Even Where Fraud and Contract Mix, Be Careful With Timing
April 12, 2021 —
Christopher G. Hill - Construction Law MusingsI have often discussed the limited circumstances under which a construction contract claim and a fraud claim can coexist. A recent case from the Western District of Virginia federal court demonstrates that care is necessary even in those limited circumstances.
In Fluor Fed. Sols., LLC v. Bae Sys. Ordinance Sys., the Court examined the question of a fraud statute of limitations under Virginia law. The basic facts found in the Complaint are these:
In 2011, the United States Army awarded BAE Systems Ordinance Systems Inc. a basic ordering agreement under which BAE was responsible for modernization projects at the Radford Army Ammunition Plant. This action stems from a subcontract between Fluor Federal Solutions LLC and BAE, under which Fluor agreed to design and construct a new natural gas boiler at the plant. Fluor has completed work on the project, and BAE has accepted that work. Nonetheless, Fluor claims that BAE has refused or failed to pay for the balance of the project costs. Fluor alleges that BAE received several changes to its prime contract from the Army but did not pass those changes along to Fluor until after BAE solicited a bid from Fluor and entered a contract with Fluor to build a temporary facility. Instead, BAE continued to misrepresent the scope of the project. Fluor alleges that the change in plans increased costs substantially, but that BAE withheld information about those changes so that it could solicit lower bids. Fluor alleges that it requested a copy of BAE’s prime contract on numerous occasions, but BAE failed to provide a copy of it. Instead, Fluor submitted a request under the Freedom of Information Act. It received a copy of BAE’s prime contract on Oct. 3, 2018.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
U.S. Army Corps Announces Regulatory Program “Modernization” Plan
August 03, 2022 —
Karen Bennett - Lewis BrisboisWashington D.C. (June 17, 2022) - The U.S. Army Corps of Engineers and the Department of the Army recently announced plans to amend the Corps Civil Works program to better serve Indian nations and other disadvantaged and underserved communities. 87 Fed. Reg. 33758 (June 3, 2022). Comments are due by August 2, 2022.
Several items warrant attention. The first are changes to Corps regulations on implementation of the National Historic Preservation Act (NHPA, or the Act) (33 CFR 325, Appendix C). Proposed options include suspension of the Corps’ Appendix C regulations and adoption of the Advisory Council on Historic Preservation’s (ACHP) regulations. Congress established the ACHP, an independent agency whose mission is to provide the President and Congress with advice as to policies and programs on historical preservation. The NHPA authorized the Council to promulgate regulations establishing procedures for evaluating the effect of a federal action on historic property. The Act also provides that a federal agency may promulgate its own regulations, consistent with the Council’s regulations. Where an agency has its own regulations, courts have consistently held that the agency’s regulations govern decision-making, provided they are not inconsistent with the Part 800 regulations. Most courts have generally regarded an agency’s regulations as inconsistent when they are less restrictive procedurally than the Council’s. Until today, the Corps has defended Appendix C and interim guidance (issued in 2005 and 2007) as consistent with the NHPA and specifically tailored for use in the Corps regulatory program. The announcement marks a significant directional change and gives the ACHP a larger role in Corps regulatory decisions.
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Karen Bennett, Lewis BrisboisMs. Bennett may be contacted at
Karen.Bennett@lewisbrisbois.com
The G2G Year-End Roundup (2022)
January 04, 2023 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogOur year-end roundup highlights the top-read Gravel2Gavel posts from 2022. Our authors addressed the legal implications for a variety of hot topics and market disruptions, providing deep industry insights that spanned Metaverse real estate investments, economic sanctions in Russia, and cybersecurity for smart buildings.
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Pillsbury's Construction & Real Estate Law Team
Federal Court Sets High Bar for Pleading Products Liability Cases in New Jersey
November 11, 2024 —
Lian Skaf - The Subrogation StrategistProducts liability is an area of law that both sides of the aisle vigorously litigate. Like in most litigation, products liability claims provide subrogation attorneys with an important means of prosecuting cases against manufacturers, sellers, and other entities in the stream of commerce. Of course, these claims also come with numerous “buyer beware” requirements.
