Karl Oles
Karl Oles is a member of Stoel Rives LLP practicing in the Construction and Design section of the Litigation practice group. Karl has experience in complex commercial litigation, including construction matters, business disputes and legal malpractice defense. His construction experience includes representation of owners, architects, engineers, contractors and subcontractors on major projects involving technical engineering issues and critical path scheduling. Karl has experience drafting and negotiating design and construction contracts for public and private clients on major commercial and alternative energy projects. He has also represented a wide variety of clients with commercial disputes outside of the construction context.
Washington Court Holds Statute of Limitations Doesn't Apply to Arbitration
Contributor: Stephen P. Kelly
In Broom v. Morgan Stanley DW, Inc., the Washington State Supreme Court held that state statute of limitations did not apply to a contractual arbitration. The arbitrators of an investment-related dispute had dismissed certain claims because plaintiffs failed to bring them before the applicable statutes of limitations lapsed. Analyzing the Washington statute of limitations and arbitration statutes, the court found that the legislature didn’t intend the term “action” in the statute of limitations – to include arbitration. Because of this, the court reasoned, the arbitrators weren’t authorized to apply the state statute of limitations to plaintiffs’ claims. The court made clear, though, that people can agree, by contract, to apply a state statute of limitations to arbitration provisions.
Construction and design contracts as well as many other types of contracts commonly specify arbitration as the exclusive forum for disputes, and commonly select what laws apply to the contract. This decision could affect a variety of construction-related disputes including construction defect and payment claims and the full impact of the decision remains to be seen. In the meantime, for a construction contract in Washington where arbitration is the forum for disputes, parties that want the Washington statutes of limitations to apply to the arbitration should make this clear.
Government Involvement Has Consequences (Part 2)
Here is list of laws that may apply to projects in which the federal government is involved.
These reflections about government involvement are prompted by recent changes to the Federal Acquisition Regulations that give federal contractors an affirmative duty to disclose any “credible evidence” that comes to their attention of (a) the violation of certain criminal laws (e.g., those involving fraud or bribery), (b) violations of the civil False Claims Act, and even (c) “substantial overpayments” from the government. Contractors are also required to train their employees to ensure that misconduct will be detected and reported. This regulation reminds us that working with the government can trigger serious legal issues. As public-private partnerships and other forms of government involvement become more common, it is important to find out whether the government is involved in your project and, if it is, what consequences that has for your company.
Government Involvement Has Consequences (Part 1)
In an effort to stimulate the economy, federal and state government agencies are seeking to promote new construction projects. This trend of government involvement in construction projects is likely to continue. When the government is involved, it is important to know whether this involvement causes public contracting laws to apply.
Governmental involvement in a construction project can range from outright ownership to a behind-the-scenes role in financing. Multiple governmental agencies may be involved in a single project. If you have a project in which a federal or state agency is involved, you risk substantial penalties for failing to follow applicable public contracting laws.
There are many federal and state laws that may apply if the government is involved in a project. In Part 2 of this post, I’ll link to a list of some of the federal laws.
Be Alert to New AIA Construction Contract Forms
Contractors and owners used to the pre-2007 AIA document forms should know that the AIA has revised its most popular forms and that the AIA software no longer supports the older versions. You may still see the older forms in Word or similar formats, but you won’t be seeing the official AIA document that automatically highlights changes from the official forms. That means you need to be more cautious about form contracts you receive that appear to be based on the older AIA forms. Changes from the official AIA versions won’t necessarily be highlighted. Construction lawyers have mixed feelings about the new AIA forms. They correct some provisions that didn’t work well in the past, but create some new concerns. As always, you need to consider the specific circumstances of your project before using any standard form contract.
Exciting Times at the Boring Machine
The $1 billion Brightwater wastewater treatment plant in north King County is experiencing delays. The attached video describes a problem with one of the large boring machines. The project, which includes several long tunnels and a central treatment plant, is divided up among several large contracts.
Unexpected Risk for Engineering Corporations
The Washington statute governing registration of engineers, RCW 18.43, establishes a licensing board with jurisdiction over disciplinary proceedings against engineers. Under RCW 18.43.130, a corporation may engage in engineering if the corporation submits an application to the board that designates a licensed engineer as “responsible for the practice of engineering by the corporation in this state [with] full authority to make all final engineering decisions on behalf of the corporation.” This statute may create problems for engineers who practice in S or C corporations.
While the apparent purpose of this statute is to make the “designated engineer” answerable to the board if the corporation departs from professional standards, a Washington trial judge recently ruled that the “designated engineer” was personally liable in tort for the negligent acts of corporate employees.
There is also a risk that the licensing board could conclude that, under the statute, the “designated engineer” must exercise his or her authority by personally making or confirming every engineering decision of the company. This would obviously be impractical for a large firm. The board has not had occasion to rule on this issue.
The statute provides that professional services corporations established under RCW 18.100 are exempt from the “designated engineer” requirement. Engineers in corporate firms practicing in Washington, or other states with similar licensing requirements, should consider whether changing to a professional services corporation will reduce their risk of unwanted consequences.
