December 2007 – Page 2 – Construction Law

No Summary Judgment on Labor Law Claims Regardless of Whether Plaintiff’s Work Was Performed in Furtherance of Contract

Dec 13 2007

Butt v. Bovis Lend Lease LMB, Inc., 2007 WL 4260519 (N.Y. App. Div. 2007 Dec. 6, 2007)

In this case, plaintiff sued for common law negligence and Labor Law violations, seeking to recover for injuries allegedly sustained when he fell from ladder while plastering a ceiling beam of an interior stairwell at a public school. Defendants included the City of New York which owned the premises, the Board of Education which operated and maintained the premises, the general contractor, and the construction manager. Defendants moved to dismiss the Labor Law violations on summary judgment, arguing that the work the plaintiff was performing when he was injured was outside the scope of his contract, and thus was not covered by the Labor Law. The court denied the motion, finding that such a defense only applied to the benefit of parties who did not have authority to supervise or control the work at issue. The court explained that such a defense would not apply to the owner’s liability because injury to a worker may not be circumscribed by contract. Further, conflicting evidence had been presented as to whether the work was outside the scope of the contract., and so the issue was not capable of resolution on summary judgment.

Subcontractor Liable for Damages Caused by Equipment It Was Contractually Obligated to Provide at Construction Site

Dec 13 2007

Urbina v. 26 Court St. Assocs., LLC, 847 N.Y.S.2d 67 (N.Y. App. Div. 2007)

This case involved causes of action for negligence, violations of Labor Law §§ 200, 240(1) and 241(6), and loss of consortium brought by an electrician, Urbina, and his wife. Plaintiffs sought to recover damages for injuries sustained when a platform upon which Urbina was kneeling collapsed at a construction site. That platform had been installed by the drywall subcontractor, R&J Construction Corp. for its own use. Plaintiffs brought claims against the owner of the premises, the lessee of the premises, and R&J. The issues on appeal involved the reasonableness of the damages awarded to plaintiffs, and contractual indemnification between defendants.

Construction Manager and Architect Not Liable for Construction Defects Where There is No Contractual Relationship with Plaintiff

Dec 13 2007

Oates v. Larkin, 2007 WL 4442361 (Mass. Super. Ct. Dec. 5, 2007)

In this case, the Superior Court considered motions to dismiss brought by multiple defendants. The case arose out of a large-scale condominium construction project. Plaintiff was president of the association of unit owners and the defendants bringing motions to dismiss were the developer, its board of managers, the construction manager and the architect (who sought to join the motion to dismiss filed by the construction manager). The developers’ and managers’ motions to dismiss were denied, provided that plaintiff complied with an order to amend the complaint. The motion to dismiss by the construction manager was allowed in part, denied in part and the architect’s motion to join was allowed.
Read More

Materialman Rewarded for Detailed Lien Despite “Open Account”

Dec 12 2007

BMC West Corp. v. Horkley, 144 Idaho 890, 174 P.3d 399 (2007)

BMC West provided materials to contractor Davies for work on Horkley’s commercial structure. All sales were on an open account. Davies did not fully pay BMC, so BMC filed liens “on the land on which the buildings were located, and on the buildings themselves.” BMC then sued Horkley for payment and to foreclose the liens. Horkley asserted the “open account defense,” which applies when a materialman “relies exclusively on the general credit of the purchaser, and does not look to the land, structure or building as additional security for the materials sold on credit.” To avoid the defense and make the lien valid, the materials “must be furnished with special reference to their use in a particular building.”

Because BMC had tracked the materials sold to Davis for use on Horkley’s building, it was not relying on Davies’ general credit alone. Since BMC was able to track the materials used to a specific project, the court granted summary judgment in favor of BMC. The Idaho Supreme Court affirmed, including an award of attorney fees.

No Summary Judgment for Contractors Relying on Preemption

Dec 10 2007

Wysocki v. Kel-Tech Constr. Inc., 847 N.Y.S.2d 166 (N.Y. App. Div. 2007)

Here, the court denied the defendants’-contractors’ summary judgment motion to dismiss the breach of contract claims brought against them by plaintiffs-construction workers. The court reasoned that the plaintiffs’ contractual rights would be independent of a collective bargaining agreement whether or not Labor Law § 220 was incorporated into the public works contracts at issue. The court explained that Labor Law § 220 applies across the board, making its requirements non-negotiable. Therefore, the collective bargaining agreement did not have any bearing on the public works contracts at issue in the case.