New Jersey allows products liability claims and the United States District Court for the District of New Jersey (District Court) clarified how such claims should be plead in Cambridge Mut. Fire Ins. Co. a/s/o David Krug vs. Stihl, Inc., No. 22-05893, 2024 U.S. Dist. LEXIS 178804 (D. N.J.). After becoming subrogated to the rights of its insured, Cambridge Mutual Fire Insurance Company (Cambridge) filed suit against Stihl, Inc. (Stihl) in the Superior Court of New Jersey, Morris County, Law Division. Stihl then removed the case to federal court. Once in federal court, Stihl filed a motion to dismiss the action. The District Court granted the motion, doing so in part with prejudice and in part without prejudice.
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Lian Skaf, White and Williams LLPMr. Skaf may be contacted at
skafl@whiteandwilliams.com
HVAC System Collapses Over Pool at Gaylord Rockies Resort Colorado
June 12, 2023 —
Jennifer Seward - Engineering News-RecordThe collapse May 6 of the HVAC system above an indoor pool at the Gaylord Rockies Resort near Denver sent six people to local hospitals, two with life-threatening injuries. An estimated 50 to 100 people were in the water or on the pool deck as pieces of the system fell into the pool and hot tub.
Reprinted courtesy of
Jennifer Seward, Engineering News-Record
Ms. Seward may be contacted at sewardj@enr.com
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North Dakota Court Determines Inadvertent Faulty Workmanship is an "Occurrence"
May 10, 2013 —
Tred EyerlyJoining what it called the majority of jurisdictions, the North Dakota Supreme Court found that damage caused by faulty workmanship can be an "occurrence." K&L Homes, Inc. v. Am. Family Mutual Ins. Co., 2013 N.D. LEXIS 61 (N.D. April 5, 2013).
The insured, K&L, was a general contractor who was sued after completing construction of a new home. The suit was based upon breach of contract and breach of implied warranties claims. The homeowners alleged that improper compacting of soil had caused shifting of their home, leading to property damage. K&L had hired a subcontractor to do the soil compaction work.
The insurer denied coverage. K&L sued the insurer, but lost at the summary judgment stage.
On appeal, K&L argued the policy should be interpreted to give effect to the document as a whole and the "subcontractor exception" to the "your work" exclusion should apply.
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Tred EyerlyMr. Eyerly can be contacted at
te@hawaiilawyer.com
Meet Your Future Team Members: AI Agents
December 10, 2024 —
Aarni Heiskanen - AEC BusinessIf you’ve been following the discussion around AI, you’re familiar with the concept of AI agents.
AI agents can be understood as intelligent automation that operates independently, monitoring its environment and taking action without constant human input. Unlike traditional software requiring specific inputs to produce predictable outputs, AI agents can adapt to varying conditions and user needs.
AI agents can be based on various technologies, including Large Language Models. They can also be constructed using other AI technologies, such as rule-based systems, machine learning algorithms, and specialized models tailored to specific tasks.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
New York Restrictions on Flow Through Provision in Subcontracts
August 14, 2023 —
Bill Wilson - Construction Law ZoneMost subcontracts include a flow through provision (also called flow down and incorporation clauses) stating that the subcontractor and contractor are bound by the same obligations as set forth in the prime contract between the contractor and owner. Many jurisdictions interpret such provisions narrowly, as illustrated in a recent case out of New York. In Amerisure Insurance Company v. Selective Insurance Group, Inc., 2023 WL 3311879, the U.S. Court of Appeals for the Second Circuit affirmed the District Court’s interpretation of a flow through clause in a construction subcontract. The Amerisure case involved a dispute over insurance coverage for a personal injury to a subcontractor’s employee on a construction project. The owner of the project sought defense and indemnity from the general contractor (GC) and its insurance company, who in turn sought coverage for the owner as an additional insured under the subcontractor’s policy. The GC based its argument for coverage on the flow through provision in the subcontract.
The prime contract required the GC to procure commercial liability insurance including the owner as an additional insured for claims caused by the GC’s negligent acts or omissions. The subcontract likewise required the subcontractor to procure commercial general liability insurance but required only that the GC be named as an additional insured. However, the subcontract also included a flow through clause, binding the subcontractor to the terms of the prime contract and assuming toward the GC all the obligations and responsibilities that the GC assumed toward the owner. However, the subcontract did not expressly require that the subcontractor name the owner as an additional insured, and in order for the owner to qualify as an additional insured under the subcontractor’s insurance policy, the subcontractor must have agreed in the subcontract to name the owner as an additional insured.
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Bill Wilson, Robinson & Cole LLPMr. Wilson may be contacted at
wwilson@rc.com