SEATTLE WASHINGTON BUILDING EXPERT
DIRECTORY AND CAPABILITIES

When Do Hard-Nosed Negotiations Become Coercion? Or, When Should You Feel Unlucky?

October 21, 2019 — Stan Millan, Jones Walker, LLP - ConsensusDocs
Conflict in a negotiation is to be expected and is arguably healthy for the process. Owners and contractors are constantly engaged in negotiations; whether it be negotiating changes to the work, changes to the schedule, or changes to the contractual terms. But at what point does taking a strong position in a negotiation cross the line and become coercion or bad faith? A recent decision from the Armed Services Board of Contract Appeals touched on this very issue. While this is a government contract case, the issues discussed in this case (namely negotiating a change) are routinely encountered in just about every construction project. This decision is instructive because it adds to a trending line of cases that limit an owner’s and contractor’s negotiation tactics. On August 5, 2019, the board issued an opinion in the appeal of Sand Point Services, LLC vs. NASA, ASBCA Nos. 6189. In Sand Point Services, the contractor was hired by the owner to repair the Wallops Flight Facility’s aircraft parking apron. During its work, the contractor hit a differing site condition, namely unsuitable soils. The contractor sought additional time and money for this differing site condition. The owner ultimately responded with a show cause letter to the contractor claiming, among other breaches, that the contractor was significantly behind schedule. This was generally viewed by all parties as the start of default proceedings against the contractor. Read the court decision
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Reprinted courtesy of Stan Millan, Jones Walker, LLP
Mr. Millan may be contacted at smillan@joneswalker.com

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Blueprint for Change: How the Construction Industry Should Respond to the FTC’s Ban on Noncompetes

May 13, 2024 — Matthew DeVries - Best Practices Construction Law
In a groundbreaking move aimed at fostering fair competition and empowering workers, the Federal Trade Commission (FTC) issued a final rule last week to ban noncompete agreements nationwide. This ruling may carry profound implications for the construction industry, prompting construction businesses to reassess their practices and ensure compliance while maintaining competitiveness. Let’s explore how construction companies, large and small, can navigate this regulatory shift effectively. Noncompete clauses have long been a staple in employment contracts within the construction sector, often used to protect proprietary information and retain skilled talent. However, the FTC’s ban on noncompetes demands a reevaluation of these practices. Employers must recognize the potential consequences of noncompliance, including legal repercussions and reputational damage, and take proactive steps to adapt to the new regulatory landscape. Communications with Employees The FTC rule requires employers to provide a form notice of non-enforcement to all present and former employees subject to an unexpired noncompete provisions. However, given the immediate legal challenges to the FTC’s rule and the fact that the 120-day compliance window has not yet begun, there is no reason to take immediate action or begin notifying employees. Instead, business owners should wait for at least 60 days before taking concrete action in response to the rule to see if any court temporarily enjoins the effectiveness of the rule. Read the court decision
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Reprinted courtesy of Matthew DeVries, Burr & Forman LLP
Mr. DeVries may be contacted at mdevries@burr.com

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Charles Carter v. Pulte Home Corporation

October 12, 2020 — Michael Velladao - Lewis Brisbois
In Carter v. Pulte Home Corp., __Cal.App.5th__(July 23, 2020), the California Court of Appeal affirmed the entry of judgment in favor of subcontractors in connection with a Complaint for Intervention based on equitable subrogation filed by Travelers Property Casualty Company of America (“Travelers”) seeking to recover defense costs incurred in defending Pulte Home Corporation (“Pulte”) in an underlying construction defect lawsuit. The parties’ dispute arose out of Travelers’ defense of Pulte as an additional insured under policies issued to four subcontractors involved in the underlying construction defect lawsuit. Several subcontractors involved in the underlying construction defect lawsuit refused to defend Pulte based on the indemnity clauses in their subcontracts. Such clauses promised to indemnify Pulte as follows: “all liability, claims, judgments, suits, or demands for damages to persons or property arising out of, resulting from, or relating to Contractor’s performance of work under the Agreement (“Claims”) unless such Claims have been specifically determined by the trier of fact to be the sole negligence of Pulte. . . .” Pulte eventually settled the construction defect lawsuit and its claims against all of the subcontractors. Travelers ultimately paid $320,491.82 for Pulte’s defense and recovered $164,400 from some of the subcontractors. Travelers’ intervention in the underlying lawsuit was intended to recover the remaining $156,091.82 from the subcontractors that refused to indemnify Pulte for the defense of the construction defect lawsuit. In the underlying trial, Travelers argued that the subcontractors were obligated to pay defense costs on a joint and several basis (minus what Travelers had already recovered). The trial court did not agree and held that Travelers was not entitled to equitable subrogation for the remaining defense costs. Read the court decision
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Reprinted courtesy of Michael Velladao, Lewis Brisbois
Mr. Velladao may be contacted at Michael.Velladao@lewisbrisbois.com

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Court Narrowly Interprets “Faulty Workmanship” Provision

March 28, 2018 — Jeffrey J. Vita and Thersa A. Guertin – SDV Blog
In a recent victory in their home state of Connecticut, Saxe Doernberger & Vita partners, Jeffrey Vita and Theresa Guertin, representing owner-developer 777 Main Street, LLC, overcame a summary judgment motion filed by Liberty Mutual Fire Insurance Company. The Connecticut Superior court refused to adopt the insurer’s broad interpretation of the “faulty workmanship” exclusion in an all-risk builders’ risk insurance policy. In 2014, 777 Main Street, LLC began renovations on the 27-story former Hartford National Bank building in downtown Hartford, converting the property from an office building to a mixed residential and commercial space. During the renovation, a subcontractor hired to perform the cleaning the concrete façade of the building accidentally over-sprayed the cleaning material onto the property’s windows. The subcontractor’s attempts to clean the overspray further damaged the structural integrity and cosmetic look of the windows. As a result, the owner was forced to replace over 1,800 windows, costing millions. Mr. Vita may be contacted at jjv@sdvlaw.com Ms. Guertin may be contacted at tag@sdvlaw.com Read the court decision
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What You Need to Know About “Ipso Facto” Clauses and Their Impact on Termination of a Contractor or Subcontractor in a Bankruptcy

