Construction Law Blog

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Mar 03, 2010 | Topics: Out of the Ordinary | View Article

Images and maps compiled from the Chile Earthquake

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Posted By: John P. Ahlers | Feb 23, 2010 | Topics: Construction News and Notes | View Article

Call For Boost to Infrastructure Investment

Pennsylvania governor Ed Rendell is championing rebuilding of the U.S. aging infrastructure. It is easy, especially in tough economic times, for legislators to push aside infrastructure initiatives, including basic maintenance and repair, in favor of issues that seem more pressing or more appealing. Such neglect misses the point that infrastructure spending is a thoughtful and wise investment, a crucial investment in the nation's future – and it is an excellent source of high-value jobs. Governor Rendell is quoted as follows:

"When I took over as governor, I was told that Pennsylvania lead the nation in the number of structurally deficient or functionally obsolete bridges. We had more than 5,600 of them, so I put a ton of money into bridge repair. We more than tripled the amount of capital budget from $200 million a year to $700 million per year. I got a special appropriation from the Legislature to do $200 million a year extra for the next four years. Well, the good news is that we repaired a lot of bridges. The bad news is that by the end of my 6^th term [as governor], the end of 2008, the number of deficient or structurally obsolete bridges had gone from 5,600 to more than 6,000. The reason is that we [Pennsylvania] led the nation in bridges 75 years or older, and the recommended life span for a bridge is 40 years. So, every time we fixed two, three would bump on to the list."

Similar investment must be made in the state of Washington to update and rebuild this State's aging infrastructure.

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Posted By: John P. Ahlers | Feb 22, 2010 | Topics: Construction News and Notes | View Article

Safeco Field Overpass Nears Completion

By mid-June the Safeco overpass, a new bridge between the baseball stadium on South Royal Brougham Way will carry traffic and pedestrians over the BNSF railroad tracks. The west end of the bridge was open on February 17, 2010. The Royal Brougham Way bridge will open to vehicles only and bicycles by April 12, 2010. The bridge's sidewalks, stairs and elevators will be open only for stadium events by April 12, 2010 at the earliest and by the end of April at the latest. By mid-June, the bridge will be open at all times to vehicles, bicycles and pedestrians. The I-90/I-5 off-ramp to the South Atlantic Street overpass will open by May 12, 2010.

Posted By: John P. Ahlers | Feb 19, 2010 | Topics: Contracting, Regulatory Administration | View Article

State of Oregon Streamlines Transportation Project by Standardizing a Collaborative-Construction Process

The state Oregon’s 2009 Jobs and Transportation Act continues the practice in the state of Oregon that began a decade ago, in which government agencies collaborate on major construction transportation projects. Eleven state and federal agencies work together in CETAS (Collaborative Environmental and Transportation Agreement for Streamlining). In a CETAS, ODOT commits funding for liaisons with other agencies; ODOT then compensates the agencies for their time, which guarantees resources are available to expedite the permitting and regulatory process of heavy highway and transportation projects.

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Posted By: John P. Ahlers | Feb 04, 2010 | View Article

$4 Billion National Infrastructure Bank Proposed by President Obama

President Obama proposes the establishment of a $4 billion national infrastructure bank that will fund transportation and provide additional funding for $1 billion of high-speed rail development. The bank can be used for projects that “provide a significant economic benefit to the nation or region” and “encourage collaboration among non-federal stakeholders including states, municipalities and private sectors, and also promote coordination with investments in other infrastructure sectors.” The national infrastructure bank sounds similar to the Washington State Public Works Trust Fund, an immensely successful legislative “bank” from which municipalities, counties and other public entities have been able to borrow low interest funds for public infrastructure projects. The Public Works Trust Fund has been self-sustaining, but for occasional legislative raids and a highly-touted and successful source of funding more much needed infrastructure projects. The national infrastructure bank proposed by President Obama appears to be headed in the right direction, and properly managed, it will surely enjoy similar success to the Washington State Public Works Trust Fund.

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Feb 03, 2010 | Topics: Out of the Ordinary | View Article

Stockholm Underground's Subway

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Jan 27, 2010 | Topics: Out of the Ordinary | View Article

Construction Tools Explained

DRILL PRESS:

A tall upright machine useful for suddenly snatching flat metal bar stock out of your hands so that it smacks you in the chest and flings your beer across the room, denting the freshly-painted project which you had carefully set in the corner where nothing could get to it.

