On July 26th join Cohen Seglias attorneys Matt Gioffre and Dan Fierstein for their seminar, “Killer Contract Clauses for Construction & Service” for the Mechanical & Service Contractors Association (M&SCA) in Blue Bell, PA. Matt and Dan will explain Killer Contract Clauses, how courts will interpret and enforce them, and will provide best practice tips for managing a project to minimize the impact of these contractual provisions.
Design professionals doing business in Kentucky beware: the Kentucky Court of Appeals recently held that a contractor may pursue a negligent misrepresentation claim against an architect for delays to a project resulting from allegedly defective plans and specifications. The Court permitted the contractor’s tort claim despite the absence of a contractual agreement between the parties and the fact that the contractor signed documents that waived its claims. Continue Reading KY Contractors Can Now Assert Claims for Negligent Misrepresentation Against an Architect Despite Absence of a Contract
A New York appellate court issued a decision in 2016 that serves as an important reminder to all tiers of the construction industry: courts take the notice provisions in your construction contracts very seriously. In the Schindler Elevator Corp. v. Tully Const. Co., Inc. case, the Appellate Division dismissed a subcontractor’s claim in its entirety because emails and letters that the subcontractor provided to the prime contractor did not comply with the strict notice provision in the prime contract. Continue Reading New York Case Reminds Us That Some Courts Take Notice Provisions Very Seriously
In the world of construction, the old legal saying “equity aids the vigilant, not those who slumber on their rights” rings true. A weary contractor risks more than an OSHA violation – when a contractor fails to protect its legal rights, it can wake up near the end of the project only to find that it has lost a substantial amount of money with little ability to recover.
In some states, courts allow contractors to sue design professionals for negligence even in the absence of a contract. In others, like Maryland, courts apply a rule known as the Economic Loss Rule (ELR) to bar such claims. Courts apply the ELR when, without a contract in place, someone sues another for purely financial losses (i.e., not for personal injuries or property damage). The ELR is very important in the construction world because contractors who sustain losses that they attribute to substandard design documents often sue the design professional who prepared the plans and specifications, even though they rarely have a contract with the designer.
In a recent case – Balfour Beatty Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP – the Maryland Court of Special Appeals (“Court”) reaffirmed the ELR and rejected various claims brought by a contractor against a design professional. The Balfour Beatty Infrastructure case involved a public works project for the City of Baltimore (“City”). The City entered into contracts with the design and engineering firm Rummel Klepper & Kahl, LLP (“RK & K”) to upgrade a water treatment plant. The City also entered into a contract with Balfour Beatty Infrastructure, Inc. (“Balfour”) to build the upgrades. Balfour did not have a contract with RK & K. Due to a series of design errors, Balfour suffered delays during construction and performed additional work that it attributed to the design errors. Based on these facts, Balfour sued RK & K for professional negligence and negligent misrepresentation, alleging that RK & K supplied false information to prospective bidders and failed to establish a reasonable contract duration.
On February 11, join Roy Cohen, Ed Seglias, and Jackson Nichols at the Sheet Metal and Air Conditioning Contractors National Association (SMACNA) Mid-Atlantic Chapter in Greenbelt, MD for their presentation, “Ignorance is not Bliss: Construction Contract Provisions You Need to Know.” They will discuss provisions that allocate risk for different site conditions, and examine contract provisions addressing payment, indemnity, change orders, and termination. Their presentation will also cover Mechanic’s Liens in DC and Maryland.
For more informationa, and to register for this event, please visit the SMACNA Mid-Atlantic website.
Roy S. Cohen is the Founder and President of Cohen Seglias, as well as a Shareholder and member of the Board of Directors. In his practice, Roy represents clients involved in every facet of the construction industry, including construction managers, general contractors, municipal authorities, private developers, major trade contractors, architects, engineers and sureties.
Ed Seglias is the Vice President of Cohen Seglias as well as a Shareholder and a member of the Board of Directors. He is also the Managing Partner of the Firm’s Delaware office and a Partner in the Firm’s Construction Group. Ed concentrates his practice in construction law and commercial litigation and has successfully tried numerous construction and commercial cases in the mid-Atlantic region.
Jackson S. Nichols is an Associate in the Firm’s Commercial Litigation and Construction Groups and represents clients in every stage of litigation, including motion practice, discovery, pre-trial preparation and trial practice and appeals. As a member of the firm’s Commercial Litigation group, Jackson assists clients in developing solutions to business disputes.
On January 21, 2016, Please join us for Ed Seglias and Jason Copley‘s seminar, “Ignorance is not Bliss: Construction Contract Provisions You Need to Know,” for the General Building Contractors Association (GBCA) in Philadelphia, PA.
This seminar will focus on key provisions in the standardized contract forms that often affect the risks and outcomes on a typical commercial construction project. For example, Ed and Jason will discuss provisions that allocate risk for differing site conditions, hazardous materials, delays beyond the contractor’s control and defection or omissions in design drawings. They will also examine contract provisions addressing payment, indemnity, scope changes and termination. Finally, they will review notice provisions, dispute resolution provisions and some bonding and warranty provisions to provide some general guidance about these terms.
