Construction Law Blog
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On October 2, 2014, the United States Department of Transportation (USDOT) issued a final rule impacting USDOT’s Disadvantaged Business Enterprise (DBE) regulations that has been in the works for over two years. The rule, first proposed on September 6, 2012, makes several changes to both the administration and the implementation of the DBE program regulations. Given the number of changes, this post will be broken up into two parts. Part one will focus on the new application forms as well as the changes related to economic disadvantage and size standards:
Contractor's Surety Taking Over Project was Not Permitted to Recover Progress Payment Made by Owner to Contractor's Bank Loan Account
It is commonly known in the construction industry that general contractors who perform public works projects are required to post a payment bond and performance bond, in part, to ensure that subcontractors are paid and the project is completed in the event the general contractor is unable to fulfill its contractual obligations. A typical circumstance in which these bonds are relied upon is when the general contractor becomes financially unable to pay or perform (i.e. bankruptcy) before the public works project is completed. Generally, under the payment bond, a surety would pay those subcontractors that have not been paid by the general contractor and, under the performance bond, the surety would take over the work left unperformed by the general contractor.
On May 12, 2014, Division I of the Washington Court of Appeals adopted the doctrine of "adverse dominiation" in a lawsuit by condominium owners against HOA Board members, tolling the applicable statute of limitations against the board members until the homeowner had knowledge of the breach.
Suit Against Limited Liability Company Held Not to Be Time Barred When Brought More Than Three Years After Dissolution
In March 2014, Division III of the Washington Court of Appeals reversed a trial court's refusal to dismiss a suit by homeowners against a developer as untimely when it was brought more than three years after the developer dissolved its limited liability company. Read more here. In that case, Division III reasoned that RCW 25.15.303, as it existed until mid-2010, controlled, and the 2010 amendment was not retroactive.
Washington Supreme Court Upholds Tribal Corporation's Waiver of Sovereign Immunity and Consent to State Court Jurisdiction
As many readers of this blog may be aware, special care must be taken when contracting with tribal nations and their corporations. First and foremost, the tribe must specifically "waive sovereign immunity." This means the tribe expressly consents and agrees it may be sued for claims arising under the contract. Without such a waiver, the tribe or its corporations cannot be sued in any court or arbitration proceeding, no matter how valid the claim. Second, many businesses also insist that the tribe consent to the jurisdiction of the U.S. federal or state courts. Absent such consent, any claim arising out of the contract would have to be brought in tribal court.
The separation of powers principle is an important cornerstone of American political governance. America's tripartite version of this principle - memorialized in the U.S. Constitution - allocates certain governing responsibilities among three branches: the legislative branch, which makes the laws; the judicial branch, which interprets the laws; and the executive branch, which enforces the laws. In theory, the system allows for the effective administration of government without centralizing too much power in a single body. In practice, government branches sometimes step on one another's toes when confronting cross-jurisdictional issues.
Across the country, Public-Private Partnerships ("P3s" - which you can read more about here) are gaining traction as an alternative means of financing and completing public projects. Although Washington has been slow to implement P3s in its own public ventures, it is important to think about the effect this emerging procurement model might have on other, seemingly "settled" areas of the law.
Ahlers & Cressman, PLLC attorneys Scott R. Sleight and Elizabeth (Ellie) Perka will be presenting a live webinar on Tuesday, September 30, 3014 covering construction subcontractor default insurance (SDI) as a potential alternative to performance bonds, the key differences between SDI and surety bonds, the benefits and disadvantages of SDI, and the factors that should be considered in weighing SDI as an acceptable vehicle for performance risk protection. This live 90-minute traning opportunity will include interactive questions and answers.
An indemnity clause in a contract allows the contracting parties to dictate liability, usually in the form of personal or property harms. For example, if A ("Indemnitor") indemnifies B ("Indemnitee") against all injuries caused by its construction, and C becomes injured by B's work, C will have a claim against B for the injury. B will then have an indemnity claim against A for the cost to defend and for any damages arising from C's lawsuit. We have previously discussed indemnification on our blog. See Top 10 Construction Contract Provisions and Washington’s Defense and Indemnification Statute.
Unlike other professionals, a unique problem faced by architects is that there are codes and ordinances that specifically detail how their jobs are to be performed. Lawyers are ethically prohibited from contracting to guarantee the outcome of the case. Doctors are practically precluded from guaranteeing the outcome of a particular medical procedure. Architects, on the other hand, are required by law to comply with codes when designing improvements in real property.