New Mexico Holds One-Sided Dispute Resolution Provisions Are Unenforceable
November 05, 2024 —
Bill Wilson - Construction Law ZoneDispute resolution provisions that grant one party the unilateral right to choose either litigation or arbitration to resolve disputes are common in the construction industry. The main difference between the two forums is that courts are more likely to strictly enforce contract terms as written as well as the applicable law, while arbitrators make decisions on more equitable considerations, untethered to the contract terms and—to some degree—the law. The party with the sole discretion to select the dispute resolution procedure can select the process most beneficial to its interests based on the nature of the dispute, regardless of who brings the claims. In Atlas Electrical Construction, Inc. v. Flintco, LLC, 550 P.3d 881 (N.M. Ct. App. 2024), the Court of Appeals of New Mexico recently held that an arbitration provision in a subcontract, under which the contractor retained the exclusive right to choose whether disputes arising under the subcontract were litigated in court or arbitrated was unreasonably one-sided, substantively unconscionable, and unenforceable.
The Atlas Electrical case involved two sophisticated entities with equal bargaining strength to negotiate the terms of a subcontract. The parties agreed to a subcontract provision which provided in the relevant part:
In the event [contractor] and [subcontractor] cannot resolve the dispute through direct discussions or mediation … then the dispute shall, at the sole discretion of [contractor], be decided either by submission to (a) arbitration … or (b) litigation …
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Bill Wilson, Robinson & Cole LLPMr. Wilson may be contacted at
wwilson@rc.com
Part II: Key Provisions of School Facility Construction & Design Contracts
July 21, 2018 —
David R. Cook - Autry, Hall & Cook, LLPIn
Part I of this article, published in late April, we discussed the performance risk and time risk involved with construction and design contracts, and in Part II, we will cover cost risk and political risk.
Cost Risk
School budgets are limited for many reasons, and the construction budget is no exception. As a result, contracts should guard against unwarranted cost increases and claims. In the absence of a written change order signed by the appropriate officer, the contract should absolutely prohibit additional compensation for changes in the work. It should forbid claims for all events except those within the school authority’s sole control. Even for permitted claims, the contractor must provide written notice so that the authority might alleviate the problem and control its costs. To encourage the contractor to limit costs and claims, the contract could include a shared-savings clause, which grants an incentive payment for completion within the budget.
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David R. Cook, Autry, Hall & Cook, LLPMr. Cook may be contacted at
cook@ahclaw.com
A Recap of the Supreme Court’s 2019 Summer Slate
September 16, 2019 —
Anthony B. Cavender - Gravel2GavelAs usual, the last month of the Supreme Court’s term generated significant rulings on all manner of cases, possibly presaging the new directions the Court will be taking in administrative and regulatory law. Here’s a brief roundup:
An Offshore Dispute, Resolve – Parker Drilling Management v. Newton
On June 10, 2019, the Court held, in a unanimous ruling, that, under federal law, California wage and hour laws do not apply to offshore operations conducted on the Outer Continental Shelf (OCS). Newton, the plaintiff, worked on drilling platforms off the coast of California, and alleged that he was not paid for his “standby time” which is contrary to California law if not federal law. He filed a class action in state court, which was removed to federal court, where it was dismissed on the basis of a 1969 decision of the U.S. Court of Appeals for the Fifth Circuit, which held that state law applies on the OCS only to the extent that it is necessary to use state law to fill a significant gap or void in federal law, and this is not the case here. On appeal to the Ninth Circuit, that court disagreed with the Fifth Circuit, and ruled that state law is applicable on the OCS whenever it applies to the matter at hand. The Supreme Court, in an opinion written by Justice Thomas, conceded that “this is a close question of statutory interpretation,” but in the end the Court agreed with the argument that if there was not a gap to fill, that ended the dispute over which law applies on the Outer continental Shelf. This ruling, recognizing the preeminent role that federal law plays on the OCS, may affect the resolution of other offshore disputes affecting other federal statutes.
Preemption Prevention – Virginia Uranium, Inc. v. Warren. et al.
On June 17, 2019 the Court decided important cases involving federal preemption and First Amendment issues. In a 6-to-3 decision, the Court held that the Atomic Energy Act does not preempt a Virginia law that “flatly prohibits uranium mining in Virginia”—or more precisely—mining on non-federal land in Virginia. Virginia Uranium planned to mine raw uranium from a site near Coles, Virginia, but acknowledging that Virginia law forbade such an operation, challenged the state law on federal preemption grounds, arguing that the Atomic Energy Act, as implemented by the Nuclear Regulatory Commission, preempts the ability of the state to regulate this activity. However, the majority, in an opinion written by Justice Gorsuch, notes that the “best reading of the AEA does not require us to hold the state law before us preempted,” and that the1983 precedent that Virginia Uranium cites, Pacific Gas & Electric Company v. State Energy Resources Conservation and Development Commission, can easily be distinguished. Justice Gorsuch rejected arguments that the intent of the Virginia legislators in passing the state law should be consulted, that the Court’s ruling should normally be governed by the exact text of the statute at hand. However, both the concurring and dissenting opinions suggest that the what the legislators intended to do is important in a preemption context.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
The Murky Waters Between "Good Faith" and "Bad Faith"
September 30, 2019 —
Theresa A. Guertin - Saxe Doernberger & VitaIn honor of Shark Week, that annual television-event where we eagerly flip on the Discovery Channel to get our fix of these magnificent (and terrifying!) creatures, I was inspired to write about the “predatory” practices we’ve encountered recently in our construction insurance practice. The more sophisticated the business and risk management department is, the more likely they have a sophisticated insurer writing their coverage. Although peaceful coexistence is possible, that doesn’t mean that insurers won’t use every advantage available to them – compared to even large corporate insureds, insurance companies are the apex predators of the insurance industry.
