Construction Law – Page 29 – Legal issues, news, and regulations concerning the construction industry

Constructing liability: Maintaining corporate protection

Mar 09 2009

Fort Worth Business Press, March 9, 2009
By K&L Gates Partner, David Coale

A critical component is shipped from Asia, sent across Texas by a distributor, and used on a Fort Worth construction project before it breaks and causes weeks of delay. Who in this “stream of commerce” may be responsible?

The owners of a corporation are generally protected from liability for the acts of the company. Even so, under the “single business enterprise” doctrine, Texas law once held that a company could be responsible for the liability of another if they shared a name or operations such as accounting, employees, offices, and finances.

Read the entire article here.

Court Declines to Find Construction Company “Statutory Employer” of Injured Worker, Denies Construction Company’s Motion for Summary Judgment

Feb 17 2009

Baugh v. Gale Lim Holdings, Inc., 2009 WL 33149 (D. Idaho Jan 5, 2009)

In this case, Gale Lim Construction contracted with the State of Idaho to repair portions of the Tin Cup Highway. Lim contacted Silver Star Communications before excavating, as required, and Silver Star then sent its employee, John Baugh, to the jobsite to mark its fiber optic cable. Baugh was injured and brought a tort action against Lim.

Lim filed a motion for summary judgment claiming that worker’s compensation law made it a "statutory employer" of Baugh and therefore immune from tort claims. Baugh defended the motion by arguing that immunity was not applicable in this case where there was no contract between Lim and Silver Star. Holding that a question of fact remained as to the existence of a contract, the court denied the motion.

Court Determines That A Builder May Seek Equitable Indemnity Against A Manufacturer Under California’s Right to Repair Act

Feb 03 2009

Greystone Homes, Inc. v. Midtec, Inc. 168 Cal.App.4th 1194 (Cal. Ct. App. 2008)

California’s Right to Repair Act (Civil Code section 895 et. seq. or the “Act”) establishes a set of standards for residential construction and provides tort liability for failing to meet those standards. The Act was enacted in response to the California Supreme Court’s decision in Aas v. Superior Court, 24 Cal.4th 627, 636 (2000), which held that “[i]n actions for negligence, a manufacturer’s liability is limited to damages for physical injuries; no recovery is allowed for economic loss alone.” In other words, under Aas, the “economic loss rule” precluded recovery for damages such as “the difference between price paid and value received, and deviations from standards of quality that have not resulted in property damage or personal injury.” The Act, however, abrogated the Aas decision by permitting a homeowner that established a violation of the Act to recover economic losses from a builder, among others, without having to show that violation caused property damage or personal injury.

In the recent case of Greystone Homes, Inc. v. Midtec, Inc., the California Court of Appeal ruled on the following two issues that had not been previously addressed under the Act: (1) whether a builder may recover for economic loss caused by a product manufacturer’s violation of the Act through a claim for equitable indemnity against that manufacturer; and (2) whether that builder may bring a direct action for negligence against the manufacturer to recover its economic losses. As discussed below, the court concluded that a builder may bring an action for equitable indemnity to recover economic loss as a result of a manufacturer’s violation of the Act, but a direct claim for negligence is not permitted.

K&L Gates Arbitration World, January 2009

Jan 15 2009

Arbitration World is an update for clients and contacts on recent development in international arbitration law and practice.

From the Editors

Welcome to the 7th edition of Arbitration World, a publication from K&L Gates’ Arbitration Group which highlights significant developments and issues in international and domestic arbitration for executives and in-house counsel with responsibility for dispute resolution.

In This Issue

• News from around the World
• Prospects for Investment Treaty Claims Arising Out of the Financial Crisis
• Arbitration Cases in the U.S. Supreme Court’s 2008-2009 Term
• Anti-suit Injunctions in Support of Arbitration Agreements – Are They Lawful in Europe?
• Is International Arbitration Delivering?
• Arbitration in Dubai: New Structures and Legal Instruments
• Arbitration Clauses in Consumer Contracts – Recent English Decisions
• Ordre Public in Enforcement and Annulment of Arbitral Awards in Germany
• Outer Bounds of Arbitrability in Texas
• Sports Arbitration Update

View the January 2009 Edition here.

Idaho’s High Court Analyzes 15 Factors for Determining Whether a Worker is an Independent Contractor or an Employee

Jan 14 2009

Excell Constr., Inc., v. Idaho Dep’t of Commerce and Labor, 145 Idaho 783, 186 P.3d 639 (2008)

This appeal arises out of an Idaho Industrial Commission finding that certain sheetrock workers hired by Excell Construction were employees rather than independent contractors. At issue was whether Excell would be required to pay $6,353 in unemployment insurance taxes and penalties. On appeal, the Idaho Supreme Court held the workers were independent contractors and reversed the Commission’s finding.

