Is an Initial Decision Maker, Project Neutral, or Dispute Resolution Board Right for You?
July 14, 2016 —
David Adelstein – Florida Construction Legal UpdatesRecently, I participated in a roundtable hosted by JAMS with experienced South Florida construction lawyers and retired circuit court judges to discuss the pros and cons of utilizing an initial decision maker (“IDM” and also referred to as a project neutral) or a dispute resolution board (“DRB”) to resolve disputes on construction projects. The IDM and DRB are designed to resolve disputes, specifically claims (whether for time, money, or both), during construction to keep the project progressing forward without being bogged down by the inevitable claim. There are numerous avenues to resolve disputes without resorting to filing a lawsuit or a demand for arbitration. The thought is that dispute resolution will be facilitated by techniques designed to assist the parties with the resolution of claims during construction. While direct discussions between the parties, meetings with the executives for business decision purposes, mediations, etc., are certainly helpful, sometimes these avenues are simply not enough to truly resolve a complex claim on a construction project that occurs during construction.
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David M. Adelstein, Kirwin NorrisMr. Adelstein may be contacted at
dma@kirwinnorris.com
Suing the Lowest Bidder on Public Construction Projects
September 17, 2015 —
Craig Martin – Construction Contractor AdvisorThe California Court of Appeals has allowed the second lowest bidders on public construction projects to sue the lowest bidder where it appears that the lowest bidder was only the lowest because it paid its employees less than the established prevailing wage. This is a novel theory for recovery, but may provide for an opportunity to challenge improperly low bids.
Background
Between 2009 and 2012, American Asphalt outbid two asphalt companies on 23 public works projects, totaling nearly $15 million. The two asphalt companies sued American Asphalt alleging that they were the second lowest bidder all 23 construction projects and they would have been the lowest had American Asphalt paid its employees the required prevailing wage. Importantly, the municipality awarding the contracts was not sued by the second lowest bidders. Instead, the second lowest bidders alleged that American Asphalt intentionally interfered with a business expectancy and sought damages from American Asphalt, specifically the profit that they lost by not performing these contracts.
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Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
CA Supreme Court Rejects Proposed Exceptions to Interim Adverse Judgment Rule Defense to Malicious Prosecution Action
August 24, 2017 —
David W. Evans & Stephen J. Squillario – Haight Brown & Bonesteel LLPIn Parrish v. Latham & Watkins (No. S228277 - August 10, 2017) (“Parrish”), the California Supreme Court examined the “interim adverse judgment rule” in a different context than previous decisions on the subject. The rule provides that if an earlier action succeeds after a hearing on the merits, this success establishes the existence of probable cause and precludes a subsequent malicious prosecution action. In a typical case applying the rule, a plaintiff in the underlying action defeats the defendant’s motion for summary judgment but then loses the case at trial leading to a subsequent malicious prosecution claim. In Parrish, the Court addressed whether the rule applies when the trial court had denied the defendant’s summary judgment motion but concluded after the defense prevailed at a bench trial that the suit had been brought in “bad faith” due to a lack of evidentiary support.
Reprinted courtesy of
David W. Evans, Haight Brown & Bonesteel LLP and
Stephen J. Squillario, Haight Brown & Bonesteel LLP
Mr. Evans may be contacted at devans@hbblaw.com
Mr. Squillario may be contacted at ssquillario@hbblaw.com
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Crowdfunding Comes to Manhattan’s World Trade Center
January 28, 2015 —
David M. Levitt – BloombergGot $5,000? You can invest in the 3 World Trade Center skyscraper under construction in lower Manhattan.
Fundrise, a real estate crowdfunding business, is inviting individual investors to put as little as $5,000 into bonds backing the 80-story tower, according to a statement e-mailed by Joshua Greenwald, a spokesman for the Washington-based company. The total cost for the Richard Rogers-designed building is projected to be $2 billion.
“We think the 3 World Trade Center investment offering is proof of the power of crowdfunding at work,” Dan Miller, co-founder of Fundrise, said in the statement. “We are proud to be able to give more people a chance to invest in this important iconic asset.”
