Best Practices Construction Law : Construction Lawyer & Attorney : Matthew DeVries : Smith Cashion & Orr Law Firm : Green Building & LEED Litigation

On Thursday, I will be joining a panel of construction attorneys and consultants to address the issue of aging infrastructure in America and, in particular, how to finance all the work that needs to be done. 

Our panelists include: 

Christopher Montez, Thomas, Feldman & Wilshusen, LLP, Dallas, TX
Kenneth R. Baker, Hill International, Poway, CA
Sarah Biser, McCarter & English, LLP, New York, NY
Robert Rubin, McCarter & English, LLP, New York, NY
Dennis Staats, Navigant Consulting, Boston, MA

You can still register for the short webinar on the Forum's website. Here are a number of answers that our panelists will try to answer: 

• What is the problem? Where are the major failures? 
• What are the sources of funding?
• How much money does the Federal Government want to pitch in?
• What can contractors do to maximize their changes to win Federally funded work?
• How may Public Private Partnerships help solve the problem?
• What does it take for a PPP to be successful?
• What can construction counsel do to help his/her clients in this arena?

If you have any questions that want answered in the webinar, it's not too late.  Send me an email and I will make sure that one of the panelists addresses it.

• Email This
• Print
• Comments
• Trackbacks

I wonder who that sad little scrap of paper is?  Do you know?  Oh, yeah, he's just a bill ... he's just a bill on capitol hill.

You knew that Nashville was the Music City, right? Reminiscent of the "Schoolhouse Rocks" days, last night I attended the kick off dinner for the AGC of Tennessee’s “Day on the Hill”… an event where AGC members attend hearings and meet with state senators and representatives about various bills relating to the construction industry in the state of Tennessee. Although there are reported to be more than 1300 bills introduced for consideration by the General Assembly in the 2010 regular session, approximately 15-20 of those impact or affect the construction industry in some manner. The top five bills for which the AGC of Tennessee has stated their position include the following:

• Worker's Compensation Insurance Reform. There have been a number of bills introduced in the session of the General Assembly regarding the issue of subcontractors not having workers compensation insurance coverage. I previously blogged about Public Chapter 1041, who's implementation date was recently deferred until March 28, 2011.  The law would have required all contractors to obtain workers compensation coverage, even on themselves if they were sole proprietors. Rather than taking a position on the individual bills that were introduced in this session, the AGC of Tennessee suggests that any legislation proposed on this issue consider the following recommendations:

1. Allow up to three officers of a company to “opt out” from being required to have coverage;
2. Require the filing of an affidavit with the Department of Labor that specifically names the individuals who have opted out of coverage;
3. Proof of at least 10% ownership;
4. Submission of a federal employer identification number with any filing;
5. An acknowledgment of a waiver of all rights of recovery, including workers compensation and tort claims, if the opt out individual is injured on the job; and
6. A provision that any individual who opts and files a claim would be guilty of fraud.

• Drug Free Workplace.  This legislation was first introduced by 2008 by the AGC of Tennessee. SB 1524 and HB 1604 make certain changes for denying workers compensation claims involving drugs or alcohol. By changing the burden of proof by the injured employee from a “preponderance of evidence” to “clear and convincing” evidence. This legal language change would make it more difficult for the employee to prove that drugs did not contribute to the cause of the accident. AGC of Tennessee strongly supports this change to the current legislation.
• Listing of Masonry Contractors. SB 2722 and HB 2794 requires information concerning those bidding for masonry contractor work be included on the outside of the envelope containing a bid, in addition to those contractors currently required to be listed. AGC of Tennessee strongly opposes this legislation, consistent with the position taken by the Tennessee Board for Licensing Contractors. Currently, masonry contractors are not required to have a license in Tennessee. Adding this requirement to current legislation as suggested by the AGC, would be put an additional burden on the general contractors bidding a project.
• Electronic Bidding. SB 3607 and HB 3158 revise the current requirements concerning information that must be contained on the outside of the envelope containing a bid to also require the same information be included in an electronic bid. AGC of Tennessee strongly supports this legislation because it brings the bid process into the electronic technological arena.
• Local Bid Preferences. AGC of Tennessee strongly supports SB 3607 and HB 3160, which clarifies that the only bid preferences that are permissible in public construction projects of local governments are those created by the General Assembly by general law. This legislation is intended to prevent local jurisdictions and governments from creating special bidding rules for construction projects.

