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Mathew L. Erlanger is an Associate at Cohen Seglias and a member of the Construction Group. He concentrates his practice in construction litigation and has experience assisting the Firm's construction industry clients with research and with the preparation of motions and briefs in various construction-related matters.

In Pennsylvania, it is well-established that a homeowner can assert claims for fraud and violation of Pennsylvania’s consumer protection statute – the Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) – against a contractor based upon the contractor’s representations, even absent any contractual relationship between the homeowner and the contractor. Essentially, where a contractor makes a representation on which reliance is “specially foreseeable” and the homeowner relies upon the representation and sustains damages as a result, the homeowner may have a claim against the contractor. This scenario often comes into play where a homeowner asserts a claim against the builder where the homeowner is not the initial purchaser of the home, but rather a subsequent purchaser.  Continue Reading Adams v. Hellings Builders, Inc.: PA Superior Court holds that a homebuilder can be liable for representations made in its promotional materials

In the recent case of Township of Salem v. Miller Penn Development, LLC, the Pennsylvania Commonwealth Court invoked the often overlooked doctrine of nullum tempus occurrit regi. Read literally as “time does not run against the king,” as a general rule, nullum tempus allows the Pennsylvania state government or agencies to sue government contractors at any time, regardless of a statute of limitations defense. Nullum tempus also applies to claims brought by local governments, such as school districts, municipalities and counties, but only if the local government 1) brings its claims in its governmental capacity and 2) seeks to enforce an obligation imposed by law, as distinct from one arising out of a voluntary agreement.

Continue Reading It’s Good to be King: Time to File a Lawsuit Does Not Run Against the Pennsylvania Government

In April, the New Jersey Supreme Court agreed to review the case of Waste Management of New Jersey, Inc. v. Mercer County Improvement Authority.  The matter concerns a defect in a bid submitted under the New Jersey Public Contracts Law (“LPCL”).  This case proves, yet again, that it is critical to pay close attention not just to the requirements of the public bidding laws, but also to the requirements contained in the bid specifications.

The LPCL has five mandatory items that must be included in a bid: (1) a bid bond, (2) a consent of surety, (3) a disclosure of corporate ownership pertaining to shareholders owning 10% of more of the corporate stock, (4) a list of certain required subcontractors and (5) an acknowledgment of the bidder’s receipt of any revisions to the bid documents.  Failure to include any of these five items is considered a fatal defect requiring rejection of the bid.  For all other bid defects, the New Jersey courts consider whether the defect is material and non-waivable based on a two-part test: (1) whether the waiver would undermine the public body’s assurance that the bidder will enter into and perform the contract according to its requirements and (2) whether the waiver of the defect would adversely affect competitive bidding by giving one bidder an advantage over other bidders?

In Waste Management, the bid specifications required bidders to submit a legal opinion regarding the enforceability of the contract to be executed by the Authority and the successful bidder.  The Authority included a form for this legal opinion in the bid documents, which consisted of three assurances: (1) the bidder had full corporate power to execute the contract, (2) the contract was binding on the bidder and (3) the contract was enforceable.

Republic Services of New Jersey, L.L.C. (“Republic”) was the low bidder.  Waste Management was the second lowest bidder.  However, with its bid, Republic’s counsel submitted a letter that addressed the three legal opinions and did not use the provided form.  Additionally, for the third opinion in the letter, Republic’s counsel concluded that certain provisions of the contract might be unenforceable but those questionable provisions did not substantially interfere with the intended benefits of the contract.  Due to the letter format and the additional language, the Authority considered Republic’s bid materially defective.

Because Waste Management failed to include the required disclosure of corporate ownership,  its bid was also rejected.  The Authority then re-bid the contract and Waste Management was deemed the low bidder.  Both Republic and Waste Management challenged the Authority’s decision to re-bid the contract and the trial court held that the Authority properly rejected the bids.

On appeal, the Superior Court, Appellate Division held that rejection of Waste Management’s bid for failure to disclose of corporate ownership was proper.  However, it reversed as to Republic.  Applying the two-part test for materiality, the court determined that Republic’s legal opinion did not deprive the Authority of its assurance that the contract would be entered into and performed according to its requirements.  Further, the court determined that the different letter format of the legal opinion would have no effect on competitive bidding.  As such, the court directed that the contract be awarded to Republic.  The Authority has appealed the Appellate Division’s ruling to the New Jersey Supreme Court, and we will report on the Supreme Court’s ruling when it is issued.

