On September 26 and 27, 2013, The Seminar Group will present its 18th Annual Oregon Construction Law seminar in Portland, Oregon. I will be speaking about Integrated Project Delivery, which is an emerging project delivery method emphasizing collaboration among project participants. Three of my partners also will be presenting: Guy Randles, program co-chair, will speak
Should Design Professionals in Washington File a Pre-Claim Notice to Protect Lien Rights? Yes!
Washington’s lien laws, like those of other states, set forth pre-claim notice requirements that, if not satisfied, may result in the forfeiture of lien rights. The applicable statute, RCW 60.04.031, presents an interesting array of “if-then” scenarios in which the notice requirements are imposed. Generally, unless falling under one of three exempted categories, RCW 60.04.031
Senate Bill 46 Shortens Repose Period for Claims Against Design Professionals
“Senate Bill 46” “Statute of Repose”
Beware the Economic Loss Trap in Construction Disputes
The Oregon Court of Appeals recently applied the so-called “economic loss rule” to a construction dispute (Marton v. Ater Construction Co., 256 Or App 554, __ P3d __ (2013)). Among other issues, the court decided whether the prime contractor’s negligence claim against its subcontractor was barred under the economic loss rule.
Under the
Contracting For Construction In Oregon? You Need to Know the Law
In my latest Daily Journal of Commerce Construction column, I discuss the need to know Oregon construction contracting law to avoid unwanted consequences. In Oregon, construction contracts are subject to a wide variety of legal requirements, many of which are often ignored or, in some cases, violated with disastrous results. Following link will provide a summary
SB 254A and Oregon’s CMGC Rules Are Overblown
Oregon Senate Bill 254A and the CMGC method generally garner more attention than is justified. Here is the background.
On a typical non-CMGC project, the general contractor will bid on a complete or nearly complete set of design documents. This is referred to as “design-bid-build.” In public construction, competitive bidding is required by statute to reduce expenditure of taxpayer funds. In the CMGC method, rather than awaiting a complete design, the contractor is chosen early and asked to (1) review the developing design of the architects and engineers, and (2) perform certain other planning and organizational work that theoretically benefits the project. The “early” work is generally considered the “CM” portion of the CMGC scope, while the post-bid or post-GMP (guaranteed maximum price) work is generally considered the “GC” portion.
What is so different about this process? Not much, really, but there are a couple of considerations that differ from traditional design-bid-build. First, because the CMGC is chosen before design is complete, the CMGC is not able to provide concrete pricing at the time it is selected; by the time the design is sufficiently complete to allow pricing, the CMGC has already been chosen. Critics argue (accurately) that this dynamic puts more leverage in the hands of the CMGC during price negotiations because the owner has now invested time and CM dollars in the CMGC and probably does not want to manage a second-round selection process to get a new contractor if the original CMGC’s price is not competitive. While this poses a theoretical problem for owners, the CMGC provides its percentage fee (markup) at the time of selection and is required to competitively bid all subcontractor work, reducing if not eliminating the concerns over cost control and negotiating leverage.
Sophisticated Parties? You May Shorten Both the Start and Length of the Statute of Limitations in CA Commercial Construction Contracts
Can parties waive both the commencement and length of the statutory limitation periods for construction defect actions? Yes, answered the Fourth Appellate District, by allowing the parties to contractually preclude the application of the “delayed discovery” rule that normally triggers the commencement of the limitation time period and affirming case law permitting the shortening of the 10-year latent limitation period to four years. The court did hold, however, that such waiver and shortening is permitted where there are sophisticated parties, in a commercial context, and perhaps that the contract must even be highly negotiated (or at least such negotiation is available).
On June 3, 2013, in Brisbane Lodging, L.P. v. Webcor Builders, Inc. (Cal. Ct. App., June 3, 2013, No. A132555) 2013 WL 2404154, the appellate court reviewed the trial judge’s granting of summary judgment in favor of the general contractor (“Webcor”) on the grounds that a provision in the 1997 version of the AIA 201 (General Conditions to the prime agreement between Owner and Contractor) unambiguously barred all claims, contract and tort, brought more than four years after substantial completion of the project, rather than four years after the Owner discovered the alleged breach or defect and within the 10-year statute of repose. The key language for both the trial court and the appellate court was found in provision 13.7:
“13.7 Commencement of Statutory Limitation Period
“13.7.1 As between the Owner and Contractor:
“.1 Before Substantial Completion. As to acts or failures to act occurring prior to the relevant date of Substantial Completion, any applicable statute of limitations shall commence to run and any alleged cause of action shall be deemed to have accrued in any and all events not later than such date of Substantial Completion ….” (AIA A201, Article 13.7.1.1 (Article 13.7.1.1), bolding and capitalization omitted.)