Although there are numerous other bills before the General Assembly, these are the main ones being discussed by AGC members this morning at the “Day on the Hill” program. 

I once worked as a staff member on Capitol Hill more than 15 years ago and I truly miss being involved in the legislative process.  Whether you support or oppose any of the above measures, the real lesson is to get involved to help shape the laws that can (and will) affect your business.

• Email This
• Print
• Comments (1)
• Trackbacks

My wife thinks I am nerd.  She's right.  I rushed the kids to bed early one night last week so that I could sit in the kitchen to watch . . . okay . . . I will say it . . . the Metro Nashville Council vote on the fanancing package of the new convention center and the ensuing aftermath.  I love this stuff!   

• In a vote of 29-9 last week, the council approved the $585 million downtown convention center, the largest building project in the City's history
• Councilmember Randy Foster opposed the measure and tweeted about the bill's passage right before it happened
• As reported on the tube, there are 1,329 days between today and the first booked event at the new convention center

There remains one pending lawsuit that could affect construction, although most commentators believe a compromise will be reached.  Tower Investment owns a parcel of land within the convention center's overall footprint.  The dispute relates to the emminent domain proceedings by Metro to secure the land.  Interestingly, a number of council members have been subpoenaed to give testimony in the case.  Proceedings are set to begin in February.

• Email This
• Print
• Comments
• Trackbacks

On December 24, 2009, the United States Senate voted to pass its own version of the health care package.  You have probably heard cries about the length of the bill (1,990 pages).  You have probably heard the cries about the costs.  But have you heard about an amendment that may significantly affect the construction industry?

According to a letter from the Associated General Contractors of America to Senator Mitch McConnell (pdf), the bill is non-workable and unnecessarily targets the construction industry.  The AGC opposes the health care package because of the complexity of the plan, the cost-shifting (rather than the cost- reductions), and the likelihood that it will increase insurance costs for those construction businesses that provide insurance to their employees.

Even worse, according to the AGC, is an amendment drafted by Senator Jeff Merkley (D-Or) and inserted into the bill by Majority Leader Harry Reid (D-Nev.) that would exempt the construction industry from the small business exemption that was included in the original bill.  According to another letter from the AGC to Senator McConnell (pdf), this would cripple small construction businesses:

For all other industries, H.R. 3590, exempts employers with fewer than 50 employees from the fines levied on those who cannot afford to provide their employees with the federal minimum standard of health insurance. However, the Manager’s Amendment alters the exemption so that it singles out small businesses in construction for special punishment by applying the exemption to only those firms with fewer than five employees in the construction industry. . . . The 50 employee threshold was meant to exempt smaller firms, [and] this amendment will unfairly punish small construction contractors.

There remains considerable debate about the effectiveness of the health care package.  The introduction and consideration of the Merkley amendment is a reminder for all industries to do your homework as Congress enacts laws that may affect, both directly and indirectly, your company.

Photo: Flickr | pixelle54

• Email This
• Print
• Comments (1)
• Trackbacks

Is it too late to discuss a case from 2009?  Nah.  Especially if the court released the opinion within the past two months.  And according to the decision in Shelby County v. Crews (pdf), there are times when it may be too late to withdraw a condemnation petition. That line in the sand appears to be the date after the public entity takes legal possession.

In Shelby County, the Court of Appeals of Tennessee recently held that the County was precluded from backing out of condemnation proceedings too late in the game. The County had possession of a small strip of land owned by the Crews. The County used the land as a parking area for a nearby penal farm and had gone as far as to pave the property. In the summer of 2004, the County filed a Petition for Condemnation of the strip of land pursuant to the condemnation statutes. The County offered approximately $40,000 as to the amount of compensation for the family land owners. The family did not contest the County’s right to acquire the property, but disputed the amount of compensation it should receive for the land. Thereafter, the trial court entered a Consent Order that granted “all property rights and ownership in fee simple” in the property to the County. The trial court scheduled a trial on the issue of compensation for a later date.

