Don’t Get Caught Holding the Bag: Hold the State Liable When General Contractor Fails to Pay on a Public Project
June 21, 2017 —
Sean Minahan - Construction Contractor AdvisorAccording to a quick Google search the term “holding the bag” comes from the mid eighteenth century and means be left with the onus of what was originally another’s responsibility. Nobody wants to be left holding the bag. But that is the situation our client (subcontractor) found themselves in when upon completion of a public project the general contractor went out of business before paying the remaining amount due and owing to our client.
Under Nebraska law, liens are not allowed against public projects. Instead the subcontractor is to make a claim on the payment and performance bond secured by the general contractor at the start of the project. In our case, the general contractor never secured a bond on which to make a claim; consequently leaving our client holding the bag.
Fortunately, we were able to hand the bag back to the State and obtain full payment for the services and materials provided.
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Sean Minahan, Lamson, Dugan and Murray, LLPMr. Minahan may be contacted at
sminahan@ldmlaw.com
Fourth Circuit Questions EPA 2020 Clean Water Act 401 Certification Rule Tolling Prohibition
August 10, 2021 —
Karen C. Bennett - Lewis BrisboisLast week, in North Carolina Department of Environmental Quality v. Federal Energy Regulatory Commission, the Fourth Circuit Court of Appeals suggested that Congress did not intend for the states, or tribes, to take final action on Clean Water Act (CWA) Section 401 applications within a year of filing. The opinion conflicts with the Environmental Protection Agency's (EPA) 2020 final rule that sought to limit state and tribal certifying authorities’ ability to delay federal projects through various tolling schemes. 85 Fed. Reg. 42210 (Jul. 13, 2020).
EPA’s rule, codified in existing regulations, states that the CWA imposes a strict one-year deadline for certification decisions, otherwise certification is waived. However, the Fourth Circuit’s view suggests that this waiver is not triggered in cases where the certifying authority has acted on the application, even if it takes longer than a year to make a final certification decision. The court ultimately decided the case on other grounds, leaving a resolution on the statutory interpretation question for another day.
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Karen C. Bennett, Lewis BrisboisMs. Bennett may be contacted at
Karen.Bennett@lewisbrisbois.com
New Jersey Supreme Court Ruled Condo Association Can’t Reset Clock on Construction Defect Claim
September 20, 2017 —
David Suggs – Bert L. Howe & Associates, Inc.The New Jersey Law Journal reported that New Jersey Supreme Court “justices reversed an Appellate Division ruling that found three suits filed against contractors by the Palisades at Fort Lee Condominium Association on various dates in March and April 2009 and September 2010 were within the six-year limit because the association received notice of construction defects in the building in an engineer's report issued in June 2007.”
The justices stated that the statute of limitations is not reset when property changes hands: "An owner of a building cannot convey greater property rights to a purchaser than the owner possessed. If the building's owner knew or reasonably should have known of construction defects at the time of the sale of the property, the purchaser takes title subject to the original owner's right—and any limitation on that right—to file a claim against the architect and contractors."
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Federal Court Holds That Other Insurance Analysis Is Unnecessary If Policies Cover Different Risks
September 28, 2020 —
Craig Rokuson - Traub Lieberman Insurance Law BlogIn Greater Mutual Insurance Company v. Continental Casualty Company, 2020 WL 5370419 (S.D.N.Y. September 8, 2020), the United States District Court for the Southern District of New York had occasion to consider the “other insurance” provisions of a commercial general liability policy, issued by Greater Mutual Insurance Company (“GNY”), and a directors and officers (“D&O”) policy, issued by Continental, to the same insured. The GNY policy covered, inter alia, property damage caused by an occurrence, as well as “personal advertising injury,” defined to include “[t]he wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor.” The Continental D&O policy covered claims for wrongful acts, including “wrongful entry or eviction, or other invasion of the right to private occupancy. . . .” Unlike the GNY policy, however, the Continental policy expressly excluded coverage for damage to tangible property.
In the underlying action, the plaintiffs alleged that the insured engaged in construction work to fix a leak from a terrace on the seventeenth floor. In doing so, the insured accessed the plaintiffs’ roof terrace. The plaintiffs alleged that the construction workers installed and stored construction materials on the roof terrace, making the plaintiffs unable to access the terrace. Plaintiffs also alleged that their deck furniture may have suffered damage, and that the workers had a “direct line of sight” into their unit, resulting in the plaintiffs having to leave their unit frequently. Causes of action were for property damage, constructive eviction, partial constructive eviction, and invasion of privacy.
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Craig Rokuson, Traub LiebermanMr. Rokuson may be contacted at
crokuson@tlsslaw.com
Construction Law Alert: Unlicensed Contractors On Federal Projects Entitled To Payment Under The Miller Act
May 07, 2014 —
Steven M. Cvitanovic and Jessica M. Lassere Ryland - Haight Brown & Bonesteel, LLPAs a matter of first impression, the Ninth Circuit Court of Appeals in Technica LLC ex rel. U.S. v. Carolina Cas. Ins. Co., 12-56539, 2014 WL 1674108 (9th Cir. Apr. 29, 2014), allowed an unlicensed subcontractor to recover from a prime contractor for unpaid services relating to a federal construction project under a federal Miller Act claim. California law otherwise prevents unlicensed contractors from recovering for unpaid work on non-federal projects as a penal measure intended to encourage contractors to maintain a valid license at all times.
