Contracts

Subscribe to Contracts via RSS

In Conway Construction Company v. City of Puyallup, No. 80649-1-1 (May 4, 2020), the Washington Court of Appeals, Division 1, adopted Oregon’s Shelter Products, Inc. v. Steelwood Construction, Inc., precluding certain claims for defects in termination cases and limiting the justification for termination to those listed in the termination notice.  It also held that Washington’s settlement statute protecting public owners, RCW 39.04.240, trumps an attorney fee provision in a contract.

In Conway, the City of Puyallup (“City”) contracted with Conway Construction Company (“Conway”) to construct certain roadway improvements.  During the project, the City became concerned about construction defects.  The City issued notices to Conway expressing its concerns.  The City also observed unsafe work conditions and reported the safety violations to the Washington State Department of Labor & Industries.  After issuing a series of notices, the City terminated Conway because of its defective work and safety violations.

On March 23, 2020, Oregon Governor Kate Brown issued Executive Order No. 20-12 directing Oregonians to “Stay Home, Save Lives.”

Unlike “stay home” orders in some other states—which prohibit the operation of all business unless specifically exempted—the Oregon Order prohibits the operation of specific categories of businesses identified in the Order (e.g., amusement parks, aquariums, etc.).  Presumably, this means that if a category of business is not identified, then it is not subject to the prohibition.

Because “construction” is not specifically identified as a prohibited business, it is reasonable for owners and contractors to presume that their projects in Oregon may continue for the time being.  While not explicitly part of the Oregon Order, some are characterizing it as  “permission by omission,” meaning that the omission of a business on the prohibited business list means you have permission to operate that business.  But proceeding under that assumption is not entirely without risk, and there are other important considerations for both owners and contractors to bear in mind, including:

In response to COVID-19, construction projects in California are currently subject to a statewide Executive Order and potentially other similar (or dissimilar) “stay home” or “shelter in place” orders or directives issued by counties and cities. Under the California statewide order, only businesses needed to maintain continuity of operations of identified federal critical infrastructure sectors (click here for the list) may continue to operate. Construction is not identified as a separate “critical infrastructure sector,” but many construction projects fall under the umbrellas of other sectors, such as “critical manufacturing,” “energy,” “healthcare,” and “commercial facilities.” The California State Public Health Officer also designated the following “essential workforce” members of relevance to the construction industry (this is not an exhaustive list):

  • “Construction Workers who support the construction, operation, inspection, and maintenance of construction sites and construction projects (including housing construction)”
  • “Workers such as plumbers, electricians, exterminators, and other service providers who provide services that are necessary to maintaining the safety, sanitation, construction material sources, and essential operation of construction sites and construction projects (including those that support such projects to ensure the availability of needed facilities, transportation, energy and communications; and support to ensure the effective removal, storage, and disposal of solid waste and hazardous waste)”

One challenge somewhat unique to owners and contractors is that the applicable orders are generally directed at identifying “essential businesses” or “critical businesses,” while owners and contractors may have a mix of projects—with some likely essential (such as construction of a hospital), others likely not (such as construction of a nightclub), and many falling in a grey area in between. When analyzing “grey area” projects it is recommended to focus on the traits of the particular project rather than attempt to understand whether your business—which may include a range of projects—can generally continue to operate.

For most in the industry, when we think about a standard construction contract, we envision the construction documents being drafted by the architect and other design consultants.  We tend to view the project as design-price-build, unless an alternative procurement mechanism has been selected such as design-build.  Consistent with this design-price-build model, the contractor’s review of…

Scammers are always seeking new ways to target victims for Business Email Compromise (BEC) scams, where they leverage email to try to convince you to give them credentials, send them confidential information like W2s, send them money by changing things like direct deposit instructions, or give any other data that can help them profit from committing fraud.  They are getting more and more sophisticated in their deceptions, and targeting those areas they see as ‘weak links.’

Construction companies however face a particular threat, as there are a number of services and private and government web sites to which companies can subscribe to learn about construction projects that are open to bid. Often, the winning bidder ends up becoming public knowledge – either because that information is posted publicly, or because the contract company advertises they were awarded the project. And of course, these contracts always carry a price tag that is attractive to scammers.

Fraudsters can use information from these same web sites along with other research to learn which construction companies have applied for and ultimately won bids. The higher the price tag, the bigger the target. Once the scammers get their fake web site set up (they can use tools to copy the real contractor’s web site almost exactly), they’ll then send an email to the victim posing as the contractor, including a direct deposit form (likely doctored with the contractor’s logo) and instructions to change payment information to a new account controlled by the scammers.  They might even try to play this trick on the construction company and pose as a vendor the construction company regularly pays. Once the money is transferred, it can be difficult – and often impossible – to recover.  Even if the victim has cyber insurance, whether or not any losses are covered depends on the policy.  Any access and information they obtain can also compromise the construction company’s information security, potentially increasing the likelihood of privacy breaches, ransomware attacks, or other serious security risks.

Parties involved in a construction project can expect to spend much energy and effort to finalize the terms and conditions of a contract. Although those terms usually carry great weight in any contract dispute, of equal or greater importance can be the parties’ actions and course of dealing during construction. A lack of strict adherence…

Some economic indicators point to a recession in the not-too-distant future, and parties involved in construction projects should take steps to avoid (or perfect) liens and protect their rights if there is a downturn. The complexities of Oregon’s lien laws are best negotiated with the assistance of experienced counsel. In my inaugural article for the…

On December 13, 2019, I will be giving a presentation on construction-related topics arising from commercial lease improvements.  The presentation is part of a two-day seminar on Advanced Commercial Real Estate Leases, co-chaired by my colleague, John A. Fandel, and hosted by Law Seminars International.  Topic will include insurance coverage, mechanic’s liens, scheduling, indemnity, safety,…