One week prior to the scheduled trial date, the County filed a Notice of Non-Suit, which is a document that gives notice of a voluntary dismissal of the condemnation proceedings.  The Crews filed an objection to the non-suit order, arguing that the County was not entitled to dismiss the case because it took possession of the property. The issue before the court was whether the County was entitled to voluntarily dismiss the condemnation after it took possession of the property.

In a short five-page opinion, the court held that the County was precluded from voluntarily dismissing the condemnation proceedings after it had acquired ownership and legal right to possession, leaving only the issue of compensation to be decided.

While this issue may seem like a no-brainer to you, the case is important because it establishes a limitation on a public entity's power to condemn property.  The public entity can no longer take possession of the property and later "back out" of the deal if compensation looks to fall in favor of the private owner.

Photo: Flickr | ToniVC

• Email This
• Print
• Comments
• Trackbacks

Back in November, I wrote about a Tennessee Attorney General Opinion that addressed the new workers' compensation law in Tennessee that requires sole proprietors to carry workers' compensation insurance on themselves. (Traditionally, there was an exclusion for sole proprietors.)  Just after release of the AG-Opinion, the leadership in the state house and senate came to an agreement to suspend the effective date of the new law.

Over the past month, there have been a number of grass roots campaigns to address this issue.  So, where does the law stand now?  According to an official bulletin from the Department of Commerce and Insurance Commissioner Leslie Newman (pdf), the statute goes into effect at midnight on December 31, 2009.  Although the General Assembly has reported that it will address the issue as soon as they convene on January 12, 2010, the statute as written and enacted is enforceable on January 1, 2010.  The most important tip from the Bulletin is about election of coverages:

The Department interprets this change in the law to mean that a sole proprietor, partner, or limited liability company member ("LLC member") who had not previously been required to have coverage on himself must  now obtain coverage on himself. . . . The Department wishes to make clear its position that failure of a sole proprietor, partner, or LLC member to obtain such coverage without having met an exemption, is in violation of [the new law] and could subject such person to penalties by the Department of Labor and Workforce Development.

The Bulletin also includes the "Certification of Election" form that must be filed with the Department. I plan on following this issue closely.

• Email This
• Print
• Comments
• Trackbacks

Every construction litigator in the residential arena knows that a state's consumer protection laws are good grounds for disputes.  Will my client get treble damages?  Will they recover attorney fees for deceptive trade practices?  Does my client have any defenses to these types of claims?

In Fayne v. Vincent (pdf), the Supreme Court of Tennessee held that the Consumer Protection Act applied to real estate professionals engaged in the sale of their personal residence. The case involved problems with a septic tank that were discovered after sale of the residence to the purchasers.  Mr. Vincent was a builder and developer and his wife was a realtor. Mr. Vincent was the developer of the neighborshood and he constructed the home in question, moving into the house after it was completed. Mrs. Vincent signed the Tennessee Residential Property Condition Disclosure Statement in her dual capacity as owner of the property and as realtor for the property.

After the purchasers moved into the home, they began to notice odorous fluid seeping from around the septic tank. After investigation, the purchasers filed suit against the builder and the realtor for various claims including negligent misrepresentation, fraud, deceit, and violation of the Tennessee Consumer Protection Act.

Following a two-day jury trial in the trial court, an appeal to the Court of Appeals, a remand back to the trial court, and a subsequent appeal, the Supreme Court held that the sale of the home was covered by the Tennessee Consumer Protection Act (TCPA). Specifically, the Court recognized that the TCPA does not apply to sellers who are “not in the business of selling property as owners or brokers” and therefore that “persons making an isolated sale of their home [is] not covered.” The Court reasoned:

We adhere to the holding ... that homeowners participating in the casual and isolated sale of their personal residence and not in the conduct of trade or commerce cannot be sued for damages under the TCPA. This principle applies to developers, contractors and realtors who are selling their personal residence in a casual or isolated sale and who are not performing or providing professional services to facilitate or finalize the sale. However, we have also concluded that developers, contractors, and realtors cannot insulate themselves from liability under the TCPA simply by owning and briefly residing in a house before they offer it for sale as their personal residence.

Accordingly, the Supreme Court held that the TCPA applied to the facts of this case.