Don’t Threaten Me!
A 2013 decision from New York reminds us that threats can be costly. In Mometal Structures, Inc. v. T.A. Ahern Contractors Corp., from the Eastern District of New York, Mometal was hired by Ahern as structural steel subcontractor. The project was delayed for reasons that were not Mometal’s fault. Mometal tried to get the information and approvals
Is Your Contractual Arbitration Clause “Unconscionable” and Thus Unenforceable?
The Washington Supreme Court—in Gandee v. LDL Freedom Enterprises, Inc., 176 Wn.2d 598 (2013)—recently examined the validity and enforceability of a contractual arbitration provision and found, under the circumstances, that the clause was “unconscionable” and therefore unenforceable. Although the case did not occur within a construction setting, it nevertheless presents important lessons to consider when drafting, negotiating or complying with mandatory arbitration provisions in construction agreements.
In Gandee, a borrower, under a debt adjustment contract, brought suit against LDL Freedom Enterprises, Inc. (“Freedom”), seeking to recover damages based on alleged violations of the Washington Consumer Protection Act (the “CPA”) (RCW 19.86, et seq.) and the Debt Adjusting Act (RCW 18.28, et seq.). Id. at 601-02. Freedom moved to compel arbitration based on the following arbitration clause reflected in the parties’ agreement:
Arbitration. All disputes or claims between the parties related to this Agreement shall be submitted to binding arbitration in accordance with the rules of [the] American Arbitration Association within 30 days from the dispute date or claim. Any arbitration proceedings brought by Client shall take place in Orange County, California. Judgment upon the decision of the arbitrator may be entered into any court having jurisdiction thereof. The prevailing party in any action or proceeding related to this Agreement shall be entitled to recover reasonable legal fees and costs, including attorney’s fees which may be incurred.
Id. at 602 (brackets in original). In addition, the agreement contained a common “severability clause,” providing that “[i]f any of the above provisions are held to be invalid or unenforceable, the remaining provisions will not be affected.” Id.
When Is a Private Project a Public Work for Prevailing Wage Application in California?
In recent years, the Department of Industrial Relations (“DIR”), the Legislature and the California courts have expanded the application of the prevailing wage law to projects through the broad definition of a “public works,” beyond what most contractors, owners and even counsel would expect. While most involved in construction anticipate that any work directly for, or direct payment of funds by, a public entity would trigger the prevailing wage laws, several decisions, determinations and recent legislation have significantly expanded the prevailing wage reach over the last several years.
Very recently, the DIR determined that both the shell construction of a Volkswagen auto dealership, and the separate tenant improvements in that shell, were public projects subject to prevailing wage law due to the land transfer by the City to the developer “because the Land is a transfer of an asset of value for less than fair market price”.
Similarly, in May 2012, the DIR determined that a contractor involved in the $95 million privately funded development and construction of a new agricultural facility was subject to prevailing wage law, but for the application of the de minimis doctrine, when the contractor accepted the City’s “in lieu of fees” for the City required infrastructure improvements. The DIR determined that “[i]t does not matter that Company is performing infrastructure improvements itself or that Company could have elected to simply pay the fee and let the City perform the infrastructure improvement work. Company plans to accept the fee waiver. Therefore, it has received or will receive public funds within the meaning of subdivision (b)(4)”. For additional applications and coverage determinations, see also the DIR’s most recent determination. Previously in January 2012, the Legislature eliminated the applicability of the DIR’s 2010 determinations that solar photovoltaic power purchase agreements that include installation of leased equipment on public property were not public works through the passage of Labor Code section 1720.6. This statute specifically defines a public project in part to be the “construction or maintenance of renewable energy generating capacity or energy efficiency improvements,” if certain elements are triggered. See the DIR determinations from April 21, 2010, PW Case 2008-038 and 2009-005, for the prior analysis: http://www.dir.ca.gov/OPRL/PWDecision.asp. (See also Lab. Code, §§ 1720-1720.6.)