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David M. Levitt, BloombergMr. Levitt may be contacted at
dlevitt@bloomberg.net
4 Lessons Contractors Can Learn From The COVID-19 Crisis
May 25, 2020 —
Patrick Hogan - Handle.comAt the start of 2020, the industry outlook in construction was positive. Many contractors were optimistic about what the year had in store for construction businesses in terms of profit, expansion of operations, and even payment issues. That was until the COVID-19 pandemic put a wrench in everyone’s business plans.
There’s no question about how huge the impact of the novel coronavirus crisis is on business operations. With the federal and state governments implementing strict measures to slow down the spread of COVID-19, construction businesses are experiencing significant delays and disruptions in their operations. Because of the lockdowns and stay-at-home orders, many construction projects are forced to postpone operations or, worse, cancel them altogether.
Nevertheless, there are lessons in the COVID-19 pandemic that contractors can learn. Here are some of them.
1. Contractors need to be proactive in meeting preliminary notice requirements
Cash is tight in times of crisis. As the economy comes to a standstill, construction businesses will need to deal with decreasing profits. They may even have to dip into their own cash reserves to cover fixed expenses and their employees’ salaries.
In times like this, it is crucial that contractors perform due diligence in protecting their right to get paid. The first step in doing so is to prepare
preliminary notices. These notices are an important step in the mechanics lien process and without them, chances contractors will not be able to recover the unpaid compensation for the materials they furnished and services they rendered.
2. Force majeure provisions are crucial parts of a contract
The novel coronavirus pandemic has highlighted the importance of force majeure provisions in construction contracts. Before the COVID-19 crisis hit business operations, force majeure provisions were typically considered as simple boilerplate clauses. This means they were just there as a standard part of contracts.
However, the same force majeure clauses, as well as impossibility of performance provisions, have become crucial in the current crisis. As many construction businesses experience difficulties with their operations, they may not be able to fulfill their contractual responsibilities. The said clauses can give contractors a much-needed reprieve.
As the current crisis continues, contractors should review contracts as these provisions can give them more time to finish the job. And in the hopefully near future when the crisis ends, business owners should review the contract creation process and ensure that these clauses included in contracts will be able to address the impact of situations similar to COVID-19.
3. Having solid internal communication is crucial
There’s a lot of uncertainty with the COVID-19 situation. With work operations temporarily stopping, the circumstances can be quite stressful for employees. There will be doubts and fears within your workforce on whether work will be back to normal as soon as possible or not.
Keeping your workforce well-informed and trusting of your organization is crucial, especially in this time of uncertainty. That is why it is paramount that you have a solid internal communication infrastructure to disseminate information about the current work situation and the next steps that the business will take. In addition, only through proper employee communication can the implementation of social distancing and hygiene measures be effective.
4. Contractors can benefit from flexible work arrangements
As the coronavirus crisis has made it necessary for everyone to stay at home, construction businesses should look for ways to continue operations. Expanded work arrangements such as work-from-home setups may just be the solution.
Of course, most of the physical work that is needed to be done on-site will be impossible to do at home, but office-based functions such as sales, client relations, design, and administrative roles can still continue. This can even have additional benefits to productivity and health. And when the crisis is over, business owners should consider incorporating these work arrangements into their operations permanently.
The COVID-19 crisis is not showing any sign of stopping soon, and even when it ends, it will take quite a long time before we can be back to business as usual. As the crisis continues, however, business owners should take the situation as a learning experience.
Once the COVID-19 crisis is over, it will take a long time for things to go back to normal. In fact, things may not end up going back to the way they were before and businesses will need to adapt to the new normal. However the situation evolves, business owners should take this opportunity to learn new things and maintain resilience in trying times.
About the Author:
Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors, subcontractors, and material suppliers with late payments. Handle.com also provides funding for construction businesses in the form of invoice factoring, material supply trade credit, and mechanics lien purchasing.
