Construction Litigation Roundup: “A Fastball Right to the Bean!”
May 06, 2024 —
Daniel Lund III - LexologyThe Metropolitan Municipality of Lima, Peru, filed suit in federal court in Washington DC to vacate two separate arbitration awards rendered against the city in international arbitration proceedings subject to the Federal Arbitration Act.
The city had contracted to build, improve, and maintain various highways in and around the city. To pay for this infrastructure, Lima agreed that the contractor would “receive revenues from existing and new toll booths.”
Apparently, the City of Lima forgot how much citizens of the area loathed tolls, and, according to the court, the local public officials “quickly truckled” (how apropos for a road project!) to the pressure. As a result, revenues promised to the contractor were not forthcoming, and the city did nothing about it.
The contractor initiated arbitration, and the city countered by arguing that the contractor had bribed its way into the contract. The city lost and was held in breach.
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Daniel Lund III, PhelpsMr. Lund may be contacted at
daniel.lund@phelps.com
2024 Construction Law Update
December 23, 2023 —
Garret Murai - California Construction Law BlogWe would like to wish you and yours a happy holiday season as we approach 2024.
The first half of the 2023-2024 legislative session saw the introduction of 3,028 bills, which, according to legislative observers, are the most bills introduced in a session in more than a decade, perhaps reflecting the fact that California has a record number of new legislators with over a quarter taking the oath of office for the first time. Of these bills, Governor Newsom signed nearly 400 into law including several impacting the construction industry related to climate change and housing affordability.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Residential Contractors, Be Sure to Have these Clauses in Your Contracts
December 23, 2023 —
Christopher G. Hill - Construction Law MusingsI have often “mused” on the need to have a good solid construction contract at the beginning of a project. While this is always true, it is particularly true in residential contracting where a homeowner may or may not know the construction process or have experience with large scale construction. Often you, as a construction general contractor, are providing the first large scale construction that the homeowner has experienced. For this reason, through meetings and the construction contract, setting expectations early and often is key.
As a side note to this need to set expectations, the Virginia Department of Professional and Occupational Regulation (DPOR) and the Virginia General Assembly require certain clauses to be in every residential construction contract. DPOR strictly enforces these contractual items and failure to put them in your contracts can lead to fines, penalties and possibly even revocation of a contractor’s license.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Navigating the New Landscape: How AB 12 and SB 567 Impact Landlords and Tenants in California
March 11, 2024 —
Sharon Oh-Kubisch - Kahana FeldThere are various changes in the Landlord-Tenant laws in CA that became effective in 2024.
For the purposes of this article, I wanted to focus on Assembly Bill (AB) 12 and Senate Bill (SB) 567 only.
Governor Gavin Newsom recently signed AB 12 into law, a legislation that limits the amount landlords can charge for security deposits to just one month’s rent for unfurnished apartments. While the law aims to make housing more accessible, it raises several concerns for landlords and tenants alike. AB 12, was authored by Assemblyman Matt Haney, D-San Francisco; it passed both the Senate and the Assembly houses in September. The legislation introduces a notable shift from existing law, under which landlords can charge up to two months’ rent for an unfurnished unit and three months’ rent for a furnished one. This exception does not apply when the prospective tenant is a military service member, however.
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Sharon Oh-Kubisch, Kahana FeldMs. Oh-Kubisch may be contacted at
sokubisch@kahanafeld.com
Contractor Prevails in Part Against CalOSHA in Valley Fever Case
February 26, 2024 —
Garret Murai - California Construction Law BlogFever. Specifically, Valley fever. Caused by the fungus Coccidioides. It lives in the top two to 12 inches of soil, can become airborne when the soil is exposed, and can cause respiratory illness and even death. And apparently, it is present in many parts of California particularly in the Central Valley and along the coast. Who knew?
