Construction Contract Basics: Venue and Choice of Law
February 19, 2024 —
Christopher G. Hill - Construction Law MusingsPreviously in this on-again-off-again series of posts on construction contract basics, I discussed attorney fees provisions and indemnification. In this installment, the topic at hand is venue and choice of law.
As construction professionals (outside of us construction attorneys), you are likely to be focused on things like the scope of work in a construction contract, the price terms, payment, delays, change orders, and the like. However, the venue (where any lawsuit or arbitration will have to happen) and the choice of law (what state’s law applies) can be equally important. You need to know where you will have to enforce your rights under the contract and also what law will apply. Will you need to go to another state to enforce your rights? Even if not, will your local attorney have to learn the law of another jurisdiction? These are important questions when reading and negotiating your prime contract (if with the owner) or subcontract (if with the general contractor).
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Appeal of an Attorney Disqualification Order Results in Partial Automatic Stay of Trial Court Proceedings
October 11, 2017 —
Howard M. Garfield & Renata L. Hoddinott - Haight Brown & Bonesteel LLPIn URS Corporation v. Atkinson/Walsh Joint Venture (No. G055271 filed September 26, 2017), Division Three of the Fourth Appellate District dealt with, for the first time, the question of whether an appeal of an attorney disqualification order results in an automatic stay of the trial proceedings and, if so, how far the automatic stay extends.
The underlying action involved a construction dispute between a contractor and subcontractor. During the pendency of that action, one party’s counsel filed a motion to disqualify another party’s counsel based on an alleged misuse of mediation-privilege protected documents. The trial court granted the disqualification motion and the disqualified counsel promptly filed a notice of appeal. The trial court then denied an application to stay proceedings pending the appeal, rejecting the assertion that the appeal automatically stayed the underlying proceedings.
Reprinted courtesy of
Howard M. Garfield, Haight Brown & Bonesteel LLP and
Renata L. Hoddinott, Haight Brown & Bonesteel LLP
Mr. Garfield may be contacted at hgarfield@hbblaw.com
Ms. Hoddinott may be contacted at rhoddinott@hbblaw.com
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Pennsylvania’s Supreme Court Limits The Scope Of A Builder’s Implied Warranty Of Habitability
September 10, 2014 —
Edward A. Jaeger, Jr. and William L. Doerler – White and Williams LLPIn Conway v. Cutler Group, Inc., -- A.3d --, 2014 WL 4064261 (Pa.), the Supreme Court of Pennsylvania addressed the question of whether a subsequent home buyer can recover from a home builder pursuant to the builder’s implied warranty of habitability, a warranty that protects those who purchase a newly constructed home from latent defects. Concluding that a builder’s warranty of habitability is grounded in contract, the Court held that a subsequent purchaser of a previously inhabited home cannot recover damages from a builder-vendor based on the builder-vendor’s breach of the implied warranty of habitability. The Court’s decision leaves unanswered the question of whether a purchaser who is also the first user-purchaser of a new home can pursue a breach of warranty action against a builder with whom the purchaser is not in privity of contract.
In Conway, the Cutler Group, Inc. (Cutler) sold a new home to Davey and Holly Fields. The Fields subsequently sold the home to Michael and Deborah Conway. After the Conways discovered water infiltration problems in their home, they filed a one-count complaint against Cutler, alleging that Cutler breached its implied warranty of habitability. In response to the Conways’ complaint, Cutler filed preliminary objections, arguing that the warranty of habitability extends from the builder only to the first purchaser of a newly constructed home. The trial court sustained Cutler’s preliminary objections based on the lack of contractual privity between the parties and the Conways appealed the trial court’s decision. On appeal, the Superior Court reversed, stating that the implied warranty of habitability is based on public policy considerations and exists independently of any representations by the builder, and even in the absence of an express contract between the builder and the purchaser. Cutler appealed the Superior Court’s decision to the Supreme Court.
