Tennessee has enacted a pilot program for public transportation projects using CM/GC project delivery.  This represents an incremental expansion of the delivery method on public projects nationwide, albeit on a trial basis for Tennessee.  The first of three projects allowed under the law may be no larger than $70 million, and the projects may not exceed $200 million in the aggregate.  The new program was reported by Matt DeVries on his blog. 

In the construction industry, the payment application process usually requires contractors and subcontractors to complete a great deal of paperwork.  In addition to submitting traditional payment applications that identify the contractor’s or subcontractor’s schedule of values, work completed to date, and balance to finish, contractors and subcontractors may also be required to submit certain lien waivers, certifications, affidavits, and other types of sworn representations.  While these additional submissions may seem clerical, or even ceremonial in nature, they can have serious legal ramifications.

There may not be a law like it anywhere else in the country.  But in Rhode Island, by statute, the second-low bidder can pursue a claim for damages if the low bidder violates the prevailing wage laws.  A recent Superior Court decision allows a pending claim by one such disappointed bidder to move forward.

The New York State Department of Taxation and Finance, Office of Counsel, Advisory Opinion Unit recently issued an opinion concerning the application of sales tax on the installation, rental and dismantling of temporary pedestrian walkways (sidewalk sheds) on capital improvement projects.  A taxpayer had posed two questions for an advisory opinion, (1) are such sales taxable when the compensation is stated as a lump sum for the rental and the service combined, and (2) would the tax be applicable if the rental and installation charges were separately stated on invoices?

In a brief opinion, the Unit concluded that as long as the installation and equipment was a “temporary facility” that is a “necessary prerequisite” to a capital improvement, the lump sum of rental and service would not be subject to sales tax charges.

As to the second question concerning separately stating charges, the Unit advised that separately stating charges for the installation and dismantling services would not be subject to sales tax, provided they were reasonable in relation to the total price.  However, the separate changes for rental costs would be taxable.  In such a case, if the equipment were purchased for subsequent rental, the petitioner could present a resale certificate to the seller to purchase the equipment to avoid incurring sales tax.

In the event the petitioner had collected and paid sales taxes when not due for reasons set forth in the opinion, petitioner could claim a credit provided the tax had been refunded to the customer.  Refund claims can be made up to three years after the tax was payable to the Department.  (See Opinion, TSB-A-13(11)S, April 11, 2013.)

Suppose you’re a prime contractor with a financially-shaky sub, and you agree with the sub’s secured lender to make payments directly to the lender.  But someone forgets to alert your accounts payable person or group, and so your company continues to pay the sub directly, to the tune of $3.8 million.  The sub later goes out of business, and the lender ends up with a shortfall of $500,000 on its secured line of credit.  The lender then sues you, the prime contractor, seeking not just the $500,000 shortfall but the entire $3.8 million.  What is the outcome under the Uniform Commercial Code (UCC)?

On September 28, 2012, Ohio Senate Bill 224 became effective and reduced the statute of limitations period for written contracts from 15 years to 8 years.  This new law applies retroactively to causes of action which accrued prior to September 28, 2012, and provides that “an action upon a specialty or an agreement, contract, or promise in writing shall be brought within eight years after the cause of action accrued.” See Ohio Rev. Code § 2305.06

The folks who eroded the privity rule in A.R. Moyer v. Graham have now abolished the economic loss rule in Tiara Condominium Ass'n v. Marsh & McClennan.  The decision, issued March 7, 2013 by the Florida Supreme Court, is blunt: “We . . . hold that the application of the economic loss rule is limited to products liability cases.  Therefore, we recede from prior case law to the extent that it is inconsistent with this holding.”  Wow!

Two New Jersey state senators recently introduced legislation that would require contracts with certain bi-state authorities for services that are of technical and professional nature, including but not limited to, contracts for architectural, engineering, and land surveying services, to be awarded through a competitive contracting process.

Appellate Court holds that the City of New York does not have to indemnify defendants in wrongful death suits arising from a deadly crane collapse because the plaintiffs had not shown a special relationship between the City and the defendants that would give rise to  special duty. In reaching its decision, the Court distinguished between the exercise of the City’s general duty to the public and an affirmative duty that the City may assume towards a particular group.

Court highlights the importance of carefully selecting each term in a construction contract. The words and terms incorporated into the contract must not only be clear and defined, but must also  be consistent.

Last January we reported on an expansion of public design build programs in New York as a result of legislation arising out of Governor Cuomo’s budget for 2012.  At that time, New York expanded the number of agencies that were permitted to utilize design build procurement from two to five.  Now with the Governor’s proposed 2013 Budget, the design build method will be made available to virtually all state entities, with the only exceptions being the New York City university and New York State university systems.

Of perhaps even greater interest is the current proposed legislation’s introduction of “design build finance” as an available capital procurement method.  This device, which may entail use of private and public funds, or perhaps a combination of same, will be available to the same broad range of state public entities as design build will be.

Both procurement methods will follow the two-tier system involving short listing proposers to an RFQ followed by a selection based on best value to the state.

The proposed legislation (See "Public Protection and General Government" Article VII Legislation) can be found here, and a supporting memo here.

Citing a decision from the U.S. Supreme Court, the highest Massachusetts court has held that an arbitrator cannot decide the issue of arbitrability unless there is “clear and unmistakable evidence” that the parties intended the arbitrator to have this authority.  Recognizing the distinction between (a) whether a dispute is subject to arbitration, and (b) who decides the issue of arbitrability, the court held that it will not treat a party’s silence or ambiguity on this issue as consent to arbitrability or a waiver of the issue.  Confused?  The case is Massachusetts Highway Dept. v. Perini Corporation (Mass. Supreme Judicial Court, Jan. 17, 2013), available here (subscription required).