Owner’s Claim For Defective Work Tripped Up By AIA’s Notice Of Claim Requirement

Notice of claim requirements in construction contracts are standard and often the cause of bad news to contractors pursuing claims for additional costs. However, these clauses can be, though not always, two-way streets. As a reminder to owners that notice of claim requirements under the AIA General Conditions apply equally to owners as to contractors, a trial court in New York recently dismissed a claim for defective work against a plumbing contractor because it was not the subject of a previous notice of claim.

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Georgia Joins National Trend By Enacting Taxpayer Protection False Claims Act

On April 16, 2012, Governor Nathan Deal signed the Georgia Taxpayer Protection False Claims Act (House Bill 822) into law. The Georgia Taxpayer Protection False Claims Act, which goes into effect on July 1, 2012, establishes civil penalties for any person or legal entity that commits or conspires to engage in certain fraudulent acts, including but not limited to:

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Duane Morris Construction Group Nominated for Chambers USA Award for Excellence

We’re happy to announce that our construction group has made Chambers’ short-list for the Chambers USA Award for Excellence. 2012 marks the third year in a row Duane Morris has been nominated. Criteria for the nomination includes notable achievements over a 12-month period such as outstanding work, impressive strategic growth and excellence in client service and is based on the independent research conducted for Chambers USA 2012. Congratulations to all of our construction attorneys for this recognition.

Court Refuses to Impose Mandatory Civil Penalties in False Claims Act Case

The United States District Court for the Eastern District of Virginia recently issued a decision that may have broad implications to the calculation and imposition of civil penalties in False Claim Act (FCA) cases, because, for the first time, a court refused to issue mandatory civil penalties against a contractor that was found to have violated the FCA.

More specifically, United States ex rel. Bunk v. Birkart Globalistics GmbH & Co., et. al., No. 1:02-CV-1168 (E.D. Va. February 14, 2012), involves a qui tam claim that was filed against a contractor for violations of the FCA. The alleged violations stem from a bid submitted to the Department of Defense, which included a Certificate of Independent Pricing that stated:

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Bill that Includes Major Revisions to Pennsylvania’s Mechanic’s Lien Law Passes House and Moves to Senate

Prior to 2007, the Pennsylvania Mechanic’s Lien Law of 1963, 49 P.S. §1101-§1902 (the “Mechanic’s Lien Law”) operated for over 40 years in its original form, without any significant or substantive modifications. In 2007, however, amendments to the Mechanic’s Lien Law went into effect that significantly changed the statute. For example, the 2007 amendments changed, inter alia, the enforceability of upfront waivers and the definition of a “subcontractor.” In 2009, additional amendments to the Mechanic’s Lien Law went into effect which changed some of the 2007 amendments.

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NRC Will Issue New Safety Orders that Implement Fukushima-Related Recommendations

On March 9, 2012, the Nuclear Regulatory Commission (NRC) announced that it directed its staff to issue three Orders, which are effective immediately, to United States commercial reactor plants. According to the NRC, this expedited mandate attempts to implement “lessons learned from the accident at Japan’s Fukushima Daiichi nuclear power plant.”

Two of the Orders will apply to every U.S. commercial nuclear power plant, including those under construction and the recently licensed new Vogtle reactors. More specifically, the first Order requires the plants to better protect safety equipment installed after the 9/11 terrorist attacks and to obtain sufficient equipment to support all reactors at a given site simultaneously.

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New York State Court Voids Project Labor Agreement Requirement On DOT Project – Orders Re-Bid

A New York State court judge in Albany rejected a Department of Transportation (DOT) requirement of a Project Labor Agreement (PLA) on a highway project on Route 17 in the Town of Wallkill, Orange County. In an Article 78 proceeding, which challenges the determinations of a public administrative agency, a non-union low bidder on the DOT project, who refused to enter into a PLA negotiated by the DOT and made a part of the bid documents, challenged the award which ignored its bid and went to the second bidder at an added cost reported to be $4.5 million. Because the DOT failed to demonstrate that the use of the PLA advanced the interests of the State’s public bidding statutes, the petition was granted. Barring an appeal, which is expected, the DOT will be required to re-bid without the PLA requirement.

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Administrative Fees Should Be Considered When Selecting a Dispute Resolution Provision

Both lawyers and clients agonize over the tactical advantages and disadvantages of arbitration and litigation. Generally, the reason for the prolonged deliberation is the parties are attempting to make a reasoned and informed decision when selecting a dispute resolution provision for their contract.

Some parties prefer arbitration, because they believe arbitration is faster and provides them with a decision-maker who is experienced in the industry. Others prefer litigation, because, among other things, they want access to a trial by jury. Costs are also a decisive factor in determining whether to arbitrate or litigate.

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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.

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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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