Failing to Pay Prevailing Wages May Have Just Cost You More Than You Thought
April 01, 2015 —
Garret Murai – California Construction Law BlogMechanics lien claims, payment bond claims, stop payment notice claims, delay claims, defect claims, abandonment claims . . .
With the variety of claims unique to construction projects it’s easy to forget that construction disputes are simply a category of business disputes in which broader business-related torts apply.
In Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc., Case No. B255558 (February 20, 2015), the California Court of Appeal for the Second District held for the first time that a second-place bidder on a public works contract may sue a winning bidder – who failed to pay its workers prevailing wages – under the business tort of intentional interference with prospective economic advantage.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Anticipatory Repudiation of a Contract — The Prospective Breach
July 05, 2021 —
David Adelstein - Florida Construction Legal UpdatesThere are instances where a party can engage in the anticipatory repudiation of their obligations under a contract. In essence, this is basically a party prospectively breaching the contract by repudiating their obligations in the contract.
A prospective breach of contract occurs where there is absolute repudiation by one of the parties prior to the time when his performance is due under the terms of the contract. Such a repudiation may be evidenced by words or voluntary acts but the refusal must be distinct, unequivocal, and absolute. Moreover, repudiation can be shown where one party makes additional demands not included in the initial agreement:
The law is clear that where one party to the contract arbitrarily demands performance not required by the contract and couples this demand with a refusal to further perform unless the demand is met, the party has anticipatorily repudiated the contract, which anticipatory repudiation relieves the non-breaching party of its duty to further perform and creates in it an immediate cause of action for breach of contract.
24 Hr Air Service, Inc. v. Hosanna Community Baptist Church, Inc., 46 Fla. L. Weekly, D1344a (Fla. 3d DCA 2021) (quotations and citations omitted).
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Do Engineers Owe a Duty to Third Parties?
June 10, 2015 —
Craig Martin – Construction Contractor AdvisorA Texas Court of Appeals, in USA Walnut Creek, DST v. Terracon Consultants, Inc., recently ruled that an engineer owed a duty to the buyer of an apartment complex, even though the engineer had no contractual relationship with the buyer. This is an expansion of the duty professionals owe on construction projects and could signal a change in the law.
In the case, Walnut Creek purchased a three year old apartment complex. A few years after taking possession, Walnut Creek noticed problems with the apartments, including cracking foundations, walls, breaking windows, and out of square door frames. Walnut Creek sued the developer and general contractor, alleging construction defects. The developer claimed that the engineer, Terracon, was at fault and Walnut Creek added Terracon to the lawsuit, asserting that Terracon was negligent in performing engineering services during construction. Terracon asked the court to dismiss the claim, arguing that it did not owe a duty to Walnut Creek. Walnut Creek in turn argued that engineers do owe a duty to subsequent owners. The trial court dismissed the case against the engineer and Walnut Creek appealed.
The appellate court reversed the trial court, finding that the engineer did owe a duty to subsequent purchasers. The court seemed persuaded by the allegations that the engineer actually created the construction defects which were the basis for the litigation.
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Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
Montana Significantly Revises Its Product Liability Laws
May 22, 2023 —
William L. Doerler - The Subrogation StrategistOn May 4, 2023, Montana changed its product liability laws when the Governor signed SB 216, which was effective upon passage and applies to claims that accrue on or after May 4, 2023. Among the changes is the adoption of a sealed container defense and the application of comparative negligence principles in strict liability actions. Montana also adopted a defense based on certain actions not being brought within 10 years. In addition, Montana adopted a rebuttable presumption with respect to a product’s defective condition. A jury must be informed about this rebuttable presumption with respect to certain warnings claims, premarket licensing procedures or claims involving drugs and/or medical devices. The changes to the Montana Code are further described below.
- In situations where there are multiple defendants, a defendant in a strict liability or breach of warranty action may now assert, as a defense, that the damages of the claimant were caused in full or in part by a person with whom the claimant has settled or released from liability. See MCA § 27-1-703(6)(a) (as revised). Comparative negligence or fault defenses are also available in actions against sellers, even where there are not multiple defendants. See MCA § 27-1-719(4)(e) (discussing a seller’s defenses in situations other than multiple defendant situations) (as revised).
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William L. Doerler, White and Williams LLPMr. Doerler may be contacted at
doerlerw@whiteandwilliams.com
The Utility of Arbitration Agreements in the Construction Industry
December 30, 2019 —
Brian L. Gardner & Jason R. Finkelstein - Construction ExecutiveIn today’s ever-evolving world of employment law, it is far from an easy task for construction industry employers to operate their business while successfully navigating all of the potential legal potholes that continue to abound and multiply seemingly with every passing day. This is particularly true in the face of the onslaught of claims lodged by current and former employees in recent years for alleged unpaid wages. While there may not be a “sure bet” way of avoiding such claims, one tool that employers should strongly consider in their arsenal are arbitration and class action waiver agreements.