To address the question of whether the implied warranty of habitability extends to a subsequent purchaser of a used residence, the Court discussed the history of the implied warranty of habitability in Pennsylvania. As stated by the Court, the Court adopted the implied warranty of habitability in the context of new home sales to reject the traditional doctrine of caveat emptor (buyer beware) because the purchaser of a new home justifiably relies on the skill of the developer. Thus, as between the builder-vendor and the buyer, the builder should bear the risk that the home he builds is habitable and functional. In adopting the doctrine, the Court noted that the doctrine is rooted in the existence of a contract – an agreement of sale – between the builder-vendor and the buyer.
Reprinted courtesy of
Edward A. Jaeger, Jr., White and Williams LLP and
William L. Doerler, White and Williams LLP
Mr. Jaeger may be contacted at jaegere@whiteandwilliams.com; Mr. Doerler may be contacted at doerlerw@whiteandwilliams.com
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Appeals Court Explains Punitive Damages Awards For Extreme Reprehensibility Or Unusually Small, Hard-To-Detect Or Hard-To-Measure Compensatory Damages
November 10, 2016 —
Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLPIn Nickerson v. Stonebridge Life Ins. Co. (No. B234271A, filed 11/3/16), (“Nickerson II”) a California appeals court outlined the requirements for complying with the single-digit multiplier annunciated as a Constitutional limitation on punitive damages by the United States Supreme Court in State Farm Mut. Automobile Ins. Co. v. Campbell (2003) 538 U.S. 408, for awards of punitive damages against insurers in cases of extreme reprehensibility or unusually small, hard-to-detect or hard-to-measure compensatory damages.
Reprinted courtesy of
Christopher Kendrick, Haight Brown & Bonesteel LLP and
Valerie A. Moore, Haight Brown & Bonesteel LLP
Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Ms. Moore may be contacted at vmoore@hbblaw.com
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Texas Supreme Court Finds Payment of Appraisal Award Does Not Absolve Insurer of Statutory Liability
April 19, 2021 —
Allison Griswold & Sarah Smith - Lewis BrisboisThe Texas Supreme Court recently published its long-awaited decision in the Hinojos v. State Farm Lloyds. In it, the court affirmed its holding in Barbara Technologies, finding that payment of an appraisal award does not absolve an insurer of statutory liability when the insurer accepts a claim but pays only part of the amount it owes within the statutory deadline, and a policy holder can proceed with an action under the Texas Prompt Payment of Claims Act.
In 2013, Louis Hinojos made a claim for storm damage to his home. State Farm’s initial inspection resulted in an estimate below the deductible, but Hinojos disagreed and requested a second inspection. At the second inspection, the adjuster identified additional damage resulting in a payment to Hinojos of $1,995.11. Hinojos then sued State Farm – and State Farm invoked appraisal approximately 15 months after suit was filed. The appraisal resulted in State Farm tendering an additional payment of $22,974.75. State Farm moved for summary judgment, arguing that timely payment of an appraisal award precluded prompt payment (or Chapter 542) damages. The trial court granted summary judgment and Hinojos appealed (notably Barbara Technologies had not yet been decided). The Court of Appeals affirmed State Farm’s victory on the basis that “State Farm made a reasonable payment on Hinojos’s claim within the sixty-day statutory limit….” Hinojos petitioned the Texas Supreme Court for review.
Reprinted courtesy of
Allison Griswold, Lewis Brisbois and
Sarah Smith, Lewis Brisbois
Ms. Griswold may be contacted at Allison.Griswold@lewisbrisbois.com
Ms. Smith may be contacted at Sarah.Smith@lewisbrisbois.com
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Contracts and Fraud Don’t Mix (Even for Lawyers!)