The Fayne case is a good reminder to developers, contractors, and realtors, as well as to purchasers of residential property, to know and understand the full breadth of your state’s consumer protection laws.  Imagine the case of where verbal abuse by the builder against a purchasing couple gives rise to a claim for intentional infliction of emotional distress and consumer protection act violations.  It happens.

• Email This
• Print
• Comments (2)
• Trackbacks

The U.S. Environmental Protection Agency yesterday issued a final rule in an effort to reduce water pollution on construction sites. The rule, which is set to take effect in February 2010 over a four-year period, is targeted to improve the quality of water nationwide.  According to a press release by the EPA, the impact is significant: 

Construction activities like clearing, excavating and grading significantly disturb soil and sediment. If that soil is not managed properly it can easily be washed off of the construction site during storms and pollute nearby water bodies.

The final rule requires construction site owners and operators that disturb one or more acres to use best management practices to ensure that soil disturbed during construction activity does not pollute nearby water bodies.

In addition, owners and operators of sites that impact 10 or more acres of land at one time will be required to monitor discharges and ensure they comply with specific limits on discharges to minimize the impact on nearby water bodies. This is the first time that EPA has imposed national monitoring requirements and enforceable numeric limitations on construction site stormwater discharges.

Soil and sediment runoff is one of the leading causes of water quality problems nationwide. Soil runoff from construction has also reduced the depth of small streams, lakes and reservoirs, leading to the need for dredging.

The pre-publication rules (pdf), as well as the EPA's Fact Sheet on the final rule (pdf) are available online.  While it is too early to comment on the draft rule (...primarily because I have not had a chance to digest it all...), it is interesting to note that adoption of the rule came in response to a court order in a lawsuit alleging that the EPA failed to issue certain regulations under the Clean Water Act.  According to the Wall Street Journal, the court requried the EPA to issue the rule no later than December 1, 2009.

• Email This
• Print
• Comments
• Trackbacks

Last week Scott Judy, Editor-in-Chief of Southeast Construction magazine, sent me a tweet about a courthouse project in Jacksonsville, Florida where a large number of fake IDs surfaced on the site.   As reported in the article, Federal officials discovered about 100 fake documents after looking at the paperwork collected by the city.  The mayor was expected to forward the list of 100 illegal workers to the contractor, Turner Construction, last week and demand that the badges badges be revoked for those workers.  

Scott then raised an interesting question: Can the owner use the issue of job-site fake IDs to consider the builder in breach of contract?  I hate to be trumpeting the same tune, but again the answer to this problem is, “It depends.” Here is why:

• As you might expect, the parties’ contract will largely dictate the rights and obligations of each party, whether it relates to payment, building specifications, delays, insurance requirements, and even compliance with federal, state and local law. So whether an owner has a cause of action for breach of contract for the presence and employment of undocumented workers on the site will largely depend on the exact terms of the parties’ contract.
• The applicable laws and regulations will often dictate additional obligations or provisions that must be included in the parties’ contract. For example, in 2007 Tennessee enacted a new requirement that "no person may enter into a contract to supply goods or services to the state or other state entities without first attesting in writing that the person will not knowingly utiluze the services of illegal immigrants in the performance of the work...." Tenn. Code 12-4-124.  Practically speaking, this means the contractor working on a public job is required to certify in writing that it will not use undocumented workers.  It must also require that its subcontractor sign the same type of attestation clause.  These statutory obligations are written into the parties' contract.
• Even if there is not a contractual requirement, there may be some statute or regulation that gives rise to liability for a contractors use and employment of undocumented workers. For instance, the same Tennessee statute cited above carries a penalty of debarment (i.e., prohibited from submitted a bid on any public project for period of one year) for any knowing violation of the law.  This statute applies ever wheter the requirement is not written into the parties' contract.

One way for a contractor to protect itself in these types of circumstances is to include a blended attestation-indemnification clause, such as:

The subcontractor, identified above, does hereby attest, certify, warrant, and assure that the subcontractor shall not knowingly utilize the services of an illegal immigrant in the performance of the Work and shall not knowingly utilize the services of any sub-subcontractor who will utilize the services of an illegal immigrant in the performance of the Work.  Subcontractor further agrees to indemnify and hold harmless the contractor for any violation of this provision.

