Construction Law Blog
Blog Disclaimer: The content provided on this website is for informational purposes only and is not legal advice. Transmission of this information is not intended to create, and receipt does not constitute, an attorney-client relationship. The information provided is intended for general information which may or may not reflect the most current developments. Read More
Is a Contractor’s Obligation to Continue Performance Absolute When Confronted with an Unresolved Dispute?
The case described in this article provides a solution to the vexing problem faced by a contractor considering stopping work due to an owner’s material breach, such as defective contract documents or the inability to proceed until the owner provides clarification. In such a situation, the contractor’s continued performance requires the contractor to expend its own resources in resolving the problem and possibly wait many months or even years for payment after exhausting the dispute resolution process. However, if the contractor simply stops performing, the contractor may be terminated for default, leaving an indelible mark on the contractor’s record until the issue is resolved by a court. Further, the contractor will likely face significant damages because the owner will re-procure the work with another contractor, which will inevitably cost more than it would have cost if the work had been performed by the original contractor.
California Federal Court Rules Engineers Owe Contractors a Duty of Care When Preparing Plans and Specifications Used in Public Bidding
The U.S. District Court for the Northern District of California recently ruled that an engineer who prepared plans and specifications that were relied upon by contractors in preparing their bids for a project owed a duty of care to those bidders. The Court held that an engineer can be liable to contractors for breach of the professional duty and/or negligent misrepresentation.
Release from Condominium Owners Association Precludes Claims by General Contractor Against Subcontractor, Except for Defense Costs
Recently, the Washington State Court of Appeals addressed a dispute between a general contractor and its windows subcontractor in connection with the construction of the Admiral Way Mixed-Use Project in West Seattle.
In Bordak Bros., Inc. v. Pac. Coast Stucco, LLC, the developer of the Admiral Way Mixed-Use Project hired Ledcor Industries (USA), Inc. (“Ledcor”) as its general contractor, and Ledcor hired Starline Windows, Inc. (“Starline”) to supply window products for the Project. After the Project was completed, the Condominium Owners Association (“COA”) discovered defects in the building and sued the developer, who then brought suit against Ledcor. Ledcor then commenced suit against its subcontractors and suppliers. Ledcor did not initially name Starline as a defendant to its claims.
The Washington Court of Appeals recently upheld a massive $155,831,471.00 jury verdict in favor of King County against Vinci/Parsons/Frontier Kemper JV (“VPFK”) and its multiple sureties. VPFK was one of the joint venture contracting entities performing tunneling work on the Brightwater Wastewater Treatment System Expansion Project. The verdict was the end result of a nearly three-month jury trial that took place in the fall of 2012.[i] The verdict represents one of the largest awards, if not the largest award, in a construction dispute in this state.
Massachusetts Court Rules That a GC/CM is Permitted to Pursue an Owner for Design Defects Even if the GC/CM was Involved in the Design Process – Part II
This is part two of a two-part blog post on the potential differences of GC/CM contracting. Read part one of this series here.
As reported last week, a Massachusetts trial court recently ruled that a Construction Manager at Risk (“GC/CM”), due to the material changes in roles and responsibilities undertaken in modern GC/CM contracting, is no longer afforded the protections that courts historically have extended to contractors (the implied warranty of the adequacy and sufficiency of the plans and specifications). The highly-anticipated appellate ruling in Coghlin Electrical Contractors, Inc. v. Gilbane Building Co. was issued in September 2015. The court ruled that the GC/CM’s pre-construction involvement in design does not preclude the GC/CM from raising a Spearin claim (i.e. claim of breach of the implied warranty of the adequacy and sufficiency of the plans and specifications). Spearin’s applicability under the GC/CM delivery method had not been a direct subject of any court case until Coghlin.
Massachusetts Court Holds GC/CM Assumed the Risk of Design Changes on Public Works Contract – Part I
This is part one of a two-part blog post on the potential differences of GC/CM contracting.
A recent Massachusetts Superior Court ruling spotlights the difference between contracts fashioned in the traditional design-bid-build protocol versus a negotiated general contractor / construction manager (GC/CM) type of procurement. A GC/CM (or, in some states, a CM/GC) firm provides a range of pre-construction services and construction management services—services that may include cost estimation, consultation regarding the design of the building project, preparation and coordination of bid packages, scheduling, cost control, value engineering, acting as the general contractor during construction, detailing the trade contractors’ scopes of work, holding the trade contracts or other subcontracts, pre-qualifying and evaluating trade contractors and subcontractors, and providing management and construction services—all at a Guaranteed Maximum Price (or, in some states, a Maximum Allowable Construction Costs), which represents the maximum amount to be paid by the public agency for the building project. The Guaranteed Maximum Price generally includes the cost of the work, the general conditions, and the fee payable to the GC/CM firm.
This article follows up on an article from earlier this year about proposed legislation in Olympia that addressed venue for lawsuits against counties.
That legislation, House Bill 1601, was drafted to address a common problem in public works contracting with Washington State counties. Washington State counties have been including provisions in their construction contracts that require all disputes between the contractor and the county to be resolved in the home county that issued the contract. These venue clauses present a problem for contractors because of the appearance of impropriety and associated challenges of litigating with counties in their home court.
Termination for Convenience Clauses Are Not Illusory Promises and Not Limited By the Implied Covenant of Good Faith and Fair Dealing
Recently, Division I of the Court of Appeals addressed two issues of first impression in private construction contracts: (1) whether a Termination for Convenience (“TforC”) clause is an illusory promise and, therefore, unenforceable; and (2) whether a TforC clause is limited by the implied duty of good faith and fair dealing. Ultimately, the Court held that partial performance of a contract provides adequate consideration to render a TforC clause not illusory, and that the implied duty of good faith and fair dealing does not trump express terms or unambiguous rights in a contract.
Recently, the largest changes in more than 30 years were made in federal mortgage disclosure requirements. On August 1, 2015, the forms that have become second nature for generations of loan originators, attorneys, and borrowers—including the Good Faith Estimate (GFE), HUD-1, and Truth-in-Lending—are no longer used for new real estate transactions. In their place are two completely new forms and a new set of requirements for how and when they are provided to borrowers.
This article provides an overview of the difference between indemnification and being added as an additional insured to an insurance policy. For further information on indemnification provisions, follow these links to a few of our previous blog posts: Top 10 Construction Contract Provisions – Indemnity; Anti-Indemnity Statutes to Prevent Overreaching; and Amendment’s to Washington’s Anti-Indemnity Statute.