Contractual Limitation of Liability in Engineer / Survey Contract Upheld

Jan 06 2009

Blaylock Grading Co., LLP v. Smith, 658 S.E.2d 680 (N.C. Ct. App. 2008)

In this case, a grading contractor sued a surveyor (who was also an engineer) for breach of contract and negligence regarding mistakes in surveying work which resulted in the contractor having to incur costs to import fill to raise the elevation of the site. The contract between the contractor and surveyor contained a provision limiting the surveyor’s liability to $50,000. The surveyor unsuccessfully moved for partial summary judgment based on the limit of liability. Following a jury verdict against the surveyor for $574,714, the surveyor moved for judgment notwithstanding the verdict, which the trial court denied, ruling that the limit of liability was void as against public policy. The North Carolina Court of Appeals reversed the trial court, holding that the limitation of liability was valid and enforceable.

Foreign Contractor’s Failure to Register with Secretary of State Does Not Void Contract or Arbitration Clause

Dec 22 2008

City of Westfield v. Harris & Assocs. Painting, Inc., 567 F. Supp. 2d 252 (D. Mass. 2008)

In this case, the Federal District Court for the District of Massachusetts allowed a contractor’s motion to compel arbitration and remanded the case to arbitration despite the fact that the contractor failed to register as a foreign corporation with the Massachusetts Secretary of State as required by M.G.L. c. 30, § 39L.

Inclusion of Disallowed Items in Lien Not Always Bad Faith

Dec 20 2008

Politano v. GPA Constr. Group, 2008 WL 515661 (Fla. Dist. Ct. App. Dec. 10, 2008)

In Politano, an owner moved to discharge a contractor’s lien for willful exaggeration based on the contractor’s inclusion of overhead and profit. The Third DCA affirmed the trial court’s decision to reduce the amount of the lien accordingly, but not discharge the lien based on the finding that the disallowed items included in the lien were a result of mistake not willful exaggeration. It rejected the owner’s argument that a lien is willfully exaggerated if it includes non-lienable items without regard to ignorance or good faith, or that a court’s reduction of a lien amount necessarily means the original lien amount was fraudulent.

Court Rules Contractor’s Failure to File Action or Counterclaim to Enforce Lien within 20 days in Compliance with the Statute Requires Discharge of the Lien

Nov 05 2008

Brookshire v. GP Constr. of Palm Beach, Inc., 99 So.2d 179 (Fla. Dist. Ct. App. 2008)

In Brookshire, an owner filed a complaint to discharge a contractor’s lien and the clerk issued an order to show cause under Florida Statute Sec. 713.21(4). Accordingly, the contractor had 20 days to show cause as to why his lien should not be enforced by action or vacated and cancelled of record. Failure to do so would result in cancellation of the contractor’s lien. The contractor filed a motion to compel arbitration and set it for hearing within the 20 day period, but did not respond to the show cause order. The contractor argued that the motion to compel satisfied Section 713.21. The appellate disagreed and directed the trial court to discharge the lien.

The contractor had argued that the motion to compel arbitration satisfied Section 713.21 because the dispute would ultimately be arbitrated and the contractor wanted to avoid any issue as to whether he was waiving arbitration. The court held that Section 713.21 does not allow for exceptions, such as extensions of time, nor does it leave the court with any discretion to excuse a failure to comply. The court also noted that any concern regarding waiving arbitration could have been satisfied by contemporaneously filing a motion to arbitrate those issues that were allegedly subject to arbitration.

Court Holds Action on Performance Bond Accrues Upon Contractor’s Acceptance of Subcontractor’s Work and Payment for that Work in Full

Oct 25 2008

BDI Constr. Co. v. Hartford Fire Ins. Co., 2008 WL 4568075 (Fla. Dist. Ct. App. Oct. 15, 2008)

In BDI Construction Co., a subcontractor filed a third party action on a sub-subcontractor’s performance bond. The surety moved for summary judgment claiming that the agreed five-year statute of limitations under Florida Statute Section 95.11(2)(b) began to run when the subcontractor accepted the sub-subcontractor’s work as complete and paid for the work in full. The subcontractor on the other hand argued that the statute of limitations began to run when the entire project was completed and accepted by the owner. The subcontractor relied on the Florida Supreme Court’s opinion in Fed. Ins. Co. v. Southwest Florida Retirement Ctr., Inc., 707 So. 2d 1119, 1121 (Fla. 1998), which stated that Section 95.11 “as it applies to an action on a performance bond, accrues on the date of acceptance of a project as having been completed according to the terms and conditions set out in the construction contract.”