WIRE WHEEL:

Cleans paint off bolts and then throws them somewhere under the workbench with the speed of light. Also removes fingerprints and hard-earned calluses from fingers in about the time it takes you to say, "Oh, $%&^!"

SKILL SAW:

A portable cutting tool used to make studs too short.

PLIERS:

Used to round off bolt heads. Sometimes used in the creation of blood-blisters.

BELT SANDER:

An electric sanding tool commonly used to convert minor touch-up jobs into major refinishing jobs.

HACKSAW:

One of a family of cutting tools built on the Ouija board principle. It transforms human energy into a crooked, unpredictable motion, and the more you attempt to influence its course, the more dismal your future becomes.

VISE-GRIPS:

Generally used after pliers to completely round off bolt heads. If nothing else is available, they can also be used to transfer intense welding heat to the palm of your hand.

OXYACETYLENE TORCH:

Used almost entirely for lighting various flammable objects in your shop on fire. Also handy for igniting the grease inside the wheel hub out of which you want to remove a bearing race.

TABLE SAW:

A large stationary power tool commonly used to launch wood projectiles for testing wall integrity.

HYDRAULIC FLOOR JACK:

Used for lowering an automobile to the ground after you have installed your new brake shoes, trapping the jack handle firmly under the bumper.

BAND SAW:

A large stationary power saw primarily used by most shops to cut good aluminum sheet into smaller pieces that more easily fit into the trash can after you cut on the inside of the line instead of the outside edge.

TWO-TON ENGINE HOIST:

A tool for testing the maximum tensile strength of everything you forgot to disconnect.

PHILLIPS SCREWDRIVER:

Normally used to stab the vacuum seals under lids or for opening old-style paper-and-tin oil cans and splashing oil on your shirt; but can also be used, as the name implies, to strip out Phillips screw heads.

STRAIGHT SCREWDRIVER:

A tool for opening paint cans. Sometimes used to convert common slotted screws into non-removable screws and butchering your palms.

PRY BAR:

A tool used to crumple the metal surrounding that clip or bracket you needed to remove in order to replace a 50 cent part.

HOSE CUTTER:

A tool used to make hoses too short.

HAMMER:

Originally employed as a weapon of war, the hammer nowadays is used as a kind of divining rod to locate the most expensive parts adjacent to the object we are trying to hit.

UTILITY KNIFE:

Used to open and slice through the contents of cardboard cartons delivered to your front door; works particularly well on contents such as seats, vinyl records, liquids in plastic bottles, collector magazines, refund checks, and rubber or plastic parts. Especially useful for slicing work clothes, but only while in use.

Jan 14, 2010 | Topics: Out of the Ordinary | View Article

Roads To Drive Before You Die!!

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Posted By: John P. Ahlers | Jan 13, 2010 | Topics: Government Contracts | View Article

The Government Owes a Duty of Good Faith in Exercising its Contract Termination Rights:

Moreland Corp. ("Moreland") contracted with the Department of Veterans Affairs ("V.A.") to design and construct a two-story medical clinic in Las Vegas, Nevada under a fifteen (15) year lease-back agreement. The V.A. took occupancy of the building in 1997. Five years later, the V.A. terminated the lease for default, claiming the building was unsafe for occupancy and that Moreland had failed to repair structural defects in a timely manner. The V.A. identified three (3) problems at the time of the default: (1) missing gusset plate welds on the second floor lateral bracing; (2) exterior cracking on pre-cast panels and on architectural covers around the steel columns; and (3) under design of the structural steel columns. The V.A. contended the building was not in compliance with building codes. Regardless, the V.A. continued to occupy the building and pay rent for nine (9) months after the default termination. Thereafter, the V.A. moved to another facility, a year later Moreland lost the building in foreclosure. In its wrongful termination action, Moreland sought to recover more than $17 million for unpaid rent on the balance of the lease and $20 million for the asset value of the building lost through foreclosure. The V.A.'s Contracting Officer maintained that the default termination, if improper, converted to a termination for convenience and thus denied Moreland's claim for unpaid rent.

