Effective October 1, 2018, general contractors with projects in Maryland will have a new headache to deal with. That’s when Maryland’s new law, the General Contractor Liability for Unpaid Wages Act, will go into effect. Under the Act, GCs will be jointly and severally liable for the failure of any subcontractors on the GC’s project to comply with Maryland’s existing wage and hour law. GCs will have to ensure that all of their subcontractors (including any sub-subcontractors or other firms they hire) pay their employees in accordance with Maryland law. Continue Reading New Maryland Law Exposes General Contractors and Subcontractors to Greater Wage and Hour Liability

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.

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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.

Continue Reading Can a Contractor Sue a Design Professional Without a Contract? Not in Maryland

The Maryland Department of Transportation/Maryland Transit Administration (MDOT/MTA) recently announced that four of the six teams that submitted qualification statements will be permitted to submit proposals to design, build, finance, operate, and maintain the Purple Line light rail public private partnership (P3) project that will run from Bethesda to New Carollton in Montgomery and Prince George’s counties. The short-listed teams are:

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Maryland Purple Line Partners, comprised of Vinci Concessions, S.A.S.; Walsh Investors, LLC; InfraRed Capital Partners, Limited; Alstom Transport SA; and Keolis SA;

Maryland Transit Connectors, comprised of John Laing Investments Limited; Kiewit Development Company; and Edgemoor Infrastructure & Real Estate LLC;

Purple Line Transit Partners, comprised of Meridiam Infrastructure Purple Line; Fluor Enterprises, Inc.; and Star America Fund GP LLC; and

Purple Plus Alliance, comprised of Macquarie Capital Group and Skanska Infrastructure Development, Inc.

Transportation Secretary James T. Smith, Jr. said, “These teams clearly demonstrated their qualifications to deliver this important project in their responses to our Request for Qualifications.” MTA Administrator Robert L. Smith said, “We were quite pleased with the overall response. The interest expressed by so many well-regarded companies is a testament to both the value of the Purple Line as a transportation asset and the power of public-private partnership to deliver value for citizens over a long period.” The other two teams were M-PG Connect, LLC, comprised of Plenary Group USA, Ltd. and Bechtel Development Company, Inc., and Purple Line Development Partners, comprised of CSCEC and United Labor Life Insurance Company, Inc.

Many of the shortlisted teams have prior experience with P3 transit projects. Members of the Purple Line Transit Partners and Purple Plus Alliance teams – Fluor and Macquarie – were part of the successful team on Denver’s Eagle P3 light rail project, which is the first design, build, finance, operate, and maintain (DBFOM) transit concession that successfully closed in the United States (it is currently about mid-way through construction and scheduled to complete in 2016). John Laing Investments of the Maryland Transit Connectors team was also involved in the Eagle P3 project. It bought out Macquarie’s interest when its financing closed in August 2010.

The Purple Line shares many similarities with Denver’s Eagle P3 rail project, including using the DBFOM model and planning to make “availability” payments to the successful concessionaire over the term of the concession. Availability payments are annual payments that commence after the light rail line is operational and reimburses the concessionaire for its financial investment in the project. Deductions can be made from the payments if the concessionaire does not meet predetermined performance targets, such as on-time performance, vehicle cleanliness, and customer service.

The next step is for MDOT/MTA to issue a request for proposals to the shortlisted teams, which is anticipated in the spring, with the target for proposal submissions by the teams in the fall 2014. We will continue to monitor these exciting P3 developments in Maryland and throughout the country, and we are available to assist organizations interested in P3s.

Jason C. Tomasulo is Senior Counsel at Cohen Seglias Pallas Greenhall & Furman PC. He focuses his practice on construction law and represents owners, general contractors, subcontractors, suppliers and sureties.

Maryland recently issued its Request for Qualifications (“RFQ”) for the Purple Line light rail transit project, Maryland’s first public-private partnership (“P3”) under Maryland’s revised P3 law that took effect July 1, 2013. As we have previously reported, the Purple Line light rail transit project is planned to run through Montgomery and Prince George’s counties from Bethesda to New Carrollton, Maryland. Maryland intends to solicit a single private partner who will be responsible for designing, constructing, operating, and maintaining the project. The private partner will also help finance a portion of construction.

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The deadline for qualification submissions by interested concessionaires is December 10, 2013 at 12:00 p.m. EST. The Maryland Department of Transportation and the Maryland Transit Administration intend to review the responses and announce up to four shortlisted proposers in January 2014. After potential concessionaires are shortlisted, the plan is to circulate the first industry review draft of the request for proposals (“RFP”) to the shortlisted proposers in January 2014. The second industry review draft of the RFP is anticipated in March 2014, along with the pre-approval of vehicle suppliers submitted by the proposers. Maryland currently plans to issue the final RFP in May 2014, with a proposal due date of October 2014, award and execution of the P3 agreement in the winter 2014/2015, and financial closing in the spring 2015.

We will continue to monitor and report on these exciting P3 developments in Maryland and throughout the country.

Jason C. Tomasulo is Senior Counsel at Cohen Seglias Pallas Greenhall & Furman PC. He focuses his practice on construction law and represents owners, general contractors, subcontractors, suppliers and sureties.