Pennsylvania State Court Enforces Pay-If-Paid Clause

Last summer, the United States Court of Appeals for the Third Circuit issued a precedential opinion in Sloan Co. v. Liberty Mutual Ins. Co., 653 F.3d 175 (3d Cir. 2011), that had broad implications for the construction community, because it affirmed an important industry-standard practice.  More specifically, the Third Circuit held that a “pay-if-paid” provision in a subcontract, which provided that the general contractor’s receipt of full payment from the owner is an express condition precedent to the subcontractor’s right to full payment from the general contractor, was valid and enforceable by the general contractor and/or its payment bond surety.

Since the Third Circuit’s ruling in Sloan, the legal and construction community have speculated on whether a Pennsylvania state court would follow the Third Circuit’s legal analysis and ruling.  Now, a recent decision by the Philadelphia Court of Common Pleas suggests that Pennsylvania state courts will follow the Third Circuit, and enforce “pay-if-paid” clauses.

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Governor Christie Unveils His 2012 “Project Portfolio” for School Construction Projects

On February 15, 2012, Governor Chris Christie announced his recommendation of twenty new capital school construction projects in eighteen municipalities.  These new school projects will be financed and administered through the New Jersey Schools Development Authority (“SDA”).    

The 20 projects set to advance in 2012 were divided into three categories addressing: 1) high educational priority needs; 2) high educational priority needs that require further discussions; and 3) serious facility deficiencies.

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Practices For Reducing Exposure To False Claims Liability – An Interview

For those who have been following the developments in the false claims arena, you no doubt have that lingering thought that one of your or your client’s claims will inevitably attract a response that everyone loathes and fears – it’s a false claim!  For those of you who don’t  --  watch out!  So, I and Nicole Woolard, an associate in the Construction Group, sat down with Patrick McGeehin, CPA, of FTI Consulting to get his suggestions on best practice recommendations for avoiding federal and other public agency false claim allegations.  [Read More]

LEED Construction = Increased Worker Safety Concerns

A troubling report has been injected into the “feel good” aura of LEED construction.  Matthew Hallowell, a professor at the University of Colorado Boulder, has confirmed via research and study that LEED projects carry an increased risk of worker injury.  The study was reported last week in ENR Mountain States, and comes with detailed reports on the nature of the increased risks.  Even a representative of the USGBC admits that the study is troubling. 

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Small Business Administration Issues Revised Size Standards for Small Businesses

The Small Business Administration (SBA) today announced final revised size standards for qualification as a small business in the Professional, Scientific and Technical Services sector of the North American Industry Classification System (NAICS).  A business that qualifies as “small” under the SBA standards is eligible for preferential treatment for Federal contracting purposes, as well as SBA assistance programs.  The changes will be effective March 12, 2012.  The changes could increase the number of firms competing eligible for Federal contracting preferences, but also will allow some business that have grown to remain eligible for those preferences. 

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NRC to Issue First-Ever Combined Licenses for Construction and Operation of New Nuclear Reactors

On February 9, 2012, the Nuclear Regulatory Commission (NRC) announced it concluded its mandatory hearing on Southern Nuclear Operating Company’s (SNC) application for two Combined Licenses (COL) at the Vogtle site in Georgia, and that in a 4-1 vote, the NRC found the staff’s review adequate to make the necessary regulatory safety and environmental findings, clearing the way for the NRC’s Office of New Reactors to issue the COLs.

The NRC staff is expected to issue the COLs within 10 business days, which will authorize SNC to build and operate two AP1000 reactors at the Vogtle site, adjacent to the company’s existing reactors approximately 26 miles southeast of Augusta, Georgia.  This is the first time that the NRC has ever issued combined construction and operation licenses.  Previously, construction and operation licenses were issued separately, which would  often lead to changes in design or construction as the plants were being built. 

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Bidders Qualified for Tappan Zee Bridge Replacement

Four bidders qualified for the replacement of the Tappan Zee Bridge spanning the Hudson River.[Read More]

When the Developer Can't Rely on the Owner's Engineer

The natural give and take between contractors and the design professionals sometimes gives way to litigation revolving around the contractor’s ability to rely on the design professional’s actions.  A recent Massachusetts appellate court decision, available here (once posted) has clarified and limited the extent of that reliance. 

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The Pennsylvania Commonwealth Court Approves Liquidation of First Sealord Surety Insurance, and Bonds Issued By This Surety Will Terminate Within 30 Days

On February 8, 2012, the Pennsylvania Insurance Department (the “Department”) announced that the Pennsylvania Commonwealth Court approved its petition to liquidate First Sealord Surety Insurance. 

In light of the Commonwealth Court’s order liquidating First Sealord Surety Insurance, contractors and owners should review their bonds in order to determine who issued them, and take appropriate actions if the bonds were issued by First Sealord Surety Insurance, because, inter alia, bonds issued by First Sealord Surety Insurance will be terminated

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Pennsylvania Does Not Adopt the 2012 International Code Council’s Model Construction Codes

On January 18, 2012, the Pennsylvania Uniform Construction Code Review and Advisory Council (the Council) voted 11 to 5 against the adoption of the 2012 I-Codes, the model building codes published by the International Code Council (ICC).  The Council, however, did make an exception regarding the accessibility portion of the 2012 model code.  Based on this vote, the Council is now charged with submitting a report to the Secretary of Labor and Industry by July  2012, and the bulk of the 2009 edition of the ICC’s codes will remain the basis for Pennsylvania’s uniform construction code.

Because the 2012 I-Codes were not adopted, the ICC’s new “green building” model code, called the International Green Construction Code will not be included in Pennsylvania’s construction code.

Many of Pennsylvania’s construction trade organizations celebrated the Council’s decision, because they believe the implementation of new codes would add additional costs that the construction industry cannot afford.  Similarly, the Council voted against the 2011-I Codes, because, inter alia, the new codes were complicated and impossible to enforce.


Big Cities Lost Construction Jobs in 2011

The Association of General Contractors of America released its construction employment data for 2011, and, as expected, the overall construction market remains weak.  Although construction spending between December 2010 and December 2011 increased by 4.3 percent, two of the country’s largest cities, Philadelphia and New York City, experienced sharp declines in their construction workforce.  More specifically, out of the 337 metropolitan areas listed by the AGC, Philadelphia reported the largest job loss with a loss of 4,800 construction jobs, a 7 percent decline.  New York City was a close second with a construction job loss of 4,600 jobs, a 4 percent decline.[Read More]

Duane Morris Construction Law

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.