Construction Law – Page 26 – Legal issues, news, and regulations concerning the construction industry

Court rules against contractor that wrongfully demanded early payment in contradiction of the payment schedule it signed

Nov 25 2010

Remodeling Constr. Serv. v. Minter, 78 A.D.3d 1677, 913 N.Y.S.2d 446 (NY App. Div. 4th Dep’t Nov. 19, 2010)

In Remodeling Constr. Serv. v. Minter, a construction company was denied further payment where it demanded more payment than it was contractually owed. Defendant hired plaintiff construction company to rebuild defendant’s house. The parties agreed in writing that payment would be meted out according to a payment schedule. According to the schedule, the drywall installation was a prerequisite to the fifth payment. After completing all the work necessary to receive the first four payments, and having received the first four payments, plaintiff then refused to install the drywall. Plaintiff refused to continue unless defendant paid plaintiff additional sums. Defendant refused and plaintiff brought suit for breach of contract. The court found that according to the contract, plaintiff was entitled only to the first four payments. The court held that plaintiff breached the contract by refusing to perform and wrongfully demanding the fifth payment. Plaintiff’s claim was dismissed.

K&L Gates Construction and Engineering Practice Secures National First-Tier Ranking in U.S. News “Best Law Firms” Rankings

Sep 15 2010

Global Law firm K&L Gates LLP has earned more first-tier rankings than any other law firm in the inaugural edition of the U.S. News & World Report – Best Lawyers rankings of the “Best Law Firms,” available online at www.usnews.com/bestlawfirms and on newsstands in the coming weeks. Based on surveys of Nearly 9,000 lawyers and more than 9,500 clients throughout the United States, including representatives of every Fortune 100 and more than half of Fortune 1000 companies, the report includes ranking of law firms in almost 40 practice areas and approximately 175 metropolitan and state areas.

Along with its first-tier rankings in surveyed metropolitan and state areas, K&L Gates was also recognized with national first-tier rankings in the Corporate Law, Securities/Capital Markets Law, Mutual Funds Law, Antitrust Law, Employment Law – Management, Private Funds/Hedge Funds Law, and Construction Law categories.

To read the full press release, click here.

Going Green: Illinois Adopts Laws Aimed at Promoting Sustainable Development

Sep 01 2010

By: Larry Eiben, K&L Gates, Chicago

The State of Illinois is part of the nationwide trend to codify new construction standards for energy efficient buildings and sustainable development. Illinois has adopted the Illinois Energy Conservation Code, which became effective January 29, 2010 and the Green Buildings Act, which became effective on July 24, 2009. The goals of these laws are to reduce energy consumption, protect the environment, cut pollution and promote sustainable development.

“Agreements to Agree” May Not be Enforceable

Aug 27 2010

By: Todd Reuter, K&L Gates, Spokane/Coeur D’Alene

Spokane Structures, Inc. v. Equitable Inv., LLC, 148 Idaho 616, 226 P.3d 1263 (2010)

"Agreements to agree" may not be enforceable. Here, a contractor signed a one-page document entitled “Design/Build Agreement” that provided that the contractor would “design, engineer, and draft plans in preparation of all documents/drawings required to enable the owner and contractor to agree on a final design and cost of construction to be performed.” The contractor presented a final design plan to the landowner, but the landowner decided not to follow through with the project. The contractor sued for specific performance, trying to force the owner to pay him for work.

Green Building is Big Business and Carries Potentially Big, But Manageable, Liability Risks

Aug 26 2010

By: Josh M. Leavitt, K&L Gates, Chicago

Introduction

While there are those who debate whether green building is effective from an environmental impact point of view, no one seriously debates that it is big business. One researcher reports green expenditures were approximately $10 billion in 2005 and between $36 billion and $49 billion in 2008. Hupp, Recent Trend in Green Buildings Laws: Potential Preemption of Green Building and Whether Retrofitting Existing Buildings Will Reduce Greenhouse Gases and Save the Economy, The Urban Lawyer Vol. 41, No. 3 (Summer 2009). Paul Primavera, Senior Vice President of the Lockton Companies predicts that “within the next three to five years certified green buildings will account for 25 percent of all new construction in the United States. Green Buildings: New Construction Concepts and Risks, (Fall 2009) available at http://www.lockton.com/Insights-And-Publications/White-Papers

Certainly political forces and public awareness are at work, but there is no doubt that the green building explosion has been driven by the belief that it is profitable. The work product of researchers and consultants projecting benefits from green building improvements, the sales representations of green building product manufacturers and public and private incentive programs have fed those expectations. Project owners expect to receive specific and often quantifiable benefits from their investments, including energy savings, reduced overhead and maintenance, more tenant interest, increased lease income, and government incentives (such as tax credits, low-interest loans, density bonuses, zoning waivers, fast-track permitting, and reduced permit fees), and other financial incentives. They also expect less quantifiable benefits such as energized work forces, general goodwill, and marketing benefits.