As should be evident from this article, the parties, including the public body, have spent thousands of dollars litigating what, to the outside, may seem like rather inconsequential details.  Because of the competitive nature of public bidding, any defect contained in a low bid, no matter how trivial, will likely result in a challenge from another bidder; especially when millions of dollars in new work are at stake.  As a result, it is critical to pay close attention to adhering not just to the required items under all public bidding laws, but also to the requirements contained in the provided bid specifications.  If you are unsure if your bid complies with either the public bidding laws or the bid specifications, please contact us before you submit it so that we can assist you in order to ensure that your bid is compliant.

 

Pennsylvania’s Home Improvement Consumer Protection Act (“HICPA”), which went into effect in 2009, generally requires that home improvement contracts be in writing and contain thirteen specific items (including the contractor’s home improvement contractor registration number, the date of the transaction and the name, address and telephone number of the contractor).  Absent inclusion of all items, the contract is not valid or enforceable against the owner.  This means that the contractor cannot assert a claim for breach of contract if the owner fails to pay for work performed.

Home Renovation

However, in the recent case of Shafer Electric & Construction v. Mantia, the Pennsylvania Supreme Court ruled that even if a contract fails to comply with HICPA, the contractor may still be able to recover the reasonable value for its services under the equitable theory of quantum meruit, or unjust enrichment.  What this means is that a homeowner is not excused from its obligation to pay the contractor simply because the home improvement contract does not comply with HICPA.

In Shafer, the homeowners engaged the contractor to build a garage addition onto their home.  The contract, however, did not comply with most of the requirements of HICPA.  After the contractor had performed work, a dispute arose and the parties agreed that the contractor would 1) invoice the homeowners for the work completed and 2) thereafter, discontinue its efforts.  Nevertheless, the homeowners refused to pay and the contractor filed suit for breach of contract and quantum meruit.  The homeowners moved to dismiss the action pursuant to HICPA.  The trial court granted the motion.  On appeal, the Pennsylvania Superior Court reversed as to the quantum meruit claim.  The homeowners then took a further appeal to the Pennsylvania Supreme Court.

The Supreme Court determined that HICPA does not preclude a non-compliant contractor from pursuing an action in quantum meruit.  Instead, HICPA only speaks to the enforceability and validity of home improvement contracts.  Further, under common law principles, a party is not precluded from bringing a quantum meruit action when one for breach of contract is unavailable.  Significantly, the court noted that the language of HICPA does not make any reference to a claim for quantum meruit being precluded and that it would be improper to insert words into HICPA that would extinguish a claim for quantum meruit.

Shafer is helpful for contractors in the event of noncompliance with HICPA.  However, it remains our strong recommendation to contractors that your home improvement contracts comply with HICPA.  Under quantum meruit, you can only recover the reasonable value of the services rendered and not necessarily the profit under the contract.  Additionally, a violation of any aspect of HICPA is also considered a violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, which could subject you to enhanced damages and attorney’s fees in the event that a homeowner asserts a claim against you.

If you are unsure about whether your home improvement contract complies with HICPA, please do not hesitate to contact us.

Jennifer M. Horn is a Partner at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate. 

Matthew L. Erlanger is an Associate in the Construction Group.

On April 29, 2014 an evenly divided Pennsylvania Supreme Court in Barrick v. Holy Spirit Hospital upheld a lower court ruling holding that communications between a party’s attorney and a party’s expert witness are exempt from disclosure during discovery.  This case was previously discussed in “Pennsylvania Supreme Court Evenly Divided on Discoverability of Attorney-Expert Communications“. In that blog post we noted that there was a proposed amendment to Pennsylvania Rule of Civil Procedure 4003.5 that would afford absolute protection from disclosure to attorney-expert communications and that it would be interesting to see what effect the order of the divided court would have on the proposed amendment.