In
Granite Construction Company v. Occupational Safety and Health Appeals Board, Case No. C086704 (2023), contractor Granite Construction was cited by CalOSHA for exposing its employees to Coccidioides at a large solar power plant known as California Flats Solar Project in Monterey California. The 3rd District Court of Appeal reversed in part. It should be noted that this case originally unpublished, it was then published, and then later depublished, so it should not be relied on for precedential value.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
McDermott International and BP Team Arbitrate $535M LNG Site Dispute
April 02, 2024 —
Mary B. Powers - Engineering News-RecordBP and Kosmos Energy are seeking “maximum recoverable damages” of about $535 million in binding arbitration with contractor McDermott International over a claim that it failed to meet contract obligations on subsea pipeline installation for an estimated $4.8 billion liquefied natural gas project off Africa.
Reprinted courtesy of
Mary B. Powers, Engineering News-Record
ENR may be contacted at enr@enr.com
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Ruling Dealing with Constructive Changes, Constructive Suspension, and the Implied Covenant of Good Faith and Fair Dealing
January 22, 2024 —
David Adelstein - Florida Construction Legal UpdatesA dispute pending in the Armed Services Board of Contract Appeals (ASBCA) dealt with interesting legal issues on a motion to dismiss. See Appeals of McCarthy Hitt-Next NGA West JV, ASBCA No. 63571, 2023 WL 9179193 (ASBCA 2023). The dispute involves a contractor passing through subcontractor claims due to impacts caused by the COVID-19 pandemic and the government’s response to the pandemic. More particularly, the claim centers on the premise that the government “failed to work with [the contractor] in good faith to develop a collaborative and cooperative approach to manage and mitigate the impacts and delays arising from the COVID-19 pandemic.” See Appeals of McCarthy Hitt.
The contractor (again, submitting pass through claims from subcontractors) claimed: (a) constructive changes to the contract entitling it to an equitable adjustment under the Changes clause of Federal Acquisition Regulation (F.A.R.) 52.243-4; (b) construction suspensions of the contractor’s work entitling it to an equitable adjustment under the Suspensions of Work clause of F.A.R. 52-242-14; and (c) the government breached the implied covenant of good faith and fair dealing. Each of these legal issues and theories will be discussed below because they are need-to-know legal issues. Keep these legal issues in mind, and the ASBCA’s ruling on the motion to dismiss as its analysis may demonstrate fruitful in other applications.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
New York Revises Retainage Requirements for Private Construction Contracts: Overview of the “5% Retainage Law”
January 22, 2024 —
Levi W. Barrett, Patrick T. Murray, Skyler L. Santomartino & Mark A. Snyder - Peckar & Abramson, P.C.On November 17, 2023, the State of New York enacted the “5% Retainage Law.” This legislation effectively limits the amount of retainage that can be held from general contractors and subcontractors to no more than 5%. It applies to many but not all construction contracts. In addition, the new law revises late stage billing requirements, enabling contractors to invoice for retainage at substantial completion. Previously, the parties to a construction contract were free to negotiate any retainage amount, limited only by an unspecified “reasonable amount” that would be released as the parties contractually set forth.
Summary
The new law amends Sections 756-a and 756-c of the General Business Law (part of Article 35E of the GBL, known as the “Prompt Pay Act”), and applies to private construction contracts “where the aggregate cost of the construction project, including all labor, services, materials and equipment to be furnished, equals or exceeds one hundred fifty thousand dollars.”
Reprinted courtesy of
Levi W. Barrett, Peckar & Abramson, P.C.,
Patrick T. Murray, Peckar & Abramson, P.C.,
Skyler L. Santomartino, Peckar & Abramson, P.C. and
Mark A. Snyder, Peckar & Abramson, P.C.
Mr. Barrett may be contacted at lbarrett@pecklaw.com
Mr. Murray may be contacted at pmurray@pecklaw.com
Mr. Santomartino may be contacted at ssantomartino@pecklaw.com
Mr. Snyder may be contacted at msnyder@pecklaw.com
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