11 Aug · Mon 2014
Massachusetts Passes Law Governing Retainage On Private Contracts
22 Jul · Tue 2014
Three Strikes on Defective Work Insurance Claim
A federal appeals court recently retired, in short order, a contractor’s insurance claim arising from defective work. The claim arose when scratches were noted on a glass storefront, shortly after installation by one sub but also after preliminary cleaning by another sub, and two days before the store was open to the public. No cause for the scratches was identified, at least in the decision.
Strike One. The damage arose from work performed by one of the subs, thus coming within an exclusion on the contractor’s GL policy. There was no evidence of any accident.
Strike Two. The claim was for restoration or replacement of the glass – the very item claimed to be either defective or improperly cleaned – and not damage to other work.
Strike Three. As the problem was noted before the store opened to the public, the claim did not fall under the completed operations hazard, since the glass had yet to be put to its intended use.A simple, brief, lesson. The case is Allegheny Design Mgmt. v. Travelers Indemnity Co. of America, 2014 U.S. App. LEXIS 13190 (3rd Cir., July 11, 2014).
16 Jul · Wed 2014
Pennsylvania Mechanics' Lien Law Amended, Clarifying Open-End Construction Loan Mortgage Priority
On July 9, 2014, Pennsylvania Governor Tom Corbett signed into law Act 117 of 2014, which amends the Pennsylvania Mechanics' Lien Law (MLL), 49 P.S. 1101, et seq., to provide that a construction loan secured by an open-end mortgage where at least 60 percent of the proceeds are "intended to pay or used to pay" all or part of the "costs of construction" will have lien priority ahead of any filed mechanics' lien claims, even when the visible commencement of work was prior to the recordation of the open-end mortgage.[Read More]
13 Jun · Fri 2014
Q: When Is a Monthly Release Not a Release?
A: When the issue is decided in arbitration. An arbitrator’s decision that a periodic subcontractor release had not waived claims made in arbitration was upheld by the Rhode Island Supreme Court, although one could read between the lines to conclude that the court would have ruled otherwise on the merits. This case highlights – with an issue that is controversial of its own accord – the distinction between arbitration and litigation.[Read More]
10 Jun · Tue 2014
High-Stakes Nuke Case Remains Where the Contract Says
Duke Energy and Westinghouse Electric are battling over money due, or not due, for the cancelled Levy County nuclear power plant in Florida. After Duke terminated the contract earlier this year, the two parties engaged in negotiation per their contract. When those efforts failed, both sides filed suit, one day apart, in two different states. Duke filed in North Carolina, per the contract, and Westinghouse filed the next day in Pennsylvania, where it had performed most of its work. The NC federal court judge has just refused to transfer that case to PA, and has directed Westinghouse to file an answer in the NC case.The judge methodically reviewed all eleven factors in assessing a motion to transfer a case, finding that two factors favored PA, two favored NC, and the remaining factors were neutral. So quantitatively, it was a tie, but qualitatively – including the plaintiff’s choice of forum and the contract’s designated forum – the analysis favored leaving the case pending in NC. The case is in the Western District, as docket number 3:14-cv-00141-MOC-DSC.
05 Jun · Thu 2014
"Everything But the Kitchen Sink" Theory of Litigation: Usually a Sign of Weakness
Lawsuits that proceed under, say, eight or more causes of action typically either (a) recite egregious acts by a group of defendants, or (b) mask a lack of substance in the plaintiff’s case. A recent federal Court of Appeals decision describes the latter, in what might otherwise be a mundane case of terminated contractor battling public authority.[Read More]
19 May · Mon 2014
Expanded Definition of "Occurrence" Did Not Convert Construction Defect Into Insured Claim
The terms of an owner-controlled insurance policy defined “occurrence” as “an accident, event, or happening, including continuous or repeated exposure to substantially the same general harmful conditions.” A New York appellate court has held that this arguably expanded definition was still not sufficiently broad to encompass curtain wall deficiencies and improper workmanship. So there was no insurance coverage for the damages and remedial work.[Read More]
09 May · Fri 2014
Prime Contractor Instituting CCIP Has Worker’s Comp Immunity from Subcontractor Employee Claims
A prime contractor establishes a CCIP for a project. The employees of first- and second-tier subcontractors are injured, receive worker’s compensation benefits, and then sue the prime contractor, alleging the contractor’s negligence caused the injury. The prime contractor argues that, by virtue of establishing the CCIP, paying the worker’s compensation insurance premium, and paying the policy deductible, it is immune from suit due to the worker’s compensation bar. A Connecticut Superior Court decision has confirmed that the prime contractor is immune from the workers' claims due to payment of the worker’s comp benefits via the CCIP.[Read More]
22 Apr · Tue 2014
The Natural Effect of Recording a Lien Bond
11 Apr · Fri 2014
Property Owner Is Strictly Liable for Building Code Violation
04 Apr · Fri 2014
Duane Morris Partner Albert Bates, Jr. to Present at the Deloitte Energy Conference
27 Mar · Thu 2014
Property Owner’s Liability under CERCLA for Unpaid Remediation Subcontractor
 Comprehensive Environmental Response, Compensation and Liability Act. The federal law imposes liability on a property owner for the cost of cleaning up contamination on the property.
17 Mar · Mon 2014
Construction Workforce Trends Point to Increased Risk on Construction Projects
Tony Dungy once stated, "It’s not necessarily who has the most talent but what team sticks together and executes their fundamentals the best." This success principle – executing on the fundamentals – applies unforgivingly in construction, an industry where every mistake must be corrected, every cost accounted for and every delay in work comes at significant costs. Numerous construction professionals have pointed out that executing fundamentals has become more difficult in the construction industry for a number of reasons, including contractor and subcontractor defaults, international procurement, transitions in how risks are contractually apportioned, and increasingly specialized construction materials and methods of construction, among others. And by numerous accounts, keeping a "team [that] sticks together" will become increasingly difficult too, as workforce availability problems look to be both abrupt and sustained.[Read More]
13 Mar · Thu 2014
Waiver of Subrogation – “Work” versus “Non-Work”
The Indiana Court of Appeals has been busy addressing the scope of subrogation waivers. The latest decision is an argument over whether the waiver extends to property that is not part of the contractor’s “Work” (as defined in the AIA contract form used by the parties). The court decided to follow what has been referred to as the majority rule on this issue, and held that the waiver of subrogation bars subrogated claims concerning non-Work property. I wrote about a similar case on a related issue just last month.[Read More]
10 Mar · Mon 2014
Managing Snow and Weather Related Delays on a Construction Project
This winter it seems like no one has been able to escape the fury of Mother Nature. As a result, construction projects all over the country are now behind schedule. Because “time is money” for all of the project participants, disputes related to time extensions, liquidated damages, acceleration claims, and other delay damages are expected. In anticipation of these disputes, contractors and owners should review their contracts and consult with an attorney before submitting or responding to a weather related claim.[Read More]