The Americas – Page 29 – Construction Law

New US Federal Rules Focus More Attention on Electronic Evidence in Construction Disputes

Apr 01 2007

This article, by K&L Gates attorneys David R. Cohen and Kari M. Horner, appears in the April 2007 edition of Construction Law International, the magazine of the IBA International Construction Projects Committee.

Important amendments to the US Federal Rules of Civil Procedure (the Rules) relating to electronic discovery in litigation became effective on 1 December 2006. Every party involved in litigation in US federal courts should become familiar with these Rules. This article provides an overview of the key provisions of the new Rules.

View the full article here.

This article was first published in the Construction Law International Vol 2 No 1, April 2007, and is reproduced by kind permission of the International Bar Association, London, UK. © International Bar Association 2006.

State Not Liable to Workers Who Also Recovered Under Workers’ Compensation System

Feb 10 2007

Fuhriman v. Idaho Dept. of Transp., 143 Idaho 800, 153 P.3d 480 (2007)

Idaho law provides that workers’ compensation benefits are the exclusive remedy for workplace injuries. Idaho Code §72-223, however, contains an exception to that "exclusive remedy." The exception allows a finding of liability against a third party, even where the injured employee has received worker’s compensation benefits, if the third party is legally liable for damages. This exception to the exclusive remedy rule does not apply, however, to employers described in §72-216, which includes third party that has expressly or impliedly hired or contracted the services of another, including contractors and subcontractors, and the third party is liable to pay workers’ compensation benefits if the direct employer, the contractor or subcontractor, does not.

In a February 2007 opinion, the Idaho Supreme Court held that the Idaho Department of Transportation was not subject to the exception (that is, it was protected by the exclusive remedy rule). The State was using workers employed by a contractor. Those workers were killed on the job. Their families received workers’ compensation benefits and sued the State. The Court rejected the claims, however, because the State would have been liable for the worker’s compensation benefits if the contractor/employer failed to pay those benefits. The exception therefore did not apply.

Be Very Careful When Entering into Settlement Agreements

Feb 08 2007

Ragnar Benson, Inc. v. Hempfield Township Mun. Auth., 916 A.2d 1183 (Pa. Super. Ct. 2007)

The Pennsylvania Superior Court untied the knottiest of two settlement agreements in this case. Under separate written agreements, Kirby Electric contracted with the Municipal Authority to do its electrical construction, while Ragnar Benson contracted to perform general construction on the Authority’s water pollution control plant. Each filed a lawsuit against the Municipal Authority, asserting breach of contract, and the Municipal Authority counterclaimed, and cross-claimed accordingly. Kirby and the Municipal Authority agreed to settle their claims and counterclaims, with the provision that Kirby and Ragnar would continue in litigation and that settlement payments would be calculated based upon the outcome of the two contractors’ litigated dispute.
Read More

K&L Gates’ Arbitration World, Winter 2006/2007

Jan 15 2007

By K&L Gates attorneys Ian Meredith, Michael D. Napoli, Martin J. King, Andrew H. Davies, Douglas J. Simmons, Ben Morgan, Clare Tanner, Brian R. Davidson, Kari M. Horner, Sarah A. Munro and Rachel G. Stephens.

Arbitration World highlights the significant developments and issues in international arbitration that matter to in-house counsel and company executives with responsibility for dispute resolution.

Welcome to the third edition of “Arbitration World” and the first edition, we are proud to say, following the combination of Kirkpatrick & Lockhart Nicholson Graham LLP with Preston Gates Ellis LLP, effective 1 January 2007, to form Kirkpatrick & Lockhart Preston Gates Ellis LLP – “K&L Gates.”

In light of this development, page 3 of this issue includes a short commentary on arbitration in Asia and a profile of the firm’s Asian offices which enable the firm to advise clients in arbitration in this increasingly strategic part of the world.

For those reading for the first time, “Arbitration World” aims to highlight significant developments and issues in international arbitration that matter to in-house counsel and company executives with responsibility for dispute resolution.

Contract Specifications Defense Applies to Both Private and Public Contractors

Jan 01 2007

Craig Johnson Constr., L.L.C. v. Floyd Town Architects, P.A., 142 Idaho 797, 134 P.3d 648 (2006)

Town entered into a contract with Dean to prepare plans for condominiums in Ketchum. Once Dean received the plans, Dean contracted with Johnson to build the condominiums according to Town’s plans. The condominiums were built in two phases. In Phase one Johnson deviated from the plans, but did not do so in building phase two. The first winter the condominiums were completed, ice dams formed on the roofs of individual units in both phases of construction. All three parties then brought actions against each other for breach of contract, negligence and indemnification.