Applying these principals to the situation in Florida, it will be interesting to watch how the contractor responds to the allegations raised. It appears from the article that "the city's contract with Turner prohibits knowingly hiring undocumented workers and Turner's agreements with subcontractors contain the same language."  Whether there is a breach of those contracts will depend largely on; (a) the express language of agreement, (b) the "intent" requirement of the statute, (c) the knowledge of the parties involved, and (d) the immigration status of the workers.

• Email This
• Print
• Comments
• Trackbacks

I recently read in the Nashville Bar Journal about a new change to the hearsay rules.  This is what immediately came to mind.  On any given day, I receive a call from my lovely wife about one of my five children who has been put on the witness stand for interrogation by my wife. The defendant child has either taken something that did not belong to them, invaded some other child’s personal space, or spewed out some dirty word.  Inevitably, when I get home from work I am called in as the judge to determine the guilt or innocence of the defendant child.  In many instances, I will interrogate some of the other witness children about what occurred.  Can you tell me which one is the traditional defendant? (Hint: bottom right.)

Under the former version of the Tennessee Rules of Evidence, prior inconsistent statements of my witness children could only be used to impeach the witness child. However, effective July 1, 2009, Tennessee adopted Rule 803(26), a new exception to the hearsay rules. The Rule provides for the admission as substantive evidence the prior inconsistent statements of any non-party witnesses if certain reliability requirements are met.  This goes further than the Federal Rule of Evidence 801(d)(1)(a) and allows an additional way to admit inconsistent statements for their substantive value. In my own child criminal court, that means that the prior inconsistent statements of my six year old son can be used as substantive proof against the four year old defendant. You know momma is going to be happy with a conviction.

While this is not the majority rule among the jurisdictions, Tennessee is now among a number of jurisdictions that have adopted this modern approach.  Again, Tennessee now allows for substantive proof the use of statements made in preliminary hearings, depositions, police investigations, or other recorded statements and interviews.

How does this affect your construction dispute?  As with many other legal questions, the answer is: "It depends."   It depends on your jurisdiction, the type of trial (judge or jury), and the type of construction dispute. 

• If you are in a jurisdiction that has adopted the modern approach, which includes Tennessee, Colorado, Hawaii, Wisconsin, New Jersey, Illinois, California or Montana, then prior inconsistent statements can be used substantively. 
• A judge should be able to truly appreciate the difference between prior inconsistent statements used for impeachment versus used for substantive evidence. 
• Finally, in a fact-driven construction disputes (as opposed to simple breach of contract matters or cases involving a battle of experts), this new evidence rule may come into play.

The real lesson to be learned from this rule change is to preserve pre-trial statements by all witnesses.  For example, it is important to take witness statements immediately following a construction accident, failure of the installed work, or other significant event during project performance.  In the event of litigation, the recorded statement can be used during trial as substantive proof.

• Email This
• Print
• Comments
• Trackbacks

As reported by the Tennessee Bar Association, the 2010 Tennessee State High School Mock Trial Competition got underway yesterday with the release and publication of the mock problem. The case involves a dispute over the design and construction of a 400,000 square foot distribution center featuring a concrete slab-on-grade floor. The primary issue in dispute is whether the work performed by the contractor constituted a breach of contract or professional negligence. A copy of the problem may be downloaded on the TBA’s website.

The case materials for this year's problem were developed in large part by the Tennessee Association of Construction Counsel, which is an association of about 100 attorneys from across the state with practices serving contractors, building material and equipment suppliers, architects, engineers, and building owners and developers.

Marisa Lee Combs, the Chair of the Tennessee State Mock Trial Committee and a construction attorney at Lewis King in Nashville, is a product of the mock trial competition. In response to an inquiry, Marisa said, " If not for that experience, I am not sure I would have chosen a career in the law. Other classmates of mine were interested in drama, so they loved playing witness roles. To me, it is a great way to show the students how complicated and fun the law can be."  

To me, it is exciting to see a future generation of thinkers, problem solvers and litigators at such an early age in their education. I am also excited to see that this year’s problem focuses on a construction dispute that will provide for some very interesting trial arguments. (Since I am a construction lawyer who regularly litigates these types of disputes, I will refrain from providing any more commentary on this issue.)

Kudos to the Tennessee Bar Association and the Tennessee State High School Mock Competition for their extraordinary efforts in creating and supporting this great program. And a hearty good luck to all the young participants!

