Construction Law Blog
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In recent posts, we discussed termination-for-convenience provisions in construction contracts, noting that such provisions appear in both governmental and non-governmental contracts. Construction Contracts Termination Basics - Part I; Part II. This post provides more detail on the state of the law on such clauses in Washington.
When confronted with extra costs on construction projects caused by architects and engineers who were hired by the owner (and have no contract with the contractor), contractors are generally inclined to seek direct recourse against the perceived wrongdoers. Generally, unless there is some personal injury or property damage involved, however, the "economic loss rule" precludes the contractor from suing an entity with whom it lacks privity of contract.
On January 9, 2014, the Washington Utilities and Transpiration Commission ("UTC") announced that it has fined two utility companies, Pacific Power and Light Co. ("Pacific Power") and Frontier Communications Northwest, Inc. ("Frontier"), under Washington's new Underground Utility Damage Prevention Act (the "Act"). These are the first two penalties issued by the UTC since the Act took effect on January 1, 2013.
Recently, Division II of the Washington Court of Appeals held that a Pierce County contract with a son's proprietorship was illegal, void, and unenforceable when the project was competitively bid by the father's proprietorship and awarded to the father by the County. Bankston v. Pierce County, 174 Wn.App. 932, 301 P.3d 495 (Division II, May 21, 2013).
Critics of arbitration often cite the absence of any avenue for a participant to appeal what it believes to be an unfair award. Proponents see this as an advantage; by deciding disputes finally and conclusively, an arbitration panel circumvents the opportunity for endless appeals. A recent Ninth Circuit Court of Appeals decision illustrates what occurs when participants seek to make an arbitration award binding and non-appealable in a settlement agreement.
In his State of the Union speech, President Obama again made building infrastructure a centerpiece of his jobs plan, promising to cut though the bureaucracy and streamline the permitting process for key projects:
we can take the money we save with this transition to tax reform to create jobs rebuilding our roads, upgrading our ports, unclogging our commutes - because in today's global economy, first-class jobs gravitate to first-class infrastructure. We'll need Congress to protect more than three million jobs by finishing transportation and waterways bills this summer. But I will act on my own to slash bureaucracy and streamline the permitting process for key projects, so we can get more construction workers on the job as fast as possible.
At this point, it isn't clear how he is going to reduce the bureaucracy inherent in federal construction projects or which "key project" he intends to streamline.
Small businesses are the economic engines of job creation and essential to strengthening our national economy. President Obama, Governor Inslee, and a whole gaggle of politicians are committed to helping America's small businesses grow and prosper. The US government has cut taxes for small businesses, and helps them get access to the capital they need to expand and create jobs that the US needs now and for decades to come.
The Washington State Legislature is reviewing legislation to expand the availability of the "general contractor/construction manager" or "GC/CM" method of construction on public construction projects.
We regularly report on major construction projects in the Pacific Northwest to keep our readers informed of upcoming opportunities in the region. Two upcoming projects fit this category:
In the first case of its Winter 2014 term, the Washington State Supreme Court is considering whether an employee benefits trust may use the Washington public works bond and retention statutes to pursue claims for unpaid worker benefits against a third party (i.e. one other than the worker's employer). Read more, here. Specifically, the court in W.G. Clark Construction Co. v. Carpenters Health & Security Trust of Western Washington, et al. is being asked to decide whether the federal law governing employee benefits, ERISA, preempts the state's bond and retention statutes, RCW 39.08 and 60.28, and therefore prevents a trust from collecting a subcontractor's delinquent employee benefit payments from a general contractor's bond or retention fund.