At trial, the jury found Johnson to be 90 percent at fault and Town only 10 percent at fault. The court held that “a public or private contractor following plans and specifications prepared by another party is not liable in negligence where defects in the plans and specifications cause injuries, so long as the contractor should not have reasonably known about the defects.” The court affirmed the jury’s verdict since there was sufficient evidence in the record to show that Johnson was negligent and failed to follow Town’s plans.

Owner Who Pays Contractor After Receiving Subcontractor’s Lien Notice Becomes Personally Liable to Subcontractor, Even Though Owner Retains More than Lien Amount

Jan 01 2007

O & M Indus. v. Smith Eng’g Co., 360 N.C. 263, 624 S.E.2d 345 (2006)

In this case, the subcontractor served a notice of claim of lien on funds owed to it by the contractor. The owner paid the contractor after the subcontractor served notice, but also retained funds in excess of the subcontractor’s lien. The subcontractor sued when neither the contractor nor the owner paid it. The subcontractor moved for summary judgment, alleging that the owner was personally liable because it paid the contractor after the subcontractor served notice. The owner also moved for summary judgment. The trial court granted the subcontractor’s motion for summary judgment and denied the owner’s. The Court of Appeals reversed, but the North Carolina Supreme Court reversed the Court of Appeals, holding, among other things, that the Court of Appeals failed to properly apply the applicable lien statutes, and that the owner’s retention of funds exceeding the lien did not relieve the owner of personal liability.

New York Public Policy Against Pay-If-Paid Provision Does Not Apply to Contracts Governed by Jurisdictions That Do Not Share That Policy

Jan 01 2007

Welsbach Elec. Corp. v. MasTec N. Am., Inc., 7 N.Y.3d 624 (2006)

Welsbach involved a general contractor engaged to construct a telecommunications network in New York. The agreement between the general contractor and sub-contractor included a pay-if-paid clause and a Florida choice of law provision. The New York Court of Appeals decided that New York’s public policy against pay-if-paid contract provisions was not so fundamental that it would override the parties’ choice of law.

The significance of this ruling is that it is now possible for a subcontractor to find that its lien rights are imported if it does business under the law of a non-West-Fair state.

Court Finds Contractor Has No Claim for Implied Indemnity or for Contribution Against Subcontractors

Jan 01 2007

Kaleel Builders, Inc. v. Ashby, 161 N.C. App. 34, 587 S.E.2d 470 (2003)

In this case, homeowners hired an architect to design their residence, and also hired Kaleel Builders, Inc., as contractor to construct the residence. Kaleel in turn hired several subcontractors. In the fall of 1996, the homeowners halted construction, and filed an arbitration demand against Kaleel alleging defective construction, including the work by the subcontractors and the design/supervision of the architect. While the arbitration was pending, Kaleel filed a complaint seeking indemnification and/or contribution against the subcontractors and architect in July of 2001. The trial court dismissed the claims against the subcontractors. The claims for breach of warranty and breach of contract were dismissed on statute of limitations grounds, and the claims for negligence, indemnity, and contribution were dismissed for failure to state a claim. The trial court also granted summary judgment for the architect. The North Carolina Court of Appeals affirmed the trial court’s decision on all claims.

Statute Adopting Several Liability in Tort Actions Does Not Apply to Contractual Indemnification Actions

Jan 01 2007

Moen Co. v. Island Steel, 128 Wash. 2d 745, 912 P.2d 472 (1996)

Here, a general contractor, Moen, who had settled with an employee of the subcontractor, Island, injured in an accident at a construction worksite sought contractual indemnification from the subcontractor pursuant to RCW 4.24.115. The principle issues in this case were: (1) whether the contractor could enforce its indemnification agreement in which the subcontractor waived its employer immunity under RCW Title 51 and which purports to shift liability to the extent of the subcontractor’s negligence (despite RCW 4.22.070 which adopts several liability in tort cases), and (2) to what extent the subcontractor was liable to contractor, if at all. Read More

New York Law Allows Subcontractors’ Assignees to Recover From Sureties

Jan 01 2007

Quantum Corporate Funding, Ltd. v. Westway Indus., Inc., 4 N.Y.3d 211 (2005)

In Quantum Corporate Funding, a subcontractor sold its accounts receivable to an assignee. When the general contractor failed to pay its debts, the assignee, or factor, brought suit against the surety for the State Finance Law § 137 payment bonds that the general contractor had been required to purchase. The surety refused payment and the factor brought suit. Though the statute is silent on who may sue on the bond, the Court of Appeals ruled that State Finance Law § 137 allows subcontractors’ assignees to recover payment from bond sureties.

Catagory:The Americas