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Insurer Must Cover Construction Defects Claims under Actual Injury Rule
March 01, 2012 —
Tred R. Eyerly - Insurance Law HawaiiThe Texas Court of Appeals held that the insured need not prove the exact dates physical damage occurred in order to trigger defense and indemnity coverage. Vines-Herrin Custom Homes, LLC v. Great Am. Lloyds Ins. Co., 2011 Tex. App. LEXIS 10027 (Tex. Ct. App. Dec. 21, 2011).
In 1999, the insured built a home. He was insured under a CGL policy issued by Great American from November 9, 1998 to November 9, 2000. Thereafter, the insured held a CGL policy issued by Mid-Continent from November 9, 2000 to September 18, 2002.
After construction was completed, the insured sold the house to the buyer in May 2000. After moving in, the buyer found numerous construction defects in the home, including water entering cracks in the home, and sinking and sagging of parts of the house. The buyer sued the insured, who sought coverage under the two policies. When the insurers refused to defend the underlying suit, the insured sued for a declaratory judgment.
The underlying case went to arbitration and an award of $2.4 million was granted to the buyer. The insured assigned to the buyer his claims against the insurers.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
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Receiving a $0 Verdict and Still Being Deemed the Prevailing Party for Purposes of Attorney’s Fees
May 24, 2018 —
David Adelstein - Florida Construction Legal UpdatesLow and behold, a party can be the prevailing party for purposes of attorney’s fees even if that party is awarded $0. That’s right, even if the party is awarded a big fat zero, they can still be the prevailing party for purposes of being entitled to attorney’s fees. This is because a party is the prevailing party if they prevail on the significant issues in the case. A party can prevail on the significant issues even if that party is awarded $0. Whoa!
For example, in Coconut Key Homeowner’s Association, Inc. v. Gonzalez, 43 Fla.L.Weekly D1045a (Fla. 4th DCA 2018), a homeowner sued her homeowner’s association claiming the association breached its governing documents. There was a basis for fees under Florida’s homeowner’s association law (and there likely was a basis under the governing documents). At trial, the jury held that the association breached its governing documents, but awarded the homeowner nothing ($0). The trial court also issued injunctive relief in favor of the homeowner. The homeowner claimed she should be deemed the prevailing party for purposes of attorney’s fees; however, this was denied by the trial court based on the $0 verdict and no fees were awarded to the homeowner.
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David Adelstein, Florida Construction Legal UpdatesMr. Adelstein may be contacted at
dadelstein@gmail.com
Forum Selection Provisions Are Not to Be Overlooked…Even On Federal Projects
September 16, 2024 —
David Adelstein - Florida Construction Legal UpdatesForum selection provisions are NOT to be overlooked. Ever. Treat them seriously. Even on federal projects where there is a Miller Act payment bond. Consider forum selection provisions on the front end when negotiating your contract.
In a recent opinion, U.S. f/u/b/o Timberline Construction Group, LLC vs. Aptim Federal Services, LLC, 2024 WL 3597164 (M.D.Fla. 2024), a joint venture prime contractor was hired by the federal government to build a temporary housing site. The joint venture prime contractor obtained a Miller Act payment bond. The joint venture then entered into a subcontract with one of its joint venture members and the member-subcontractor then engaged a sub-subcontractor. The sub-subcontractor claimed it was owed $3.5 Million and sued the member-subcontractor, as well as the prime contractor’s Miller Act payment bond, in the Middle District of Florida. The member-subcontractor and the Miller Act payment bond sureties moved to transfer venue to the Middle District of Louisiana pursuant to a forum selection clause in the contract between the sub-subcontractor and the member-subcontractor. The contract provided that the exclusive venue would be a United States District Court located in Louisiana.
Forum selection provisions are analyzed in federal court under 28 U.S.C. 1404(a): “For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.” U.S. f/u/b/o Timberline, supra at *2. A forum selection provision is presumptively valid and given controlling weight. Id. (quotations and citations omitted).
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