Second Department Grants Leave to Amend Answer to Plead Statute of Limitations Defense Under CPLR 214-c

Dec 10 2007

Felice v. Am. A.W.S., Corp., 846 N.Y.S.2d 656 (N.Y. App. Div. 2007)

In this action, plaintiffs sought to recover for personal injuries and property damages arising out of defendant’s renovation of plaintiffs’ residence. Plaintiffs alleged that defendant had negligently performed the work, resulting in water leaks and the formation of mold. Defendant sought leave to interpose an amended answer which included, inter alia, the affirmative defense of statute of limitations. Defendant contended that the plaintiffs’ causes of action sounded in negligence and thus were governed by a three-year statute of limitations.

Appellate Court Accepts Measured Mile Method for Calculating Acceleration of Work Damages in Case of First Impression

Dec 06 2007

James Corp. v. N. Allegheny Sch. Dist., 2007 WL 4208589 (Pa. Commw. Ct. Nov. 30, 2007)

In this case, the Commonwealth Court of Pennsylvania held that the trial court properly measured acceleration damages sustained by a general contractor under the “measured mile” theory of recovery. In a multi-phased construction project entered into by the school district and James Corporation, the district delayed James’ performance by failing to obtain permits in a timely manner, by requiring extra work which interfered with the planned sequence of work, by relocating fencing and reconfiguring the erosion and sedimentation pond, and by requiring removal of asbestos (which was not in the contract). Amidst the delay, the district abandoned the contract schedule, refused to consider the time impact on the contractor’s planned sequence, and then terminated the contractor after substantial completion. The trial court awarded James damages for acceleration/compression of work, unpaid invoices, prevailing wages withheld, attorneys’ fees and expenses. Read More

General Contractor Liable to Subcontractor for Damages and Attorneys’ Fees for Failure to Fully Compensate Subcontractor for Work on Change Orders

Dec 04 2007

Am. Envtl. Contractors, Inc. v. Garber Constr. Co., Inc., 2007 WL 4358169 (Mass. Super. Ct. Nov. 26, 2007)

The Superior Court heard a jury-waived trial in which the plaintiff subcontractor sought damages from the defendant general contractor after an unexpected roof collapse created the need for substantial extra work on the project. The general contractor and the project manager executed several change orders for extra work after the collapse. The subcontractor claimed that it was not compensated for the full amount of extra work by the general contractor. The general contractor claimed it was owed the money by the project manager and filed a third-party complaint. Read More

Material Supplier Deemed to Have Contracted with “Subcontractor” to Permit Claim Against “Miller Act” Bond

Dec 03 2007

United States ex rel. E&H Steel Corp. v. C. Pyramid Enters., Inc., 509 F.3d 184 (3d Cir. 2007)

This litigation arose after a steel supplier on a U.S. government construction project asserted a claim against a payment bond issued by the general contractor (to which it had no contractual privity) pursuant to the Miller Act (40 U.S.C. § 3131). Because the Miller Act limits the availability of such bond claims to either entities in contractual privity with the bond issuer (the GC) or those entities having contractual privity with a "subcontractor,” the key issue was whether the entity with which the supplier contracted was a “subcontractor.” The District Court for the District of New Jersey, applying a number of a factors, determined that it was not a subcontractor and dismissed the bond claim.

Anti-Indemnity Statutes: A Threat to Limitation of Liability Clauses?

Dec 01 2007

By K&L Gates attorneys Richard F. Paciaroni and Janet M. Serafin

Limitation of liability clauses are frequently relied upon in design and/or construction contracts to manage risk by limiting the damages recoverable from contractors and design professionals. Historically, these clauses have generally been upheld, particularly when the contracting parties are both sophisticated entities. However, a growing concern over the trend of design professionals requiring contracting partners to indemnify them, despite the former’s own negligence, caused most states to adopt anti-indemnity statutes. What remains somewhat uncertain is how these anti-indemnity laws affect the enforceability of limitation of liability clauses. Two recent cases have invalidated a limitation of liability clause under the relevant anti-indemnity statute. While these cases still represent the minority view, they beg the question of the prudence of continued reliance on such clauses, particularly in jurisdictions which have not yet ruled on the issue.

Archive:December 2007