Construction Law Blog
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Blog: Congress Strikes a Blow to President Obama’s “Fair Pay and Safe Workplaces” Executive Order 13673
On October 25, 2016, the Federal Acquisition Regulatory Council (FAR Council) and the U.S. Department of Labor implemented former President Obama’s Executive Order 13673: “Fair Pay and Safe Workplaces” rules. The rules became effective on October 25, 2016 and fundamentally altered the way federal contractors and subcontractors will need to handle and resolve employment and labor claims, as well as compliance issues involving their entire workforce. The final rules can also result in otherwise-capable companies being “blacklisted” and effectively barred from federal contracts and subcontracts based on labor and employment law violations related or unrelated to prior or current federal contract performance. The centerpiece of the new regulatory scheme was the new disclosure and responsibility requirements. Contractors and subcontractors needed to disclose all “labor law decisions” that they had during the three years (prior to bid submission) as part of the process of applying for a new federal contract or subcontract. If a contractor or subcontractor has too many “labor law decisions” to report or the few it has are too severe, pervasive, repeated, or willful in the eyes of the government “experts,” the company could be deemed “non-responsible” and denied a contract.
King County Superior Court issued sanctions of $1,641,721 in favor of Gefco and against Cascade Drilling, Inc. and its President, Bruce Niermeyer, composed of $1,394,435 in attorneys’ fees and $247,286 in expert fees.
Cascade Drilling is a contractor. Gefco manufactures and sells large drilling machinery. The dispute centered around a project that began in 2008. Cascade was hired to drill a water well at a housing development in Wheeler Canyon, California. Cascade used a 50K drilling rig purchased from Gefco. The pump drive shafts on the drilling rig failed four times. After each failure, Cascade ordered a replacement pump drive shaft from Gefco.
The new Part 107 FAA Rules took effect on Monday, August 29, 2016. Unlike the previous requirements for flying a drone commercially, the new rules are much more simplistic and permissive of a broad amount of commercial drone usage.
The following is the basic knowledge you need to legally use a drone on your future projects. To fly a drone commercially, there are now four major requirements:
- You must be at least sixteen years old;
- You must register your drone online;
- You must pass an aviation knowledge test administered at an FAA-approved testing center; and
- You must pass review by the Transportation Security Administration.
A customer shopping at Walmart’s outdoor garden center in Clarkston, Washington, reached down to brush aside a stick covering a price tag for bags of mulch stored on wooden pallets. The “stick” turned out to be a rattlesnake, and bit his hand.
The customer sued Walmart on the legal basis of “premises liability,” claiming that as Walmart’s business invitee (one who enters the owner’s property primarily for the owner’s benefit), the store owed him a duty to warn or guard against hazardous conditions such as the rattlesnake.
Many construction contracts contain a termination clause that allows a contractor to be terminated either for convenience or for cause. Termination for convenience and termination for cause clauses have been discussed previously on the blog here, here, and here. The distinction between a termination for convenience or for cause is an important one.
If a contractor is terminated for convenience, the rights of the party who has terminated the contractor for convenience could be limited in the future. This is specifically true as to any defects in the terminated contractor’s work that are discovered after the termination for convenience.
For nearly 20 years, Lockheed Martin has been working on developing a “Hybrid Airship” that may transform the ability to construct facilities in remote project locations.
On September 13, 2016, the Daily Journal of Commerce reported that the first of these “Hybrid Airships,” which can land in snow, ice, gravel, and water, are set to deliver from a facility operated by PRL Logistics in Kenai, Alaska, beginning in 2019. PRL will be operating the blimps in partnership with UK-based Straightline Aviation who placed the first order for the airships this year. According to PRL, the hope is that the airships will provide low cost solutions for moving freight in Alaska, where runways and roads are not always available. The helium-lifted behemoth blimps have space for 47,000 pounds of cargo and 18 passengers and cost about $40 million dollars.
Washington Courts allow an insurer to determine its duty to defend an insured against a lawsuit based only on the face of the complaint and the limitations of the insurance policy. This is otherwise known as the “eight corners” rule (four corners of the complaint plus the four corners of the policy). In other words, the insurance company is not permitted to rely on facts extrinsic to the complaint in order to deny its duty to defend an insured. See Truck Ins. Exch. v. VanPort Homes, Inc., 147 Wn.2d 751, 763 (2002). The laws in Washington provide greater protection to the insured over the insurer when it comes to the insurer’s duty to defend. The duty to defend a claim is triggered if a claim could “conceivably” be covered under the policy. See Woo v. Fireman’s Insurance, 161 Wn.2d 43 (2007). If there is any ambiguity in a policy with regard to coverage, the ambiguity is interpreted in favor of the insured.
Section 8(a) of Small Business Act Favoring Small, Disadvantaged Businesses Upheld Under Equal Protection Clause
The Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution requires that public bodies and institutions treat similarly-situated individuals in a similar manner. The government, therefore, cannot apply a law dissimilarly to people who are similarly situated. For example, in the mid-1970s, the Medical School of the University of California Davis (a public university) reserved 16 of 100 spaces in its class for “disadvantaged” students.[i] In the seminal case of Regents of Univ. of California v. Bakke, the U.S. Supreme Court ruled that racial preference was unconstitutional under the Equal Protection Clause because an applicant’s race was an explicit factor in determining disadvantage. In other contexts, however, the U.S. Supreme Court has found that “mere awareness of race in attempting to solve the problems facing [minority groups] does not doom that endeavor at the outset.”[ii]
Implied warranties are warranties created by law, legislation, or courts. In the construction industry, one of the most prominent implied warranties is that owners who provide plans and specifications to their contractors impliedly warrant the adequacy of their plans and specifications.[i] That implied warranty had its beginning in the 1918 US Supreme Court decision of U.S. v. Spearin[ii] and is, therefore, popularly known as the Spearin Doctrine. Under the Spearin Doctrine, if the contractor completes the work in accordance with the owner’s plans and specifications, but there is a deficiency or failure, the owner, not the contractor, is responsible. When the owner breaches its implied warranty, in most instances, the contractor is entitled to additional compensation for extra work performed, delays experienced, and other additional expense or loss occasioned by the warranty breach. A recent case demonstrates that this implied warranty is not “immunity.” The contractor must still act reasonably and diligently, particularly when the contract provisions so require.
Indemnity Clauses That Conflict with Oregon Indemnity Statute Can Remain Partially Valid and Enforceable
When the indemnity provision of a contract conflicts with ORS 30.140, it is voided to the extent that it conflicts with the statute, but no more. Such provisions can remain partially valid and enforceable.[i] In Montara Owner Assn., the owner brought claims against the contractor for construction defects and damage relating to the construction of 35 townhouses. Contractor then brought third-party claims against more than 20 subcontractors for breach of contract and indemnity. Before trial, contractor settled with all but one subcontractor. The subcontract contained an indemnity provision requiring subcontractor to indemnify contractor for losses arising out of subcontractor’s work, including losses caused in part by contractor’s own negligence.