Articles Posted in Construction Generally

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Today, our colleagues Michael Rizzo, Glenn Sweat and John Jensen published their Alert titled The 2018 Government Shutdown – How Can Contractors Preserve Rights? Takeways from the Alert include:

  • Communicate with your Contracting Officers early and often regarding approvals and responses to inquiries.
  • Analyze current contracts. Assess contract funding levels, determine which contracts which must continue, and become familiar with Suspension of Work, Stop Work, and Government Delay of Work clauses.
  • Minimize financial damage and maintain continuity of operations and high employee morale.

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On December 22, 2017, the U.S. Court of Appeals for the District of Columbia Circuit issued a unanimous opinion upholding most of the Occupational Safety and Health Administration’s (OSHA) 2016 revised workplace standard for respirable crystalline silica, 29 C.F.R § 1910.1053(a)(1). The case is North America’s Building Trades Unions v. OSHA. The new rule lowers by half the permissible exposure level (PEL) of a worker’s exposure during the workday for all covered industries including the foundry, brick, construction and hydraulic fracturing industries.

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The states employ unclaimed property laws (also referred to as escheat laws) to determine if property owned by one person but that is in the possession of another person is subject to the state’s control after the period of abandonment set by state law has passed. In recent years, states have aggressively enforced their unclaimed property laws by both auditing companies and assessing fines for failure to comply with the state’s laws. Large and small companies confront the states’ aggressive tactics pretty regularly and, more recently, companies have been fighting back because complying with the state’s audit requests is expensive and time consuming and, from their perspective, the large fines that a state can assess for failure to comply with the state’s unclaimed property law are unfair and unreasonable. Recently, companies have been turning to federal common law for protection against state actions of this nature.

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On November 22, the Texas Court of Appeals, sitting in Fort Worth, decided a case involving mandatory sanctions awarded under the Texas Citizens Participation Act (TCPA). In Rich v. Range Resources Corporation, et al., the Court of Appeals determined that although that denial of sanctions was erroneous, it was not harmful; error.

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In the case of CH2M Hill Engineers, Inc. v. Springer, et al., the Court of Appeals of Texas, Ninth District, sitting in Beaumont, decided an interlocutory appeals brought by the Appellant CH2M Hill Engineers, Inc. The Court of Appeals concluded that the “trial court did not abuse its discretion when it denied CH2M’s motion to dismiss” based upon the evidence before it, and affirmed the trial court’s order. The Court of Appeals noted that

While the record contains evidence that CH2M is registered with the Texas Board of Professional Engineers, the record does not contain any evidence that a licensed or registered professional practices within CH2M. Scott Neeley, Senior Designated Manager, signed the agreement between CH2M Hill and the Appellees. Mr. Neeley has not been shown to be a ‘licensed or registered professional,’ nor did he sign the contract as such. Moreover, the report is not signed by a licensed or registered engineer, but only issued by ‘CH2M Hill.’ CH2M has not proven, or even identified a single licensed professional engineer who performed professional engineering services for the firm.

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On November 27, the U.S. Court of Appeals for the Seventh Circuit decided the case of Betco Corporation v. Peacock, et al., which concerns a contractual dispute between the buyer and the seller of companies that produce and market a biodegradation product that is utilized in waste management and control. After paying out the escrow contemplated by the parties’ contract, Betco Corporation (Betco) “discovered that certificates of analysis were being re‐used or falsified by the sales team.” Critical of Betco’s due diligence efforts, the Seventh Circuit held that Betco

“failed to develop its argument in the district court that its breach of contract claim was in fact a claim for intentional misrepresentation that should have survived the Agreement’s one‐year time limit. Thus, it waived this claim, and we decline to hear its merits.

However, Betco did not waive its claim against Malcolm Peacock for breach of the duty of good faith. But our only inquiry in analyzing this claim is whether Malcolm acted in a way that injured or destroyed Betco’s ability to receive the benefits of the contract. Because Betco proffered no evidence at trial of consumer complaints, it cannot show that it was deprived of its contractual expectations. To the contrary, Betco received a company producing a successful line of products to the satisfaction of its customers.”

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California is imposing greater responsibilities on prime contractors for nonpayment of wages and benefits by their subcontractors. On October 14, Governor Jerry Brown signed into law Assembly Bill 1701 (Thurmond), adding Section 218.7 to the California Labor Code. Labor Code § 218.7(a)(1) requires prime contractors, on all private construction contracts entered into beginning January 1, 2018, to assume and be liable for any unpaid wages or fringe benefits incurred by subcontractors of any tier. Although this liability extends to unpaid wages, benefit payments, and union contributions (including interest thereon), it does not extend to any penalties or liquidated damages resulting from a subcontractor’s failure to make such payments in the first instance. As a result, going forward in California, prime contractors on private projects will need to be as involved in monitoring their subcontractors’ payroll practices as their public works counterparts.

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On October 19, 2017, the U.S. Department of Transportation (DOT) released a draft Strategic Plan (the Plan) for public comment. The Plan establishes goals and long-term objectives for increasing investment and streamlining federal environmental review and approval of transportation infrastructure projects over the next five years (Fiscal Years 2018-2022). Comments on the draft Plan are due by November 13, 2017.  Continue Reading ›

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On August 25, the U.S. Court of Appeals for the Tenth Circuit, in an unpublished opinion, affirmed the lower court’s ruling that the cost to remediate environmental contamination at a ski resort was subject to a contractual exclusion in the facility’s commercial general liability insurance policy. The case is Taos Ski Valley, Inc., v. Nova Casualty Company.

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On October 13, the U.S. Court of Appeals for the Fourth Circuit decided the case of Siena Corporation v. Mayor and City Council of Rockville, Maryland, et al. The Court of Appeals affirmed the lower court’s decision to dismiss the plaintiff’s complaint that an amendment to Rockville’s “Light Industrial” municipal zoning ordinance was unconstitutional as being violative of the due process and equal protection guarantees of the Fourteenth Amendment to the Constitution. The ordinance made it impossible for Siena Corporation to build on its property a large self-storage facility within 250 feet of a public school.

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