To that end, last year, the United States Supreme Court rendered its ground-breaking decision in Epic Systems Corp. v. Lewis, 584 U.S. ___ (2018). In Epic Systems, the Supreme Court held that arbitration agreements containing class and collective action waivers of wage and hour disputes are enforceable. At the time of the decision, a split of authority existed among courts across the country as to whether such agreements were viable. On the one hand, several courts contended that class waivers unfairly violated employees’ rights to collectively bargain under the National Labor Relations Act. On the other hand, many other courts were finding that such agreements were fully enforceable and supported by the policies promoted under the Federal Arbitration Act. The Epic Systems Court sided with this latter viewpoint, concluding that the FAA’s clear policy promoting arbitration as a dispute resolution mechanism and private parties’ rights to freely negotiate contracts outweighed any potential arguments against such agreements under the NLRA.
With wage and hour lawsuits being filed against construction industry employers practically daily, the Epic Systems decision is critically important. Construction employers can now freely enter into arbitration and class waiver agreements with their laborers and thereby potentially limit the cost, expense and exposure of fighting such actions in a public forum on a collective or class-wide basis. To be clear, such agreements will not eliminate employees from bringing such wage and hour claims entirely, nor should the use of those agreements signal to employers that they need not make every good-faith effort to comply with their obligations under the Federal Labor Standards Act and/or any applicable state wage and hour laws. But the reality is that arbitration and class waiver agreements can work to avoid tens or hundreds or even thousands of employees from banding together in some of the massive wage and hour lawsuits being filed across the country. Instead, employers can require that those legal battles be conducted by a single plaintiff in a more controlled environment before an arbitrator (or panel of arbitrators).
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Brian L. Gardner & Jason R. Finkelstein, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Mr. Gardner may be contacted at bgardner@coleschotz.com
Mr. Finkelstein may be contacted at jfinkelstein@coleschotz.com
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Chutes and Ladders...and Contracts.
November 25, 2024 —
Daniel Lund III - LexologyA contractor which designed and constructed a hydroelectric plant in Guatemala sued under the Federal Arbitration Act in federal court in Florida to overturn a project-related arbitration decision, “on the basis that the Tribunal had exceeded its powers.” That petition was denied based upon Eleventh Circuit precedent which foreclosed that challenge under the FAA for an arbitration conducted “under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards,” a.k.a., the “New York Convention.”
The U. S. 11th Circuit initially affirmed the lower court decision, but then upon an en banc rehearing reversed: holding that in a New York Convention case where the arbitration seat is in the U. S., or where United States law governs the arbitration conduct, “Chapter 1 of the FAA provides the grounds for vacatur of the arbitral award. … § 208 of the FAA provides that ‘Chapter 1 applies to actions and proceedings brought under [Chapter 2] to the extent that chapter is not in conflict with [Chapter 2] or the [New York] Convention as ratified by the United States.’ …Chapter 1 of the FAA… thus acts as a gapfiller and provides the vacatur grounds for an international arbitration award otherwise governed by Chapter 2.”
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Daniel Lund III, PhelpsMr. Lund may be contacted at
daniel.lund@phelps.com
Flood Insurance Claim Filed in State Court Properly Dismissed
October 28, 2015 —
Tred R. Eyerly – Insurance Law HawaiiThe insureds' claim for flood coverage filed in state court was properly dismissed by the trial court. Rodriguez-Roble v. Am. Nat'l Prop. & Cas. Co., 2015 La. App LEXIS 1810 (La. Ct. App. Sept. 23, 2015).
The insureds' home was damaged by wind, rain and flood water during Hurricane Isac. The insureds provided to American National what they contended was satisfactory proof of their claim. American National failed to make any offers to resolve the claim.
The insureds sued in state court, seeking damages under the policy and penalties for American National's alleged bad faith in failing to settle or pay the claim. American National moved to dismiss, arguing that the state court did not have subject matter jurisdiction. American National further argued that under the National Flood Insurance Program, the federal courts had exclusive jurisdiction over the denial and adjustment of flood insurance claims. The trial court agreed that the flood insurance policy was governed by federal law.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Ensuing Loss Provision Salvages Coverage for Water Damage Claim
September 16, 2024 —
Tred R. Eyerly - Insurance Law HawaiiThe Court of Appeals for the D.C. Circuit reversed the district court's finding of no coverage and found that the ensuing loss provision provided coverage for water damage. 3524 East Cap Venture, LLC, et al. v. Weschester Fire Ins. Co., et al., 104 F. 4th 193 (D.C. Cir. 2024).
Plaintiff 3534 East Cap Venture, LLC, a real-estate developer, hired plaintiff McCullough Construction, LLC, to build a residential and retail complex. Defendants Westchester Fire Insurance Company and Endurance American Insurance Company issued identical builders' risk policies, which covered the building while it was under construction. Each insurer was responsible for half of any qualifying losses.
The policies covered loss caused by or resulting from water damage. The policies, however, excluded loss caused by "dampness of atmosphere" or by "[e]xtremes or changes in temperature." But the exclusions contained an exception if "loss by an insured peril ensues."
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
