Real Estate & Construction News Roundup (07/05/23) – A Hospitality Strike in Southern California, Agencies Step in With Lenders and the Social in ESG
August 14, 2023 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn our latest roundup, we see promising developments for climate change action in commercial real estate, how homeowners are reacting to new energy concerns, the fallout of the U.S. debt ceiling fight on global M&A deals, and more!
- There are new ways the commercial real estate sector can grow its commitment to climate goals and contributions to reducing its carbon footprint. (Mahesh Ramanujam, Forbes)
- Thousands of hospitality workers in Southern California went on strike to demand higher wages, access to affordable family health care benefits and stronger workplace protections. (Julianne McShane, NBC)
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Pillsbury's Construction & Real Estate Law Team
Another Reminder that Contracts are Powerful in Virginia
February 08, 2021 —
Christopher G. Hill - Construction Law MusingsRegular readers of this construction law blog are likely tired of my refrain that the contract is king here in Virginia. With few exceptions, some of which have been passed in the last few years, the contract can and does essentially set the “law” for the transaction. A recent opinion from the 4th Circuit Court of Appeals confirms this principle.
In Bracey v. Lancaster Foods, LLC, the Court looked at the question as to whether parties can contractually limit the statute of limitations in which a plaintiff or arbitration claimant can file its claim for relief. In Bracey, Michael Bracey, a truck driver, sued his former employer, Lancaster Foods, asserting various employment law claims. Lancaster moved to dismiss and compel arbitration based on the terms of an alternative dispute resolution agreement Bracey signed when he was hired, under which he consented to arbitration of any employment-related claim and waived all rights he may otherwise have had to a trial. Bracey challenged the arbitration clause, one that also included a 1-year limitation on the time in which Bracey was allowed to file any claim, as unconscionable. A federal judge in Maryland agreed and granted the motion to dismiss.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Designers “Airpocalyspe” Creations
May 19, 2014 —
Beverley BevenFlorez-CDJ STAFFBlaine Brownell in Architect Magazine discussed how recently some designers have created items to deal with urban pollution, however, the creations themselves are more politically-charged than practical.
Brownell lists recent examples of architects and designers “perverse” creations: “Notable smog-inspired works include the Aegis Parka, a protective jacket created by Dutch design studio Nieuwe Heren; a palladium dichloride coat that changes color in the presence of carbon dioxide emissions and is designed by London-based artist Lauren Bowker; and R&Sie(n)’s ‘Dustyrelief’ building in Bangkok, designed to collect atmospheric dust via an electrostatically-charged facade.”
“Perhaps such proposals—and the disarming irony they conjure—will motivate the changes necessary to clean up our act,” Brownell concluded.
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Making Construction Innovation Stick
February 22, 2018 —
Tom Sawyer, Jeff Rubenstone, and Scott Lewis – ENRIntegrating innovations into construction workflows—rather than serially testing, piloting and discarding them—is a definition of success. Yet few innovations—even ones that shine in trials—are absorbed into practice. Many just quietly go away, sending the work of vetting and testing them down the drain. That leaves some firms wondering if most construction technology innovation efforts are a waste of time.
Reprinted courtesy of Engineering News-Record authors
Tom Sawyer,
Jeff Rubenstone and
Scott Lewis
Mr. Sawyer may be contacted at sawyert@enr.com
Mr. Rubenstone may be contacted at rubenstonej@enr.com
Mr. Lewis may be contacted at lewisw@enr.com
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Texas Allows Wide Scope for Certificate of Merit
January 07, 2025 —
Lian Skaf - The Subrogation StrategistThe purpose of certificate of merit (sometimes referred to as affidavit of merit) statutes is to identify frivolous claims before the court wastes time and resources during litigation. More common in medical malpractice cases, several states have enacted similar requirements for professional negligence claims dealing with construction-related issues. While a subrogation attorney should not be bringing a frivolous case to suit anyway, the requirement adds another step in the process that plaintiffs need to properly navigate.
Chapter 150 of the Texas Civil Practice and Remedies Code requires that in an action arising out of professional services by a licensed or registered professional, claimants must file an affidavit from a qualified expert attesting to the theories of recovery, the negligence and the factual basis for the claims. The expert must be competent, have the same professional license or registration as the defendant and practice in the area of practice of the defendant.
In Janis Smith Consulting, LLC v. Rosenberg, No. 03-23-00370-CV, 2024 Tex. App. LEXIS 7961, the Court of Appeals of Texas, Third District (Court of Appeals) addressed a challenge from the defendant as to the sufficiency of the plaintiff’s certificate of merit in an interlocutory appeal. The Court of Appeals affirmed the lower court’s dismissal of the defendant’s motion to dismiss based on the allegedly improper certificate of merit, holding that the plaintiff’s expert was sufficiently qualified to certify the legitimacy of the case.
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Lian Skaf, White and Williams LLPMr. Skaf may be contacted at
skafl@whiteandwilliams.com
Practical Pointers for Change Orders on Commercial Construction Contracts
December 31, 2014 —
John E. Bowerbank - Newmeyer & DillionConstruction projects pose unique challenges, including keeping costs within budget, meeting project deadlines, and coordinating the work of numerous contractors and subcontractors in the wake of inevitable design revisions and changes to the plans. Anticipating potential project challenges and negotiating contract provisions before commencing work on a project is critical for all parties. Careful planning should reduce the number of contract disputes. This, in turn, can facilitate the completion of a project within budget and on schedule.