File Protection

On July 10, 2014, the Supreme Court addressed the proposed amendment by officially amending Rule 4003.5.  Under new Rule 4003.5(a)(4), which goes into effect on August 9, 2014, a party may not discover the communications between another party’s attorney and any expert.  This is true regardless of whether the expert is expected to testify at trial.  Additionally, a party may not discover draft expert reports and any communications between another party’s attorney and experts relating to such drafts.

Based on the amendment, there is no longer any doubt.  Going forward, in any civil case in the Pennsylvania state courts, communications between an attorney and an expert are not discoverable.

Jennifer M. Horn is a Partner at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate. 

Matthew L. Erlanger is an Associate in the Construction Group.

On April 29, 2014, an evenly divided Pennsylvania Supreme Court issued an order affirming the Pennsylvania Superior Court’s decision in Barrick v. Holy Spirit Hospital. The ruling means that communications between a party’s counsel and a party’s expert witness remain exempt from disclosure during discovery.

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Barrick v. Holy Spirit Hospital

In this case, arising out of injuries sustained in March 2006 due to a collapse of a chair in a hospital cafeteria, there has been much consideration of the issue of whether documents containing communications between a party’s counsel and the party’s expert witness are “discoverable,” i.e., whether they have to be turned over to the other party in the lawsuit. Initially, the trial court concluded that the documents had to be turned over. The Superior Court went back-and-forth on the issue and ultimately a full panel of judges determined that communications between counsel and an expert are beyond the scope of expert discovery under Pennsylvania Rule of Civil Procedure 4003.5(a)(1), which generally only allows for discovery through interrogatories, or written questions, of the substance of the facts and opinions of the expert’s expected testimony and a summary of the basis for each opinion. In addition, the Superior Court held that such communications are protected by the attorney work product doctrine under Pennsylvania Rule of Civil Procedure 4003.3, which generally protects the disclosure of the mental impressions of a party’s attorney.

Following the Superior Court’s ruling, the Pennsylvania Supreme Court granted review limited to a singular issue: whether the Superior Court’s interpretation of Rule 4003.3 giving absolute work product protection to all communications between a party’s counsel and their trial expert was proper. After hearing argument, the Supreme Court, consisting of only six justices as opposed to the full panel of seven (one of the Justices had been part of the Superior Court panel that previously ruled on the case), was evenly split with three justices in favor of affirmance and three justices in favor of reversal. As a result, the Supreme Court entered an order on April 29, 2014 affirming the Superior Court’s ruling.

Justice Baer (joined by Justices Todd and McCaffery) wrote an opinion in support of affirmance (“OISA”) and Justice Saylor (joined by Chief Justice Castille and Justice Eakin) wrote an opinion in support of reversal (“OISR”). The OISA argued in favor of a bright-line rule barring discovery of attorney-expert communications. The OISA also noted that the Procedural Rules Committee has proposed an amendment to Pennsylvania Rule of Civil Procedure 4003.5 that would expressly adopt the bright-line rule. The OISR argued that the Superior Court’s conclusion that all communication between counsel and an expert is protected, regardless of the content, is unsupportable. Instead, the OISR would consider the content of the communication at issue rather than holding that all attorney-expert communications are exempt from disclosure.

Impact

Because the Supreme Court was evenly divided on the issue presented, neither the OISA nor the OISR constitutes precedent, and lower courts are not bound by either opinion. Instead, the lower courts are to follow the Superior Court’s decision because a decision of the Supreme Court that is not comprised of a majority of the court is not binding precedent. As a result, the Superior Court’s en banc opinion continues to control, and as a rule, communications between an attorney and an expert are not discoverable.

It will be interesting to see what impact this case may have on the proposed amendment to Rule of Civil Procedure 4003.5, which would codify the Superior Court’s bright-line rule. It will also be interesting to see if the Pennsylvania Supreme Court will look to hear another case in order to create precedent with a majority opinion. Regardless of what may occur, for now, communications between a party’s counsel and a party’s expert witness remain not subject to discovery.

We will continue to monitor developments regarding discovery between an attorney and an expert and keep readers advised.

Jennifer M. Horn is a Partner at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.

Matthew L. Erlanger is an Associate in the Construction Group.