In order to safeguard policyholders’ interests, most states have developed a body of law (some statutory, some based on judicial decisions) requiring insurers to act in good faith when dealing with their insureds. This is typically embodied as a requirement that the insurer act “fairly and reasonably” in processing, investigating, and handling claims. If the insurer does not meet this standard, insureds may be entitled to damages above and beyond that which they could otherwise recover for breach of contract.
Proving that an insurer acted in “bad faith,” however, can be like swimming against the riptide. Most states hold that bad faith requires more than just a difference of opinion between insured and insurer over the available coverage – the policyholder must show that the insurer acted “wantonly” or “maliciously,” or, in less stringent jurisdictions, that the insurer was “unreasonable.”
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Theresa A. Guertin, Saxe Doernberger & VitaMs. Guertin may be contacted at
tag@sdvlaw.com
Short on Labor, Israeli Builders Seek to Vaccinate Palestinians
February 01, 2021 —
Ivan Levingston & Fadwa Hodali - BloombergIsraeli builders want the government to vaccinate Palestinian construction workers to help rally a battered housing industry.
While Israel is racing to inoculate its citizens, the West Bank-based Palestinian Authority has no vaccination program in place. Beyond being a critical health issue, the gap is also an economic problem because the Israeli construction sector relies heavily on Palestinian workers who’ve been cut off repeatedly from building sites due to lockdowns.
Before the pandemic, about 65,000 Palestinians worked for Israeli contractors inside Israel, accounting for a third of their workforce. Closures and restrictions on both sides led to a 30% drop in housing starts despite rising demand.
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Ivan Levingston, Bloomberg and
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Traub Lieberman Partner Michael Logan and Associate Christian Romaguera Obtain Voluntary Dismissal in Favor of Construction Company Under the Vertical Immunity Doctrine
June 21, 2024 —
Christian Romaguera - Traub LiebermanIn a lawsuit filed in Orange County, Traub Lieberman Partner Michael Logan and Associate Christian Romaguera achieved a voluntary dismissal in favor of their Client, a construction company. The Plaintiff claimed that he was seriously and permanently injured, and demanded $1,000,000.00. The Plaintiff turned out to be an employee of our Client’s subcontractor, and the Plaintiff received worker’s compensation benefits from his employer, the subcontractor. Under Florida Statute § 440.11(1), “The liability of an employer . . . shall be exclusive and in place of all other liability, including vicarious liability, of such employer to any third-party tortfeasor and to the employee . . .” When a subcontractor provides workers’ compensation benefits to its injured employee, workers’ compensation immunity would not only apply to the subcontractor but to the general contractor as well. This is also known as “vertical immunity.” The Traub Lieberman team filed a detailed motion and memorandum of law to argue its case, and the Plaintiff voluntarily withdrew the claim against the Client just before that motion was set to be argued before the Judge.
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Christian Romaguera, Traub LiebermanMr. Romaguera may be contacted at
cromaguera@tlsslaw.com
Builder and County Tussle over Unfinished Homes
November 13, 2013 —
CDJ STAFFRivard, Florida has been trying to get rid of a group of unfinished homes destroyed. Now Hernando County officials have decreed that the partially-built homes are unsafe and must be demolished. However, after the building permits were withdrawn, Costa Homes filed a lawsuit asking that they be reinstated. The county had given the builder a deadline to file new permits, but were met with a lawsuit.
Costa Homes seeks to be relived of the county’s requirement that each of the six homes be provided with $10,000 bond and also finds the county’s completion schedule to be “so short it constitutes a prescription for failure.” Building officials had declared the structures unsafe in August and had stipulated that they had to be made safe.
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New OSHA Vaccination Requirements For Employers With 100 Or More Employees (And Additional Advice for California Employers)
November 19, 2021 —
Laura Fleming & Rana Ayazi - Payne & FearsUpdate 11.8.21: On Nov. 6, 2021, the United States Court of Appeals for the Fifth Circuit granted a stay of the OSHA ETS, stating that the OSHA ETS may have “grave statutory and constitutional issues.” The stay is not a final ruling on the validity of the ETS but temporarily halts its implementation nationwide. OSHA has until Nov. 8, 2021 at 5:00 PM to respond and the petitioners have until Nov. 9, 2021 at 5:00 PM to reply to OSHA’s response. The Fifth Circuit will then issue its ruling likely late this week or early next week.
On Sept. 9, 2021, President Joe Biden announced his COVID-19 Action Plan. The Action Plan called on the Department of Labor’s Occupational Safety and Health Administration (“OSHA”) to develop a rule requiring all employers with 100 or more employees to ensure their workforce is fully vaccinated or require any workers who remain unvaccinated to produce a negative test result on at least a weekly basis before coming to work.
On Nov. 4, 2021, OSHA released the rule in the form of an Emergency Temporary Standards (“OSHA ETS”). Here are ten things you need to know about the OSHA ETS:
- How To Count To 100: (1) The applicable number is the total number of employees employed on November 5, 2021—this is the headcount that will be used for the duration of the OSHA ETS. (2) The count must be done at the employer level not the individual location level. (3) Part-time employees do count towards the total number of employees. (4) Employees who work from home do count towards the total number of employees. (5) Independent contractors do not count towards the total number of employee.
Reprinted courtesy of
Laura Fleming, Payne & Fears and
Rana Ayazi, Payne & Fears
Ms. Fleming may be contacted at lf@paynefears.com
Ms. Ayazi may be contacted at ra@paynefears.com
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