2014 – Page 4 – Construction Law

Welcome to the 26th Edition of K&L Gates’ Arbitration World

Apr 03 2014

Welcome to the 26th edition of Arbitration World, a publication from K&L Gates’ International Arbitration Group that highlights significant developments and issues in international and domestic arbitration for executives and in-house counsel with responsibility for dispute resolution.

To view Arbitration World, click here.

To download a printable PDF of the publication, open the link above and click on the fourth icon from the right in the magazine toolbar at the top of the page.

In this edition, we report on the much-anticipated decision of the U.S. Supreme Court in BG Group PLC v. Republic of Argentina regarding the respective roles of courts and arbitrators in deciding threshold issues of arbitrability or jurisdiction. We review a recent decision of the Indian Supreme Court in the context of the wider changes in India regarding international arbitration in recent years, as well as a decision of the Full Federal Court of Australia regarding the implications of seeking to resist enforcement of an award after already unsuccessfully challenging the award at the seat of arbitration.

We include articles on the new arbitration rules issued by the Japan Commercial Arbitration Association (JCAA) and the Vienna International Arbitration Centre (VIAC) and report on the interesting development of the introduction of “Optional Appellate Arbitration Rules” by the American Arbitration Association (AAA) / International Centre for Dispute Resolution (ICDR).

We consider the potential issues that may arise with short-form ‘ad hoc’ arbitration clauses, and continue our series of articles on means of protecting foreign investments with a review of the means of access to relevant dispute resolution mechanisms. We also provide our usual updates on developments from around the globe in international arbitration and investment treaty arbitration.

We hope you find this edition of Arbitration World of interest, and we welcome any feedback (email ian.meredith@klgates.com or peter.morton@klgates.com).

Federal Circuit Confirms that Government Has a Broad Duty of Good Faith and Fair Dealing and Declines to Shift Risk of Differing Site Conditions to Contractors

Feb 25 2014

By Stuart B. Nibley and John P. Estep, K&L Gates, Washington D.C.

In what many will consider a victory for federal government contractors, the U.S. Court of Appeals for the Federal Circuit recently (i) clarified the standard for determining when there is a breach of the implied duty of good faith and fair dealing and (ii) held that certain contractual disclaimer language was insufficient to preclude a contractor from alleging a claim based on differing site conditions.

Does the Lack of an Enforceable Contract under HICPA Spell No Recovery for Pennsylvania Contractors?

Feb 13 2014

By Jacquelyn S. Celender, K&L Gates, Pittsburgh

The Supreme Court of Pennsylvania is set to decide whether the Home Improvement Consumer Protection Act, 73 Pa. C.S. § 517.1-517.18 (“HICPA”), can bar a contractor from recovery under a theory of quantum meruit in the absence of a valid and enforceable home improvement contract under HICPA. See Shafer Elec. & Constr. v. Mantia, — A.3d –, No. 276 WAL 2013, 2013 WL 5806466 (Pa. Oct. 29, 2013). In the Shafer case, the Superior Court of Pennsylvania reversed a lower court’s dismissal of a mechanics’ lien claim asserted by a contractor against the property of a homeowner on the grounds that the contractor lacked a valid agreement with the homeowner under HICPA. Shafer Elec. & Constr. v. Mantia, 67 A.3d 8 (Pa. Super. Ct. 2013) (relying in part on the Superior Court’s holding in Durst v. Milroy Gen. Contracting, Inc., 52 A.3d 357 (Pa. Super. Ct. 2012)).

The Superior Court rejected the homeowner’s argument that permitting contractors to assert causes of action on a theory of quantum meruit would evade HICPA’s goal of protecting homeowners. Instead, the Superior Court focused on section 517.7(g) of HICPA, which provides:

(g) Contractor’s recovery right.—Nothing in this section shall preclude a contractor who has complied with subsection (a) from the recovery of payment for work performed based on the reasonable value of services which were requested by the owner if a court determines that it would be inequitable to deny such recovery.

Shafer Elec. & Constr., 67 A.3d at 12. The Court noted that “the statute yields an absurd result of providing contractors with an equitable means of recovery under quasi-contract theory, but only whena written contract exists such that quantum meruit recovery is not needed nor allowed by law.” Id. at 13 (emphasis in original). Persuaded by the contractor’s argument that “if this were the intent of the drafters [of the HICPA], to require the contractor to comport with all of the requirements of [section 517.7(a)] to recover in [q]uantum [m]eruit, then the contractor does not need to recover on a [q]uantum [m]eruit theory, for the value of his services, because he would have a valid and enforceable contract on which to rely”, the Court held that the “the General Assembly’s obvious ‘purpose’ in drafting section 517.7(g) was to provide for an equitable remedy in situations where there was no valid and enforceable written contract under section 517.7(a).” Id.

The Supreme Court of Pennsylvania’s decision in Shafer could have important implications for contractors attempting to assert liens under Pennsylvania’s mechanics’ lien law, 49 P.S. § 1101, et seq., and should continue to be closely monitored.

AAA Issues Optional Appellate Arbitration Rules

Jan 30 2014

By J. P. Duffy, K&L Gates, New York

A significant set of new rules were issued by the American Arbitration Association (AAA) which will afford parties the ability to appeal arbitral awards to specialized appellate tribunals. The new Optional Appellate Arbitration Rules, which could apply to arbitrations concerning construction matters, are noteworthy for arbitrations as they offer an arbitral structure — outside of judicial enforcement regimes — for reviewing awards alleged to suffer from serious factual or legal defects. To learn more about the new rules, click here.

This article was originally published in the International Law Office Arbitration Newsletter on January 30, 2014.

Recent Article Offers Help in Navigating Forensic Schedule Analysis

Jan 29 2014

By Ryan D. DeMotte, K&L Gates, Pittsburgh

For construction attorneys looking for guidance in navigating the often confusing world of forensic schedule analysis ("FSA"), Patrick Kelly’s and William Franczek’s article in the Fall 2013 edition of The Construction Lawyer, "Clearing the Smoke: Forensic Schedule Analysis Method Selection for Construction Attorneys" provides a useful overview. The article describes the controversies over the legitimacy of FSA, and then evaluates the pros and cons of the various FSA methods and discusses the factors that analysts and attorneys should consider in selecting an FSA method for a particular case.

The authors point out that FSA methods go by a number of different names, and they helpfully provide a four-family classification of the main methods: (1) as-planned vs. as-built, (2) contemporaneous period analysis, (3) retrospective time impact analysis, and (4) collapsed as-built.

Texas Supreme Court Holds “Contractual Liability” Exclusion Inapplicable

Jan 23 2014

By: Roberta D. Anderson, K&L Gates, Pittsburgh

In a highly anticipated decision issued on January 17, the Texas Supreme Court held that the standard commercial general liability (CGL) “contractual liability” exclusion does not void coverage for claims alleging that a contractor failed to construct a project in a “good and workmanlike manner” as required by the construction contract in Ewing Construction Company, Inc. v. Amerisure Insurance Company.

Had the Court answered “yes” to the Fifth Circuit’s certified question, there would have been a radical expansion of the standard contractual liability exclusion that would have been unsupported by — indeed, would have been contrary to — the court’s 2010 decision in Gilbert. The implications to the construction industry may have been severe. Coverage for a wide range of construction defects and other mistakes would have effectively disappeared under Texas law. Many contractors would have faced the concern of potential uninsured liability resulting from the contract work. And many consumers would have been left without realistic compensation for construction mistakes.

Fortunately, the Court correctly answered “no.”

To read the full alert, click here.

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