The Court of Federal Claims reviewed the default termination and found in favor of the contractor on its claim for the balance of the rent, plus interest. The court ruled that the default termination by the government was improper. It concluded the defects were largely cosmetic and easily could have been repaired if the V.A. had permitted Moreland to do so. It held that the building was safe to occupy during the repairs and the V.A.'s refusal to allow repairs breached the lease. Terming the government's conduct in its administration of the lease as "deplorable by any measure," the court held that even if the contractor had been in technical default, the V.A.'s bad faith compels the court to overturn the termination for default." The court invited Moreland to apply for attorneys' fees under the Equal Access to Justice Act. The V.A. breached it covenant of good faith and fair dealing – implied into every contract, including Government contracts." The court found two instances of bad faith by the V.A., the first was when the Contracting Officer denied two claims for added labor costs during construction, even though he believed they were meritorious and was prepared to grant nearly $300,000 in changes for them. The Contracting Officer denied the claims on advice of the V.A.'s legal counsel, "so the agency would have greater leverage in negotiating other claims."

Noting that government contractors are required to submit accurate and complete claims, the court held that the government has a reciprocal obligation to act in good faith. The court held that the outright denial of meritorious claims to obtain bargaining advantage over a contractor "will not be condoned by this Court" The second act of bad faith related to the V.A's need to install an auxiliary HVAC system on the roof, not part of the contract specifications. The V.A. demanded that Moreland conduct a structural loading study at no cost to the V.A. and justified its request with a two page report in which a V.A. engineer claimed there were many structural deficiencies in the building. Moreland declined to perform the study after consulting with the project's architect and engineer.

Finally, the court found that the V.A. report was used as a pretext to shift the cost of the structural study to Moreland and gave no credence to it because of the V.A.'s ulterior motive in having it prepared. The court awarded Moreland $17,673,850, plus interest and $438,188 in attorneys' fees under the Equal Access to Justice Act.

Moreland Corp. v. United States, 76 Fed.Cl. 268 (2007)

Posted By: John P. Ahlers | Jan 11, 2010 | Topics: Construction Defect | View Article

Chinese Drywall Crisis

During the housing boom from 2004 to 2009, approximately 309 million sq. ft of Chinese drywall was imported into the United States. Since then, more than 600 lawsuits have been filed alleging that the imported drywall contains sulfur compounds which when exposed to heat and moisture release sulfurous acids causing a noxious smell and the corrosion of metals. Most significantly the corrosion has been noted on copper components, such as wiring, refrigerator coils and the coils of air handling units. The lawsuits also allege a variety of health issues. Although the majority of the litigation is in the Southeast United States, reports indicate that Chinese drywall may have been used in construction across the United States.

Claims involving Chinese drywall typically are product defect claims. The claims allege that drywall was defectively manufactured as opposed to improperly installed. Initially, claims focused on the drywall manufacturers with homebuilders getting a pass. This trend has changed and suits against homebuilders have become common. Builders therefore must be prepared for the possibility of litigation and should take measures to reduce their exposure.

How successfully builders will be in quickly recovering repair costs, among other costs, from insurance carriers will depend in part on the law of the state in which the insurance policy is construed. Insurers in some jurisdictions are relying on their policies' pollution exclusion in refusing to extend coverage for losses incurred as a result of Chinese drywall. The pollution exclusion, contained in most commercial general liability policies, typically provides that bodily injury or property damage caused by the discharge, dispersal, seepage, migration, release or escape" of a "pollutant" is not covered. The term "pollutant" is generally defined as "any solid, liquid, gaseous or thermal irritant or contaminate, including smoke, vapor, suit, fumes, acids, alkaloids, chemicals and wastes."

The primary issue in obtaining coverage in face of such an exclusion is whether the alleged contaminate constitutes a "pollutant" as contemplated by the policy.

On June 15, 2009 a special panel on multi-district litigation issued an order consolidating all Chinese drywall lawsuits currently pending in the federal courts (more than 600) in the Eastern District of Louisiana, to be heard by Judge Eldon F. Fallon. Multi-district litigation is a federal court system procedure that allows the consolidation of cases that share common questions of fact. Such a consolidation authorizes one judge to oversee all pretrial discovery matters, hearings and motions and to get the cases ready for trial and ripe for settlement. If after all pretrial matters have been resolved, there remain issues to be tried, each case is then remanded to its home district where the trials are conducted independently.

Judge Fallon, with the help of plaintiff and defense steering committees, is selecting five (5) test cases to be tried by year end. This accelerated time table undoubtedly will encourage settlement, as the outcome of these five cases will in large measure define the results of all others.