Construction Law Blog
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Subcontractors on public projects in Washington State will no longer be required to wait until final acceptance of the project to get their retainage money. A new statute, which goes into effect on July 23, 2017 and applies only to Washington public projects, will allow subcontractors to get their retainage sooner.
Under prior law, a subcontractor could only get its retainage prior to final acceptance if the general contractor provided a retainage bond to the public owner to secure a release of the general contractor’s retainage and the subcontractor then provided a similar retainage bond to the general contractor in the amount of its own retainage. If the general contractor decided to not provide a retainage bond to the owner, the subcontractor would be forced to wait until final acceptance of the project before it could get paid its retainage.
While we avoid using this blog as a platform for self-promotion, we recently received share-worthy distinctions, which both flatter and humble us. We invite you, our loyal readers, to celebrate in our success, which in great measure is due to you.
Founding partner John P. Ahlers was ranked third overall across all practicing industries in Washington 2017 Super Lawyers and founding partner Paul R. Cressman, Jr. was ranked in the Top 100. The following other firm members were also recognized as Super Lawyers: Founding partner Scott R. Sleight, Bruce A. Cohen (Partner), Brett M. Hill (Partner), and Lawrence Glosser (Partner). In addition, Ryan W. Sternoff (Partner), James R. Lynch (Partner), Tymon Berger (Associate), and Lindsay (Taft) Watkins (Associate) were selected as Super Lawyers Rising Stars. Over half of the firm's lawyers received Super Lawyers distinction.
Construction attorneys rarely encounter state and local tax issues. However, in a recent negotiation over a disputed change proposal, an Owner’s attorney argued that Washington prohibits recovery of B&O tax as a separately-billed line item in the change proposal. Given that itemization of B&O surcharges seemed a fairly common business practice, I was initially skeptical of the position. Upon further review, it became apparent that the Owner’s argument was indeed correct and that many contractors may be unknowingly violating the law by separately itemizing and adding a percentage for B&O tax to their billings or change proposals.
A drastic change has been implemented by the Washington State Department of Transportation (“WSDOT”) to the Disadvantaged Business Enterprise (“DBE”) Program in Washington. Effective June 1, 2017, WSDOT has implemented a “waiver” to exclude women-owned DBEs[i] from qualifying toward Condition of Award (“COA”) Goals on federally-funded projects. This move is significant. It will likely result in long-lasting detrimental impacts on the DBE community, women-owned businesses, and the entire construction community in Washington. The construction industry should be in an uproar over this change. Instead, it has largely gone unnoticed (likely because its impacts have not yet been felt). It is a de facto exclusion of women-owned businesses from the DBE program, and the severity of this change cannot be overstated.
A New AAA Study Confirms that Arbitration is Faster to Resolution Than Court – And the Difference Can be Assessed Monetarily
There has been a perception among some litigators that arbitration is more expensive than court due to several factors. Among them:
- The “upfront” costs are higher in that filing fees for arbitration exceed those in court. Arbitrators are paid, whether hourly or a flat rate, and the three arbitration panels can become very expensive.
- Some arbitration clauses preserve statutory discovery rights, basically defeating the advantage of a simplified arbitration process. Discovery wars are extremely expensive. Depositions are the most costly of discovery, and in arbitration, as opposed to court, depositions are limited or do not exist.
- Some arbitration clauses integrate the statutory rules of civil procedure, making arbitration almost equivalent to litigation. These types of clauses do the parties no favors
Although we live in a politically-divided nation, there is one issue on which there seems widespread agreement: our country requires a massive upgrade to its infrastructure. Rundown airports, crumbling highways, obsolete ports, and dangerous bridges are now endemic across the United States. By contrast, Asian airports and elegant European bridges and rails show that our country needs an upgrade, the cost of which will be enormous.
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.