To read more, click here.

K&L Gates Partner Gregory Andre Co-Authors Chapter about Negotiating Construction Contracts

Aug 17 2010

Chicago Partner Gregory Andre, with the help of Associate Michael Roth, made a significant contribution to a recently published resource on construction law by co-authoring a lengthy chapter about negotiating construction contracts. The chapter, aptly entitled “Negotiating Construction Contracts”, provides a detailed discussion of the topic and addresses a myriad of underlying issues, including information to be provided by the owner and the contractor, changes in the work and change orders, delay, claims disputes, default, and many others.

Available from the Illinois Institute of Continuing Legal Education, the 2010 edition of Construction Law: Transactional Considerations can be purchased by clicking here.

Failure to Provide all Necessary Minority and Woman-Owned Business Enterprise Subcontracts Within Reasonable Time After Subcontract Award is Material Breach of Contact

Aug 15 2010

Jay Dee/Mole Joint Venture v. Mayor and City Council of Baltimore, 725 F. Supp. 2d 513 (D. Md. 2010)

In an interesting decision issued by the United States District Court for the District of Maryland, the Court held that a prime contractor was in material breach of its contact with the City of Baltimore for not entering into promised subcontracts with Minority and Women-Owned Disadvantaged Businesses.

Under Maryland law, state and local public contracts typically require participation by minority, social, economic and woman-owned disadvantaged businesses (collectively “DBs”). Such participation is usually accomplished by subcontracts, which are typically entered into post prime contract award. To qualify as a bidder/offeror, however, the prime contractor must make certain certifications and representations as to how the DB participation requirements are to be met.

The Availability in the UAE of Liens to Secure Payment under Construction Contracts

Aug 11 2010

By Neal R. Brendel, Amy L. Barrette, & Wadih El-Riachi, K&L Gates, Dubai

This article was originally published in Arab Law Quarterly.

Abstract
While much attention has been devoted to curbing the rise of lawsuits surrounding Dubai’s struggling construction industry, surprisingly little attention has been focused on another option available to contractors who seek payment for failed or troubled projects. Contractors, architects, and engineers may find relief under a seldom-reported UAE federal law that establishes qualified rights for contractors to secure payment for work under non-governmental contracts by filing a priority lien against the project itself. This article discusses the remedy, know in many common-law jurisdictions as ‘mechanic’s liens’ or ‘builder’s liens’, and why it is important for contractors to be familiar with the applicable Civil Code and Civil Procedure Code provisions. Those who first exercise their lien rights and seek to register liens with the Land Department will be treading new ground and will want to be well-prepared and educated on their rights provided under existing law.

To read the full article, click here.

Fifth Circuit Disallows Equitable Defenses to Limitations Under Texas Performance Bond Statute

Jul 23 2010

Hartford Fire Ins. Co. v. City of Mont Belvieu, Texas, No. 09-40586 (5th Cir. July 13, 2010)

By: David Coale & Billie Ann Maxwell, K&L Gates, Dallas

This case shows why it is important for governmental entities, their contractors, and performance bond providers to be aware of statements among the parties for limitations purposes, and the application of equitable defenses, in the context of the one-year limitations period under Texas Government Code § 2253.078(a). The lessons of this case apply fully to similar statutes in other jurisdictions.

California Court of Appeal Clarifies Definition of Retention Payments Under Civil Code § 3260

Jul 07 2010

Yassin v. Solis, 184 Cal. App. 4th 524 (Cal. Ct. App. 2010)

By: Carlo L. Rodes and Brett D. Bissett, K&L Gates, Los Angeles

In this case, the court of appeal set forth a definition for retention that applies whenever a contractor seeks an award of penalties for improperly withheld retention under a California prompt payment statute.

The plaintiff-contractor, Diaa Yassin was hired by the defendants-owners, (collectively “Solises”), to improve the Solises’ home. Under the contract, Yassin was to receive a series of payments throughout various stages of construction and the last payment was to be made upon completion of the work and before occupancy. Yassin ultimately sued the Solises for money allegedly owed under the contract. Although the court addressed other matters, a principal issue was the status of the final two payments of $15,000 and whether those amounts qualified as retention payments under California Civil Code § 3260. Under section 3260, if an owner fails to make retention payments within the time prescribed by that section, a contractor may recover a penalty in the amount of 2 percent per month on the improperly withheld amount plus attorney fees.