Define the Forum and Scope of Recovery in Contract Disputes
March 02, 2020 —
Phillip L. Sampson Jr. & Richard F. Whiteley - Construction ExecutivePrivate and public companies spend billions of dollars every year on construction projects. For these projects, time is money, and incorporating the most advantageous legal terms in the construction contract can minimize the number and extent of disputes, and ultimately save money.
It is important to remember that the provisions in construction contracts are negotiable. In a common scenario, the contractor and owner informally agree to the scope of a construction project and its cost. When it is time to reduce the deal to writing, the contractor and owner decide to use an AIA contract that appears to be a standard form. The document looks to be on point, and the parties simply need to fill in a few blanks with the cost and scope-specific information. Presuming that the AIA provisions are mutually protective and beneficial, the parties do not think about altering the “standard” terms. They sign the contract, and the project begins.
Months later, the owner and contractor end up disputing delays on the project, entitlement to various payments, and whether certain aspects of the work are defective. At this point, the parties realize that some of the contract’s terms could have been drafted a bit more favorably—but by that time it’s too late. So remember, construction contracts are negotiable, even provisions within “standard” AIA contracts.
Reprinted courtesy of
Phillip L. Sampson Jr. and Richard F. Whiteley, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Mr. Sampson may be contacted at phillip.sampson@bracewell.com.
Mr. Whiteley may be contacted at richard.whiteley@bracewell.com.
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Construction Jobs Expected to Rise in Post-Hurricane Rebuilding
November 07, 2012 —
CDJ STAFFBusinessweek reports that construction jobs and materials will see increased demand as property owners in New York and New Jersey rebuild after hurricane Sandy. Tom Jeffery, of Irvine, California-based CoreLogic, a real estate information service, noted that “a high percent of damaged properties are going to be repaired.” Experts estimate property damage to total anywhere from $7 billion to $40 billion.
It is also estimated that about 739,000 properties in the area are underwater in the way that has nothing to do with flooding, with negative equity of 25 percent or more. Many of these homeowners are likely to walk away from their mortgages.
Ken Simonson, chief economist of the Associated General Contractors of America, expects “localized spikes in construction employment throughout November and the winter.” Martin Connor, the chief financial officer of Toll Brothers, expects to see more a rise in labor costs than in materials.
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Contract Change # 10: Differing Site Conditions (law note)
March 28, 2018 —
Melissa Dewey Brumback - Construction Law in North CarolinaPreviously, the A201 required a Contractor to provide notice to the Owner and Architect within 21 days after discovery of unforeseen site conditions. This notification is required prior to the conditions being disturbed, so as to allow the Design Team the ability to evaluate the site and determine the compensability of any such differing conditions.
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Melissa Dewey Brumback, Construction Law in North Carolina
Brown Paint Doesn’t Cover Up Construction Defects
April 25, 2012 —
CDJ STAFFIn a decision that describes the case as illustrating “the perils that real estate brokers and their agents assume when acting as a dual listing agent to both the buyers and sellers of the same house,” the California Court of Appeals has issued a decision in William L. Lyon & Associates v. The Superior Court of Placer County. Lyon & Associates sought summary judgment to dismiss the claims of the Henleys who bought a home in a transaction where a Lyon agent represented both sides.
The prior owners of the home, the Costas, had used a Lyon agent in purchasing their home. When they later sought to sell it, that agent “became aware of some of the house’s defects and problems.” In response, the Costas sought the help of another agent, Connie Gidal, also of Lyons & Associates. Photos taken in the presence of Ms. Gidal show defects of the paint and stucco. The Costas also took the step of painting the house dark brown. During the sale process, “rain caused many of the painted-over defects to reappear.” The Costas “purchased more dark brown paint and covered up the newly visible damage prior to inspection by the Henleys.”
With the damage concealed, the Henleys bought the home in May 2006. The agreement with Lyons & Associates noted that “a dual agent is obligated to disclose known facts materially affecting the value or desirability of the property to both parties.” Escrow closed on May 9, 2006. The contract with the broker included a two-year limit on the time to bring legal action.
The Henleys moved in during June 2006, and “began to discover construction defects that had been concealed by the Costas.” In addition to the painted-over stucco problems, the Henleys found that the Costas had “installed quartzite stone overlays on the backyard steps in a manner that caused water intrusion on the house’s stucco walls.”
In May 2009, the Henleys sued the Costas, Ron McKim Construction, Lyons & Associates, and Ms. Gidal. Their complaint alleged that Lyons & Associates had committed breach of contact, negligence, fraud, breach of fiduciary duty, and negligent nondisclosure in connection with the construction defects. The Costas named Lyons in a cross complaint. Lyons moved for summary judgments on the grounds that the two-year statute of limitations had expired before the complaint and cross-complaint were filed. Both the Henleys and the Costas opposed this claim. The court denied the motion and Lyons appealed.
The appeals court upheld the denial, noting that the both California Supreme Court decision and later action by the legislature compels real estate brokers and salespersons “to conduct a reasonably competent and diligent visual inspection of the property offered for sale.” The court noted that under California law, brokers have responsibilities to both sellers and buyers. The section of law cited by Lyons applies to seller’s agents. The court rejected the contention by Lyons that they were “cooperating brokers.” The Henleys were “not constrained by the two-year statute of limitations.”
Lyons contended that even if California’s statute did not apply, there was a contractual limit of two years. The court also rejected this, agreeing with the Henleys that “the two-year limitation period must be extended by the discovery rule.”