To register for this event, click here.
Edward Seglias is the Vice President of Cohen Seglias Pallas Greenhall & Furman PC as well as a Shareholder and a member of the Board of Directors. He is also the Managing Partner of the Firm’s Delaware office and a Partner in the Firm’s Construction Group. Ed concentrates his practice in construction law and commercial litigation and has successfully tried numerous construction and commercial cases in the mid-Atlantic region.
Jason A. Copley is the Managing Partner of Cohen Seglias Pallas Greenhall & Furman PC and a Partner in the Firm’s Construction Group as well as a Shareholder and member of the Board of Directors. Jason focuses his practice on representing contractors, subcontractors and owners in the areas of construction and commercial litigation and maintains offices in both Philadelphia and Harrisburg.
Arbitration has become a very common and effective way to resolve construction disputes in lieu of traditional litigation, and it is easy to understand why:
- The parties can select arbitrators with construction expertise who speak their language and are more likely to understand complex construction issues than a general court of law.
- Arbitrations are characteristically speedier from inception to award.
- Discovery (the parties’ exchange of information and taking of depositions) is often more truncated and can, therefore, be less costly.
- Arbitrator awards are typically binding and not normally subject to an appeals process that tends to add more time and cost to the outcome.
We would be remiss, however, if we did not mention that arbitration is not for everyone. Parties are often required to pay filing and other administrative fees that are considerably more expensive than the cost of court filings, and they must also pay the arbitrators, who typically bill by the hour (feel free to insert your own generic lawyer joke here). In the construction context, we find that owners, developers, and public entities often will elect litigation over arbitration.
The finality of the award cannot be overstated. This article about a recent federal court decision – in which a party discovered after the award that one of the arbitrators failed to disclose a number of serious charges that included the unauthorized practice of law – drives the point home. Under the Federal Arbitration Act, courts may only vacate an arbitration award under very limited and extreme circumstances:
- the award was obtained by corruption, fraud, or undue means;
- there was evident partiality or corruption in any of the arbitrators;
- the arbitrators were guilty of misconduct for refusing to hear evidence relevant and material to the dispute; or
- the arbitrators exceeded or imperfectly executed their powers.
In other words, a court will not disrupt an arbitration award simply because the arbitrators may have “gotten it wrong.”
It can be strange and counterintuitive to think about how a dispute should be resolved when signing a contract. Most parties to a construction contract are, understandably, thinking about the excitement of starting a new project, how to build the project cooperatively and safely, and how to manage it in a way that will be profitable to the companies involved. It is nonetheless important to think about dispute resolution while negotiating your construction contract. This is so because the decision to arbitrate or litigate is often one that is made within the contract document itself rather than by the election of the parties after the dispute has arisen. If a dispute develops, the language of the contract will have important implications for how your dispute is decided, who will decide it, and how much time and money it will cost to resolve.
Tony Byler is a Partner at Cohen Seglias Pallas Greenhall & Furman PC and a member of the Construction Group. As a trial lawyer, he focuses his practice on representing public and private owners, contractors, subcontractors and material men. Tony also serves as an arbitrator on the Roster of Neutrals for the American Arbitration Association.
Daniel E. Fierstein is an Associate in the Construction Group of Cohen Seglias and focuses his practice on construction law. Dan counsels clients at all tiers of the construction industry, including general contractors, subcontractors, owners, developers, and design professionals.
Please join us tomorrow, 11/4, for Shawn Farrell‘s presentation “Construction Disputes: Lessons Learned” at the Carpenters’ Company of City and County of Philadelphia’s Master Builder Dialogues.
Shawn Farrell has over 20 years of experience litigating construction disputes, and will share the lessons he learned to demonstrate how an effective project management team can identify and manage the risks associated with construction contracts without the need for litigation. This seminar will instruct participants on the realistic application of contract terms, payment statutes, lien law, and bond rights to construction operations, with the objective of maximizing profit and minimizing the time to close out a project.
For more information and to register, please visit the Carpenters’ Company’s website.
In late July, the West Virginia Purchasing Division of the Department of Administration issued an “emergency rule” that exempts construction contracts from a new law regarding change order approval. This new law, which went into effect on July 1, originally required that all change orders be approved by the Purchasing Division and the Attorney General prior to commencement of work. The emergency rule, which was adopted by the West Virginia Secretary of State, clarifies that change orders related to government construction contracts do not require prior approval. The rationale behind the exemption for government construction contracts relates to the lengthy work stoppages that would inevitably occur while waiting for the required preapproval. The Department found that these stoppages are “costly and unfeasible” and often lead to “increased costs for the taxpayer, state government agencies, contractors and countless others.” So as to avoid these delays and additional costs, contractors on public West Virginia projects must continue to work after submitting a change order request.
Contractors should be familiar with this change to the law’s applicability, as failing and/or refusing to perform work while a change order is pending approval may subject you to liability for any resulting delays to the Project’s completion and/or additional costs incurred by the government. Contractors faced with a change in their original scope of work should consult with an attorney prior to proceeding with the work to ensure that all rights to payment for performance of the new and/or additional work are preserved.