• Email This
• Print
• Comments
• Trackbacks

Following on my earlier post ... nevermind.  Leadership of the Tennessee House and Senate recently reached a bipartisan agreement to immediately introduce legislation in January 2010 to suspend the effective date of Public Chapter 1041 from January 1, 2010 to February 28, 2011.  As reported last week, the new law was enacted to require a sole proprietor to carry workers' compensation insurance on himself.  The effect of the new ruling was addressed in Tennessee Attorney General Opinion 09-173 (pdf). 

In a statement, Representative Judd Matheny, Chairman of the House Consumer and Employee Affairs Committee alluded that timing was an issue:

 “Although there are merits in this legislation which need to be addressed, its effective date could not come at a worse time for the portions of the industry affected or the already fragile economy.”

Matheny is sponsoring HB 1839 along with Representative Joe Pitts to immediately suspend the effective date of PC 1041 until February 28, 2011.

According to House and Senate Leadership, a suspension of PC 1041’s implementation until February 28, 2011 is the first of two steps in reconsidering the issue of the sole proprietor and workers’ compensation in the construction industry. The second step would be considering alternative ways to address gaps in coverage for workers in companies of all sizes in the various construction fields. Recommendations for alternatives have been collected from consumers and affected industries and are being looked at closely. No action on implementing any alternatives is expected until February 28, 2011 at the earliest.

This action should assist sole proprietorships for the time being.  However, unless the move is taken immediately at the start of the January 2010 session, there will still be some period where the new law will be in effect which requires workers' compensation coverage.

• Email This
• Print
• Comments
• Trackbacks

College football in the Midwest.  No further comment needed.  So it should come as no surprise to see that a construction project in Mishawaka, Indiana was "postponed" as the local football team advanced to the state playoffs.

Although the school's request to hold off the work crews affected construction for only a few days—and there was no indication that the postponement significantly delayed the completion of the work—it does raise some questions about excusable delays.  

Generally, the parties' contract will determine whether a delay is excusable or non-excusable. Some typical examples of excusable delay include:

• Design problems
• Differing site conditions
• Changes in the work
• Force majeure (i.e., Acts of God, unusually severe weather, riots, war, labor disputes)  

In some instances, the contract will contain an exhaustive list of those events or circumstances where a delay to the contractor's work will be excused.  In other instances, the contract may simply define an excusable delay as "any delay to the work that is beyond the contractor's control and without the fault or negligence of the contractor." 

On the other hand, non-excusable delays are traditionally the responsibility of the contractor. Examples of non-excusable delay may include:

• Non-conforming or defective work
• Failure to adequately plan or schedule the work
• Inadequate manpower
• Any other delay within the contractor's control

In these instances, the contractor is generally not entitled to a time extension, is not entitled to additional compensation for the extra time on the project or work performed, and may even be responsible for liquidated damages.

When there is a delay to the work, what should you do?  Although you may have different options depending on whether you are the owner, contractor or supplier ... or depending on whether the project is public or private ... here are some tips:

1. Review the delay provisions of the agreement.  Because these provisions vary from contract to contract, it is critical to understand what will be considered excusable.  The real issue here is to determine what will be the litmus test in determine whether the non-performance or delay in the work should be excused for some reason beyond the performing party's control.  
2. Determine whether a time extension is warranted.  As you review the delay provisions, the next step is to determine what relief will be given if the delay is determined to be excusable.  For example, the contract may allow for a contract time extension, additional compensation, and relief from liquidated damages when the delay is found to be excusable or beyond the performing party's control.
3. Consider whether the delay is concurrent.  Many times the contractor's work may be delayed by more that one cause—one that is excusable and one that is non-excusable.  In this instance, depending on the applicable law, the court may either: (a) deny any recovery whatsoever because the delays were caused, in part, by the contractor; or (b) apportion the delay damages between the responsible parties.

For some additional thoughts on delay claims, see Tim Hughes' articles (part 1, part 2) on his former law firm website. 

• Email This
• Print
• Comments (1)
• Trackbacks

I love seeing a case zig zag through the appellate process ... and I especially enjoy reading one where intermediate appellate court reverses the trial court and the highest court then reverses that intermediate appellate court.  I know, I'm sick.