“Changes” Clauses in Construction Contracts
Most commercial construction contracts have a clause addressing changes to the contract. A “changes” clause typically requires the mutual agreement of the parties on the scope of any modifications to the contract, as well as the effect on the contract price and timeframe for the work to be performed. This results in what is generally referred to as a “change order.” Many projects have a large number of change orders, which can result in significant cost overruns and delays to the project if the contract contains a complicated change order process. Therefore, in order to minimize cost overruns and project delays, it is crucial to keep the change order process as simplified and streamlined as possible.
In the most basic terms, change orders memorialize modifications to the original contract, and typically alter the contract's price, scope of work, and/or completion dates. A typical change order is a written document prepared by the owner or its design professional, and signed by the owner, design professional, and affected contractors and subcontractors. An executed change order indicates the parties’ agreement as to what changes are taking place, including approval for additional costs and schedule impacts.
While the reasons for change orders and the parties initiating them may vary, all change orders have one feature in common. Effective change orders alter the original contract and become part of the contract. Therefore, from a legal standpoint, change orders must be approached with the same caution and forethought as the original contract.
Practice Pointers for Change Orders
In light of the foregoing, some practice pointers for change orders in commercial construction contracts are as follows:
- Carefully Negotiate and Draft Change Order Provisions in the Original Contract.
A carefully negotiated and drafted “changes” clause that accounts for “unexpected circumstances” or “hidden conditions” can protect the parties from downstream costly disputes.
- Immediately Address Changes by Following the Change Order Process, Including Obtaining Necessary Signatures.
Regardless if you are an owner, general contractor or subcontractor, you should address any proposed change order immediately. Even if a decision maker gives “verbal” approval to go ahead with changed work, the work should not proceed without following the change order process in the original contract. This includes making sure to obtain any necessary signatures for the change order, if at all possible.
- Analyze the Plans and Specifications to Determine Whether “Changes” are Within the Scope of the Original Contract, or Whether They are Extra Work.
Prior to entering an original contract, it is imperative that the parties review the plans and specifications for ambiguities regarding work included in the original contract, versus potential extra work that would require a change order. This is important because a careful review of the plans and specifications sometimes reveals that work believed to be a change order is, in fact, original work, or vice versa.
- Make Sure Requests and Approvals for Change Orders are Done by an Authorized Representative.
When a party requests or gives its approval to a change order, it is important to confirm the request or approval came from an authorized representative.
- Avoid Vague and Open-Ended Change Orders.
Indeed, the vaguer a change order, the more likely it can lead to a dispute. Vague and open-ended change orders, including change orders that provide for payment on a time and materials basis, can be difficult for an owner to budget and schedule. This can lead to disputes as to cost and/or time extensions.
- Oral Assurances for Payment Without a Signed Change Order May Not Be Recoverable.
When a party provides verbal assurances to another party for extra work without following the change order process, there is a much higher likelihood that disputes will occur. Although there is case law that may allow a contractor to recover for extra work in private contracts based on oral promises, the parties should avoid placing themselves in such a legal position. Notably, in public contracts, a contractor may not be able to recover for any extra work without a signed changed order, even with verbal assurances of payment from the owner.
About the Author:
John E. Bowerbank, Newmeyer & Dillion
Mr. Bowerbank is a partner in the Newport Beach office and practices in the areas of business, insurance, real estate, and construction litigation. You can reach John at john.bowerbank@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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Hurricane Laura: Implications for Insurers in Louisiana
October 19, 2020 —
Jennifer Michel & Tabitha Durbin - Lewis BrisboisJust two days before the 15th Anniversary of Hurricane Katrina, Category 4 Hurricane Laura made landfall near Cameron, Louisiana. Although the “unsurvivable” 20-foot storm surge, which had been predicted ahead of the storm, thankfully was significantly less, the impact of Laura on the Southwest Coast of Louisiana and Southeast Coast of Texas and its neighboring parishes and counties, most notably Cameron Parish, was quite severe. Lake Charles, Louisiana suffered widespread flooding and sustained catastrophic wind damage. Although the storm moved quickly, it retained its strength longer than expected such that even areas well inland sustained considerable damage. Preliminary estimates for insured losses from storm surge, flooding, and winds range from $8 to $12 billion for residential and commercial properties. Insurers providing residential or commercial property insurance in Louisiana should keep the following statutory claims handling requirements in mind.
Louisiana Statutory Provisions
Under Louisiana law, an insurer is expected to comply with certain statutory requirements in investigating and handling claims submitted by its insureds and third-party claimants. The majority of these requirements, and the consequences of their violation, are codified by La. R.S. 22:1892, which governs the payment and adjustment of claims, and La. R.S. 22:1973, which delineates an insurer’s duty of good faith. Together, the statutes impose three requirements on insurers: timely initiation of loss adjustment, timely payment of claims, and a duty of good faith and fairness in the adjustment and payment of said claims.
Reprinted courtesy of
Jennifer Michel, Lewis Brisbois and
Tabitha Durbin, Lewis Brisbois
Ms. Michel may be contacted at Jenny.Michel@lewisbrisbois.com
Ms. Durbin may be contacted at Tabitha.Durbin@lewisbrisbois.com
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