Technica LLC (“Technica”) worked as a sub-subcontractor on a large federal fence replacement project (the “Project”). Over the course of a year, Technica supplied nearly a million dollars worth of labor, materials, and services for the Project. However, Technica received only $287,861.81 in partial payments for its work. Technica proceeded to file suit in district court against the prime contractor Candelaria Corporation (“Candelaria”) and its payment surety Carolina Casualty Insurance Company (“CCIC”) under the Miller Act to recover amounts owed to it on the subcontract against the payment bond.
Reprinted courtesy of
Steven M. Cvitanovic, Haight Brown & Bonesteel, LLP and
Jessica M. Lassere Ryland, Haight Brown & Bonesteel, LLP
Mr. Cvitanovic may be contacted at scvitanovic@hbblaw.com; Ms. Lassere Ryland may be contacted at jlassere@hbblaw.com
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Measures Landlords and Property Managers Can Take in Response to a Reported COVID-19 Infection
May 18, 2020 —
Kyle Janecek & Jason Morris - Newmeyer DillionMost landlords and property managers are now familiar with steps they should be taking to reduce the spread of COVID-19. But what if a tenant or employee has tested positive with COVID-19? Unfortunately, many landlords and property managers are grappling with this very question. While there’s some clarity as it pertains to evictions in the landlord-tenant context, other considerations like disinfection, required notices, and maintenance, are evolving or unclear. Here are steps landlords and property managers can take in response to an employee or tenant testing positive with COVID-19.
Measures Landlords Can Take for Employees
For workplaces, there is a large variety of guidelines and procedures that are generally available to review. The Centers for Disease Control and Prevention (CDC) has valuable guidance available online here and here. The Occupational and Safety Health Administration (OSHA) has valuable guidance available online here. In short, if there is an incident where one employee may have exposed others to COVID-19, here are five steps employers should take:
- Send the affected employee home and instruct them not to return to work until the criteria to discontinue home isolation are met in consultation with healthcare providers, and state and local health departments. Make sure to maintain all information about employee illnesses as a confidential medical record.
- Ask the affected employee whether they have had close contact with any other workers.
Reprinted courtesy of
J. Kyle Janecek, Newmeyer Dillion and
Jason L. Morris, Newmeyer Dillion
Mr. Janecek may be contacted at kyle.janecek@ndlf.com
Mr. Morris may be contacted at jason.morris@ndlf.com
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Up in Smoke - 5th Circuit Finds No Coverage for Hydrochloric Acid Spill Based on Pollution Exclusion
October 19, 2020 —
Kerianne E. Kane & David G. Jordan - Saxe Doernberger & VitaThe Fifth Circuit Court of Appeals recently held that an insurer was not obligated to pay damages associated with a hydrochloric acid spill based on a pollution exclusion in the policy.
In Burroughs Diesel, Inc. v. Travelers Indemnity Co. of America,1 a trucking company sued its property insurer, Travelers Indemnity Company of America (“Travelers”) when it refused to pay a claim for a storage tank leak which resulted in over 5,000 gallons of hydrochloric acid entering the property and causing significant damage to buildings, vehicles, tools, and equipment. The acid was initially dispensed in liquid form, but quickly became a cloud that engulfed the property. Travelers denied coverage for the claim based on the pollution exclusion because “acids” fell within the policy’s definition of “pollutants.”
The trucking company sued Travelers in the United States District Court for the Southern District of Mississippi, alleging breach of contract and breach of good faith and fair dealing for refusing to pay the claim. The trucking company argued that coverage was warranted because there is an exception to the pollution exclusion if “the discharge, dispersal, seepage, migration, release or escape is itself caused by any of the ‘specified causes of loss,’” and the hydrochloric acid cloud was a form of “smoke,” which is a specified cause of loss covered by the policy. The District Court entered summary judgment in favor of Travelers, finding that the trucking company failed to demonstrate that an exception to the pollution exclusion applied. The trucking company appealed to the Fifth Circuit Court of Appeals.
Reprinted courtesy of
Kerianne E. Kane, Saxe Doernberger & Vita and
David G. Jordan, Saxe Doernberger & Vita
Ms. Kane may be contacted at kek@sdvlaw.com
Mr. Jordan may be contacted at dgj@sdvlaw.com
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Public Contract Code Section 1104 Does Not Apply to Claims of Implied Breach of Warranty of Correctness of Plans and Specifications
October 30, 2023 —
Garret Murai - California Construction Law BlogIt’s the classic tale of two cities. One city is occupied by architects and engineers. The other, by contractors. And while the cities typically co-exist relatively peacefully together, at times, they do not, such as when a defect arises that can either be a design or construction defect.
Sometimes, project owners are pulled into these fights as well. There is a common law rule that when contracting with a contractor the owner impliedly warrants to the contractor that the plans and specifications are sufficiently accurate and correct.
And, if you work on local public works projects, you may be familiar with Public Contract Code section 1104 which provides that, with the exception of design-build projects, local public entities cannot require a bidder to assume responsibility for the completeness and accuracy of architectural or engineering plans and specifications.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