In a decision released yesterday, Goff v. Elmo Greer & Sons Construction Company, the Supreme Court of Tennessee reversed the Court of Appeals and reinstated the trial court's decision approving an award of punitive damages in a construction case.  The owners of the property filed suit against the general contractor on a highway widening project.  The owners contracted with the general contractor to use their adjacent land as a lay down area in exchange for compensation.  When the contractor failed to pay the full contracted amount, the owners sued.

Following a trial, the jury found in favor of the land owner and awarded: (a) about $5,300 for the unpaid contract balance; (b) about $9,500 for damages resulting from blasting activities; and (c) about $3,300 for burying debris on the property.  The jury also returned a verdict of $2 million in punitive damages, which the trial court reduced to $1 million.

The Court of Appeals affirmed the trial court's judgment as to liability, but reversed the award of punitive damages based upon a finding that the trial court improperly considered Tennessee's environmental laws in approving the award.  The Supreme Court of Tennessee reversed, holding that the trial court properly considered Tennessee's environmental statutes in approving the award.

The Goff decision has a number of construction nuggets to analyze.  One of the more significant aspects of the opinion is the jury's award of punitive damages based upon various environmental laws without any finding of a violation of those laws.   The intermediate appellate court determined that because the jury found that the contractor had not committed an environmental tort, the trial court should not have relied on the environmental statutes and policies in affirming the award of punitive damages.  The Supreme Court disagreed:

The evidence supporting the nuisance claim was the proof regarding buried whole waste tires.  In order to determine the reprehensibility of burying whole waste tires, the trial court considered the State's policy regarding such action. To this end, the trial court correctly noted that the State has enacted legislation against burying whole waste tires, recited the public policy behind that legislation, acknowledged that [the contractor] was aware of the State’s policy against burying waste tires, and
observed that high civil penalties are permissible for burying waste tires. In our  view, the fact that the legislature has determined it necessary to prevent the improper burial of tires “to protect the public health, safety and welfare” is important in the discussion of the reprehensibility of [the contractor's] actions.

Interestingly, the Supreme Court did not decide whether a private right of action existed for a claimed violation of the state's environmental statutes because the jury did not find the existence of any "environmental tort" and neither of the parties raised the issue on appeal.

For the contractors out there, Goff is a good reminder of the total exposure (including significant punitive damages) for violation of state waste disposal and environmental laws.  For the legal practitioner, Goff instructs that a statute may be used to define the public policy for proving punitive damages even when there is no violation of the actual statute.

• Email This
• Print
• Comments
• Trackbacks

Over the past two months, I have received a few inquiries from small business owners about an amendment to Tennessee's workers' compensation laws.  The primary question is whether the new law, which takes effect on December 31, 2009, will require a sole proprietor to carry workers' comp insurance on himself?  (Traditionally, there was an exclusion for sole proprietorship under Tennessee law.)

According to the recent Tennessee Attorney General Opinion No. 09-173, the answer to the above question is a resounding, "YES."  Based upon the AG's opinion, here is how the law now stands:

1. If you are a general contractor or subcontractor, you must provide workers' compensation insurance coverage for your employees. ("Any person engaged in the construction industry, including principal contractors, intermediate contractors and subcontractors, shall be required to carry workers' compensation insurance.")
2. If you are a sole proprietorship ... and you have no employees and you are performing the work yourself ... you are required to carry workers' compensation insurance on yourself, unless: (a) you contract directly with the homeowner; or (b) you are working on your own residence.

It will be interesting to watch how the construction industry responds to this issue.  The legislative history of the amendment reveals that the change in the law was prompted by a need to ensure that all subcontractors and employees working on a construction site were properly covered by workers' compensation insurance.  According to the legislative discussion, some employers were purportedly avoiding paying for coverage by claiming that their employees or subcontractors were actually sole proprietorships.

Question: What's happening in your state on this issue?

• Email This
• Print
• Comments
• Trackbacks

I have my Google reader set to search various blogs, news sites, and Twitter feeds to help me keep current with the latest trends in the construction industry.  There remains one major problem: the words we use have different meanings for everyone.  