The court noted that “Lyon & Associates may not reap the benefit of a shortened contractual limitation period when its own alleged malfeasance contributed to the delay in the discovery of the buyer’s injury.” The court found that the Henleys could proceed with their breach of contract claim, because, “when a breach of contract is committed in secret, such as the intentional nondisclosure of a real estate broker regarding a previously visible construction defect, the contractual limitations period is properly held subject to the discovery rule.” The court felt that the interpretation favored by the California Association of Realtors would “halve the applicable statute of limitations period.”
In addition to rejecting Lyon request for summary judgment on the claims made by the Henleys, the court also rejected the request of summary judgment on the claims made by the Costas, concluding that neither claim is time-barred. Costs were awarded to both the Henleys and Costas.
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Industry Standard and Sole Negligence Defenses Can’t Fix a Defect
June 14, 2021 —
Lian Skaf - The Subrogation StrategistStrict products liability cases have been the subject of much fluctuation in the Pennsylvania courts over the last few years. Utilizing hope created by the courts in recent strict liability cases, defendants have tried to revive defenses based on meeting industry standards and the plaintiff’s contributory negligence. Recently, the Superior Court of Pennsylvania tempered that hope with limitations of how far strict liability defenses can extend.
In Sullivan v. Werner Co., No. 3086 EDA 2019, 2021 Pa. Super. LEXIS 210, an appellate panel of the Superior Court reviewed the lower court’s decision to exclude evidence of industry standards and of the plaintiff’s negligence in a trial that resulted in a $2.5 million verdict for the plaintiff. Upholding the decision of the lower court, the court found that the proffered evidence was within the discretion of the court to exclude.
In Sullivan, Michael Sullivan (Sullivan) was working as a union carpenter at a renovation project for a local school. He and his apprentice were installing exterior sheathing to the outdoor walls. In order to install the sheathing, Sullivan had to use a scaffold. He put together a new SRS-72 scaffold manufactured by Werner Company (Werner) that his foreman bought at Lowe’s Companies, Inc. (Lowe’s) and used the scaffold during the course of his work. While on the scaffold, Sullivan fell through and crashed to the ground. He suffered permanent injuries as a result of the incident.
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Lian Skaf, White and Williams LLPMr. Skaf may be contacted at
skafl@whiteandwilliams.com
Pre-Suit Settlement Offers and Construction Lien Actions
July 21, 2018 —
David Adelstein - Florida Construction Legal UpdatesIt is unfortunate, but in certain matters, a construction lien foreclosure action is not actually driven by the principal amount in dispute. Oh no. Rather, it is driven by attorney’s fees. That’s right. Attorney’s fees. This is true even though Florida applies the significant issues test to determine the prevailing party for purposes of attorney’s fees. However, oftentimes the prospect of attorney’s fees is enough for parties to fear that exposure.
There is a 1985 Florida Supreme Court case that I like to cite if applicable, C.U. Associates, Inc. v. R.B. Grove, Inc., 472 So.2d 1177, 1179 (Fla. 1985), that finds, “in order to be a prevailing party entitled to the award of attorney’s fees pursuant to section 713.29 [a construction lien claim], a litigant must have recovered an amount exceeding that which was earlier offered in settlement of the claim.” Accord Sullivan v. Galske, 917 So.2d 412 (Fla. 2d DCA 2006) (explaining that although contractor is receiving a judgment in his favor, he may not be the prevailing party if the homeowner offered to settle prior to the lawsuit for an amount equal to or greater than the award in the judgment).
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David Adelstein, Kirwin NorrisMr. Adelstein may be contacted at
dma@kirwinnorris.com
Just How Climate-Friendly Are Timber Buildings? It’s Complicated
February 12, 2024 —
Eric Roston - BloombergThis article is part of the Bloomberg Green series Timber Town, which looks at the global rise of timber as a low-carbon building material.
The number of people living in urban areas around the world
will swell by upwards of 2 billion over the next three decades. Many of those people will need new homes. But building those with conventional materials would unleash a gusher of carbon dioxide: Concrete, steel, glass and bricks for construction make up a combined
9% of global CO2 emissions, according to research by the United Nations Environment Program.
Enter engineered wood, a seemingly no-brainer solution.
Mass timber is not the typical lumber that has structured single-family houses in North America for decades. The wood components are strong enough to hold up an office tower or apartment block, and building with them is thought to emit much less CO2 than using standard materials. And since wood is about 50% carbon, the material itself even stores a little carbon, to boot.
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Eric Roston, Bloomberg
Wonder How 2021 May Differ From 2020? Federal Data Privacy May Be Enacted - Be Prepared
February 22, 2021 —
Joshua Bevitz - Newmeyer DillionState data privacy laws, which are far from uniform, are on the rise. To address that, as well the public’s increasing concern with protecting their private information, it is expected that there will be a serious effort in Congress this year to enact federal data privacy legislation. Here is what you need to know to ensure your business is ready for potential federal regulation.
Applicable State Laws
As is widely known, some states have recently enacted data privacy legislation to protect consumers. For example, in early 2020, California’s new privacy law, the California Consumer Privacy Act (CCPA), took effect, giving consumers more discretion regarding over how companies share and use their personal information. (For years, California already had in place its Database Security Breach Notification Act.) More recently, California enacted the California Privacy Rights and Enforcement Act (CPRA), which amends and strengthens the CCPA. Other states, such as Maine, Nevada, New York, Oregon, and Washington, have enacted their own data privacy legislation.
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Joshua Bevitz, Newmeyer DillionMr. Bevitz may be contacted at
joshua.bevitz@ndlf.com
