Identifying and allocating risks;
- Accurate scheduling;
- Clear project documentation and communication; and
- Real-time dispute resolution.
The intent of these techniques is not to shift legal obligations or risks. Rather, the intent is to keep project personnel and project management for all the participants focused on communicating and working together, including responsibly confronting real problems to avoid or mitigate their impact. Allocating risks, scheduling, project documentation and communication, and real-time dispute resolution are independently relevant on a bilateral basis between the owner, designer, and the various contractors. These approaches and their diligent execution by the parties during construction contribute far more to a successful project than anything lawyers and claims consultants can contribute in after-the-fact legal proceedings.
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Bill Shaughnessy, Jones Walker LLP (ConsensusDocs)Mr. Shaughnessy may be contacted at
bshaughnessy@joneswalker.com
Changes to Va. Code Section 43-13: Another Arrow in a Subcontractor’s Quiver
November 02, 2020 —
Christopher G. Hill - Construction Law MusingsAs is always the case here in Virginia, our General Assembly has made some legislative changes that affect construction contracting. One of these changes is an amendment to Va. Code 43-13 found in the mechanic’s lien section of the Virginia Code.
This section of the code has always required that any money paid to a contractor must first go toward paying its subcontractors, suppliers and laborers prior to being used for any other purpose. Prior to 2020, the only remedy for violaiton of Va. Code 43-13 was to go to the local Commonwealth’s Attorney and request a prosecution of the wrongdoer. For various reasons, including that such action did not get the subcontractor or supplier that remained unpaid under this section paid, this remedy was not often pursued except in the most egrigious cases.
A key change in the statute occurred during the 2020 legislative session states as follows:
Any breach or violation of this section may give rise to a civil cause of action for a party in contract with the general contractor or subcontractor, as appropriate; however, this right does not affect a contractor’s or subcontractor’s right to withhold payment for failure to properly perform labor or furnish materials on the project. Any contract or subcontract provision that allows a contracting party to withhold funds due under one contract or subcontract for alleged claims or damages due on another contract or subcontract is void as against public policy.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