August 24, 2020 —
Christopher G. Hill - Construction Law MusingsIn prior posts here at Construction Law Musings, I have discussed how fraud and contracts are often like oil and water. While there are exceptions, these exceptions are few and far between here in Virginia. The reason for the lack of a mix between these two types of claims is the so-called “source of duty” rule. The gist of this rule is that where the reason money is owed from one party to another (the source of the “duty to pay”) is based in the contract, Virginia courts will not allow a fraud claim. The rule was created so that all breaches of contract, claims that are at base a failure to fulfill a prior promise and could, therefore, be considered to be based on a prior “lie,” would not be expanded to turn into tort claims. This rule has been extended to claims that most average people (read, non-lawyers) would consider fraud because there was no intent to fulfill the contract at the time it was signed.
Just so you don’t think that lawyers are exempt from this legal analysis, I point you to a recent case where a law firm sued a construction client of theirs for failure to pay legal fees. In EvansStarrett PLC v. Goode & Preferred General Contracting, the Fairfax County Circuit Court considered a motion by the Plaintiff law firm seeking to add a count of fraud to its breach of contract lawsuit. The Court considered the following facts.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
5 Questions about New York's Comprehensive Insurance Disclosure Act
February 14, 2022 —
Richard W. Brown & Michael V. Pepe - Saxe Doernberger & Vita, P.C.On December 31, 2021, New York enacted the Comprehensive Insurance Disclosure Act (“CIDA”), requiring defendants to provide plaintiffs with “complete” information for any insurance policy through which a judgment could be satisfied, within sixty (60) days after serving an answer. The stated goal is to reduce delay tactics by compelling disclosures of all policies implicated by a claim as well as other claims, contracts, or agreements that may deplete available coverage or residual limits of policies that have already been eroded by other payments. The impact of CIDA’s disclosure requirements may be scaled back by proposed amendments currently pending before the New York state legislature.
1. What does CIDA Require?
CIDA requires the automatic disclosure of insurance information to plaintiffs. New York’s Civil Practice Law & Rules (“CPLR”) 3101(f) permits civil discovery of the contents of existing insurance agreements by which an insurer may be liable for all or part of a judgment. However, CIDA amends the CPLR to mandate that defendants must automatically disclose the following information in all pending cases starting March 1, 2022, or within sixty (60) days of filing an answer to a complaint going forward:
- Complete copy of all insurance policies that are available to satisfy all or part of a potential judgment.
- This includes Primary, Excess, and Umbrella policies.
- The relevant applications for insurance.
Reprinted courtesy of
Richard W. Brown, Saxe Doernberger & Vita and
Michael V. Pepe, Saxe Doernberger & Vita
Mr. Brown may be contacted at RBrown@sdvlaw.com
Mr. Pepe may be contacted at MPepe@sdvlaw.com
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A Court-Side Seat: Coal-Fired Limitations, the Search for a Venue Climate Change and New Agency Rules that May or May Not Stick Around
February 15, 2021 —
Anthony B. Cavender - Gravel2GavelThis is a brief review of recent significant environmental and administrative law rulings and developments. With the change in presidential administrations, the fate of at least some of the newly promulgated rules is uncertain.
THE U.S. SUPREME COURT
BP PLC v. City and County of Baltimore
On January 19, 2021, the Court heard oral argument in BP PLC v. City and County of Baltimore. The respondents filed a Greenhous Gas Climate Change lawsuit in state court, alleging that BP, like other energy companies, is liable for significant damage caused by the sale and promotion of petroleum products while knowing that the use of these products and the resulting release of greenhouse gases damages the environment and public property. Several similar lawsuits have been filed in state courts, pleading common law violations as well as trespass and nuisance law violations The energy companies have tried, unsuccessfully to date, to remove these cases to federal court. The petitioners argue that the federal removal statutes allow the federal courts of appeal to review the lower court’s remand, thus opening the possibility that some of the issues presented in these cases can be tried in federal court, presumably a friendlier forum. A decision on this procedural issue should be rendered in a few months. Read the court decision
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Reprinted courtesy of Anthony B. Cavender, Pillsbury
Mr. Cavender may be contacted at anthony.cavender@pillsburylaw.com