September 12, 2022 — Martha B. Chovanes & Laurie A. Stanziale - ConsensusDocs
While contractor bankruptcies have long been an issue in the construction industry, in the aftermath of COVID-19 and the resultant labor, material and supply-chain delays, contractor bankruptcies are of even greater concern. Many construction contracts attempt to protect the upstream party from a bankruptcy filing of its contractor or subcontractor by providing for an automatic right to terminate a contract, referred to as “ipso facto” clauses. However, such clauses are generally unenforceable as bankruptcy laws, specifically Section 365(e) of Title 11 of the United States Code, protect the party filing for bankruptcy (the “Debtor”) from unilateral termination of the contract by the non-Debtor party. What is an “Ipso Facto” clause? An ipso facto clause is a provision in an agreement which permits its termination by one party due to the bankruptcy, insolvency or financial condition of the other party. Reprinted courtesy of Martha B. Chovanes, Fox Rothschild LLP (ConsensusDocs) and Laurie A. Stanziale, Fox Rothschild LLP (ConsensusDocs) Ms. Chovanes may be contacted at mchovanes@foxrothschild.com Ms. Stanziale may be contacted at lstanziale@foxrothschild.com Read the court decision
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This New Indicator Shows There's No Bubble Forming in U.S. Housing

April 01, 2015 — Michelle Jamrisko and Nina Glinski – Bloomberg
When a parking space in Manhattan costs $136,000 and only 15 percent of San Francisco's homes are affordable for the middle class, it's easy to worry that another housing bubble is around the corner. The vast majority of American homeowners have little to fear: A new gauge from Nationwide Insurance in Columbus, Ohio, suggests the national market is in its best shape since 2001 and there's no reason to fear a national downturn, no less a bursting bubble. In its first data release, the national Leading Index of Healthy Housing Markets rose to 109.8 in the fourth quarter. Values greater than 100 indicate a robust industry. The index uses local data in 373 metropolitan statistical areas that are underlying drivers of the housing market, including measures on employment changes, demographics and the mortgage market. Reprinted courtesy of Michelle Jamrisko, Bloomberg and Nina Glinski, Bloomberg Read the court decision
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In Supreme Court Showdown, California Appeals Courts Choose Sides Regarding Whether Right to Repair Act is Exclusive Remedy for Homeowners

August 10, 2017 — Garret Murai - California Construction Law Blog
Earlier, we wrote about an appellate court split concerning the Right to Repair Act (Civil Code sections 895 et seq.) which applies to construction defects in newly constructed residential properties including single-family homes and condominiums (but not condominium conversions) sold after January 1, 2003. The California Court of Appeals for the Fourth District, in Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98, held that the Right to Repair Act does not provide the exclusive remedy when pursing claims for construction defects involving “actual” property damage (e.g., a defectively constructed roof causing actual physical damage due to water intrusion as opposed to a defectively constructed roof that while constructed improperly does not cause actual physical damage). However, the California Court of Appeals for the Fifth District, in McMillin Albany LLC v. Superior Court (2015) 239 Cal.App.4th 1132, which is currently pending before the California Supreme Court, held that the Right to Repair Act does in fact provide the exclusive remedy when pursuing claims for construction defects whether they involve “actual” property damage or merely “economic” damages. For homeowners, they would prefer the option of pursuing remedies under either or both the Right to Repair Act (which includes detailed pre-litigation procedures and statutory construction standards) or under common law claims such as negligence (which do not include pre-litigation procedures and have more flexible standards of care). The California Court of Appeals for the Third District has now thrown its hat into the ring . . . on the side of McMillan. Read the court decision
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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com

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Is The Enforceability Of A No-Damage-For-Delay Provision Inappropriate For Summary Judgment

February 24, 2020 — David Adelstein - Florida Construction Legal Updates
Is the enforceability of a no-damage-for-delay provision inappropriate for resolution on a summary judgment? The recent decision in U.S. f/u/b/o Kingston Environmental Services, Inc. v. David Boland, Inc., 2019 WL 6178676 (D. Hawaii 2019), dealing with Florida law, suggests that it is inappropriate for a summary judgment resolution, particularly when there is a right to a jury trial. In this case, a prime contractor was hired on a federal construction project in Hawaii. The prime contractor hired a subcontractor and the subcontractor sued the prime contractor and its surety under the Miller Act. Of interest, the subcontractor was seeking to recover for the costs it incurred due to construction delays. The prime contractor moved for summary judgment as to the no-damage-for-delay provision in the subcontract. The no-damages-for-delay provision read as follows (and it is a well-written no-damage-for-delay provision): The Subcontractor expressly agrees that the Contractor shall not be liable to the Subcontractor for any damages or additional costs, whether foreseeable or unforeseeable, resulting in whole or in part from a delay, hindrance, suspension, or acceleration of the commencement or execution of the Work, caused in whole or in part by the acts or omissions, whether negligent or not, of the Contractor including other subcontractors or material suppliers to the Project, its agents, employees, or third parties acting on behalf of the Contractor. The Subcontractor’s sole remedy for any such delay, hindrance, suspension, or acceleration shall be a noncompensable time extension. Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.
Mr. Adelstein may be contacted at dma@kirwinnorris.com

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