Surety Bonds vs. Subcontractor Default Insurance

If a contractor cannot meet deadlines on a construction project or a subcontractor pulls out of a new project bid in order to pursue a more attractive opportunity, the project owner and/or prime contractor face potentially significant damages, which can include corrective work, costs of completion or substitute performance, and delay. In my latest column for the Daily Journal of Commerce, I discuss the characteristics of the two most important options that exist for owners and prime contractors to protect themselves against such risks – performance bonds and subcontractor default insurance (SDI) – and provide some suggestions to help them pick the appropriate one. Read the full article here.

Originally published as an Op-Ed by the Oregon Daily Journal of Commerce on September 16, 2021.

Construction Contract Termination Provisions: Recent Washington Case Examines Parties’ Rights

The importance of carefully drafting, and following, a construction contract’s termination provisions was made clear for project owners and contractors by a recent Washington Supreme Court decision, Conway Construction Co. v. City of Puyallup. The city contracted with Conway to build a major roadway, but when the city lost confidence in Conway’s work, it issued the contractor a notice of termination for default and withheld payments. In the ensuing case, the Washington Supreme Court sided with Conway, holding that the termination was improper because evidence showed that Conway did not neglect or refuse to correct the defects – as was required by the contract – and affirming that the city could not claim an offset for defective work that was discovered after termination. In an article for the Daily Journal of Commerce, we provide a few tips for owners and contractors that may reduce their risk of claims and preserve their right to damages, in light of the Conway decision. Read the full article here.

Originally published as an Op-Ed by the Oregon Daily Journal of Commerce on Aug. 19, 2021.

A Key Battleground: Material Price Escalations and Supply Chain Disruptions

At the forefront of concerns for those in the construction industry is the escalation in material prices and disruptions to supply chains that were in large part a byproduct of the pandemic. Project owners and contractors want to understand their rights with regard to these risks and also how the risks should be apportioned. In my latest column for the Daily Journal of Commerce, I look at how contractor risk is shared using a variety of methods in several types of commonly used construction contracts. I also provide some suggestions to help parties to a stalled contract negotiation find an outcome in which both the owner’s and contractor’s interests are aligned. Read the full article here.

Originally published as an Op-Ed by the Oregon Daily Journal of Commerce on July 16, 2021.

Don’t Be Late! (But Assume That Your Construction Project May Be)

Today, the construction industry faces a myriad of challenges – as well as the COVID-19 pandemic, rapidly increasing construction material costs, labor and material shortages, and a hot housing market are potential obstacles for project owners and contractors that, despite their best efforts and intentions, could prevent them from completing their construction projects on time. In my latest article for the Daily Journal of Commerce, I look at some steps owners and contractors can take to mitigate the risk brought by these challenges. Read the full column here.

Originally published as an Op-Ed by the Oregon Daily Journal of Commerce on June 17, 2021.

Liability Laws Still Require Contractors to Follow Safety Guidelines

About a year ago, I wrote a column for the Daily Journal of Commerce about effective COVID-19 safety policies and what contractors can do to maximize job site safety to comply with developing Occupational Safety and Health Administration (OSHA) and Centers for Disease Control and Prevention (CDC) COVID-19 safety standards and guidelines. In the interim,  much has changed but much has remained the same – OSHA and CDC guidance, as well as how businesses must operate during a pandemic, continues to evolve, but the fact remains that contractors still need to make their job sites safe and take steps to prevent their employees and clients from contracting COVID-19 on the job site or at the office. In my latest column for the DJC, I look at a few of the liability issues facing contractors and outline a few steps for them to protect themselves from such liability. Read the full column here.

Originally published as an Op-Ed by the Oregon Daily Journal of Commerce on May 20, 2021.

Construction Project Scheduling & Delay Claims Seminar

On June 2, 2021, I will co-chair The Seminar Group’s Construction Project Scheduling & Delay Claims live webcast seminar.  The seminar will include a panel of knowledgeable lawyers with broad experience litigating scheduling and delay claim disputes.  Click here to learn more and to register online.

Webinar: Navigating a Financially Troubled Project During Uncertain Times

On June 11, I will be co-chairing and my colleague Colm Nelson will be a panelist for “Navigating a Financially Troubled Project During Uncertain Times,” a full-day webinar presented by the WSBA Construction Law Section in partnership with Stoel Rives. Colm will be on a panel that will cover claims and claim defenses related to COVID-19. Other topics include:

  • One-hour ethics discussion
  • Discussion of bankruptcy and receiverships
  • Overview of Washington lien law
  • COVID-19 Impacts on the construction industry and workforce
  • Judicial panel — perspectives on how coronavirus has changed trial and appellate practice and how they will continue to evolve
  • Insurance panel discussion
  • Annual case law and legislative updates

You can find out more about the event and register by clicking here. CLE credits are available.

Pandemic Creates Cause to Rethink Overlooked Contract Provisions

The construction industry has proved adaptable over the course of the pandemic — owners and general and trade contractors have worked closely to ensure that work continued, while keeping workers safe and complying with the various government-ordered and -recommended practices intended to slow the spread of COVID-19. By now, most owners and contractors are well versed on the importance of force majeure provisions in their contracts. But the pandemic has also shone a light on other often overlooked provisions.  In my latest column for the Daily Journal of Commerce, I discuss these provisions as well as provide some suggestions on managing impacts and claims during a pandemic. Read the full article here.

Originally published as an Op-Ed by the Oregon Daily Journal of Commerce on April 15, 2021.

Benefits and Risks of Involving a Project’s Contractor in The Design

The roles of designers and contractors are being combined for more and more construction projects, an approach that comes with both benefits and risks. Several methods of project delivery are commonly in use, none of which is entirely exclusive — different projects may include different and overlapping roles for owner, designer and contractor. In my latest column for the Daily Journal of Commerce I compare three methods of project delivery — “design-bid-build,” construction manager” or “CM,” and “design-build” — and outline some advantages, and risks, inherent to each as well as means of protection against the risks. Read the full article here.

Originally published as an Op-Ed by the Oregon Daily Journal of Commerce on March 18, 2021.

New Washington Case Strictly Construes Lien Statute and Rejects Warranty Work as Basis to Extend Lien Filing Period

In its March 11, 2021 opinion, Division Three of the Washington Court of Appeals considered whether the 90-day period to record a claim of lien is extended by a contractor performing work after substantial completion to correct nonconforming work – usually referred to as “warranty work.”  In the case of Brashear Electric, Inc. v. Norcal Properties, LLC, the Court strictly construed the statutory term “repairing” to exclude the contractor’s correction of its own work and rejected the notion that warranty work extended the 90-day timeframe to file a lien claim.

Norcal Properties, LLC (“Norcal”) and Blue Bridge Properties, LLC (“Blue”) own adjacent properties.  Norcal and Blue separately contracted with Vandervert Construction (“Vandervert”) to construct a building on each property.  The prime agreements’ substantive provisions were identical.  Vandervert subcontracted with Brashear Electric, Inc. (“Brashear”) to work on both projects.

Under the prime agreements, Vandervert promised to correct nonconforming work up to a year after substantial completion.  Vandervert’s subcontracts with Brashear required Brashear to assume the prime agreements’ warranty provisions. Continue Reading

LexBlog