Take, for example, my search of Twitter feeds (above) for Building Information Modeling (BIM).  If you were to do the same search during a weekday morning, the majority of results would return various individuals involved in some aspect of the construction industry either praising or criticizing BIM. Now, if you were to do the same search on any given Friday or Saturday night, you might be surprised to get a varied assortment of results (and photographs) of individuals out for a night of partying.  You see, BIM is also slang for "bimbo" or ... how do I say this ... a "lady with questionable morals"? 

What's the lesson here?  Did you click on this article because you thought it related to LEED or Green Buildings?  It kinda does.  It kinda doesn't.  The lesson is that we live and work in a world where information spreads quickly.  In addition, we have become informal in our communications through the use of email, texting and Twitter.  (And in our personal lives, there may not be anything wrong with informality in our communications.)

However, the construction project is built on expectations and performance.  Where those expectations are accurately and correctly reduced to a writing, the parties have a written contract.  Where the parties use words that have different meanings (and both interpretations are reasonable), we now have an ambiguity.  A judge or arbitrator will then be asked to interpret that ambiguity based upon any number of legal tools (i.e., parties' words and conduct, other writings outside the four cornings of the contract, industry norms, etc.).  As the construction industry begins to employ new technologies, such as BIM, or new performance based goals, such as energy performance from a LEED certified building, then it becomes even more important that we use words that do not lead to miscommunication.

• Email This
• Print
• Comments
• Trackbacks

What is the scope of coverage under a commercial general liability (CGL) insurance policy on a construction project?  As most attorneys will tell you, "It depends."  It truly depends on the express terms or language of the policy, the cause of the damage, and notably the jurisdiction of the dispute.

The Mississippi Supreme Court heard oral arguments on October 5, 2009 in the case of Architex Association Inc. v. Scottsdale Insurance Co. to determine what exactly is covered under the terms of a CGL policy.  The general contractor (Architex) filed suit against its insurance carrier after the owner the project sought damages from the general contractor for alleged defective work.  The insurer claimed that the defective work was performed by a subcontractor, which was not covered by the CGL policy.  The general contractor contended that any negligent work of the subcontractor should be covered under the "your work" provisions of the policy.  

The trial court held that damages were not caused by an occurrence or accident since the work being performed by the subcontractor was an "intentional act."  The oral arguments on appeal can be found at the Mississippi Appellate Court Video Archive. (The appellate court has some great questions between 1:50pm-1:55pm and 2:01pm). 

In a prepared statement published in the Mobile Bay Business Journal, Architex's counsel, Dorsey Carson, indicated that a finding for the insurance carrier would render a contractor's CGL policy practically useless:

"It would exclude coverage for any damages if the act that caused the damage is in any way related to the act of construction. It is a matter of whether the insurer is going to cover its insured for acts that it received premiums for, and for a policy that it marketed to contractors expressly for this type of damage.”

A decision from the Mississippi Supreme Court is expected by the end of the year.  Many in the construction industry are watching this case as it will have a significant impact on insurance coverage disputes:

• “The insurance industry made a very conscious decision to provide this coverage and charge these premiums. We are asking the insurance industry to stand behind the language of the policy it has today.” Mike Kennedy, general counsel for Associated General Contractors of America.
• "The premise has always been that if the work of your subcontractors is negligently performed and causes damage, it's covered." Chris Solop, Mississippi Associated General Contractors.

• Email This
• Print
• Comments (1)
• Trackbacks

For all my Nashville and Middle-Tennessee friends, I want to take a moment to highlight two upcoming conferences.  Although the programs are geared towards construction lawyers, don't shy away if you did not get a "shark degree" from Build 'Em Big University ... Each conference offers a little different glimpse depending on your career path.  What do I mean? 

The Fundamentals of Construction Law will be held on November 5, 2009 in Nashville, TN (...along with many other locations...) and is taught by leading construction lawyers.  This program presents a unique opportunity for new construction lawyers or experienced lawyers who occasionally practice construction law to learn the essentials from those who practice it daily at its highest levels. The program concisely covers the gamut of construction issues including:the roles of the key participants in a project, the structure of project delivery systems, the bidding and construction process, insurance and bonding and dispute resolution.

For the non-lawyer: This seminar will give you a great glimpse into the basic legal principles affecting your construction practice.

The Nashville conference is being coordinated by Joe Welborn, one of my partners (... and all-around-great-guy...).  If you have any questions about the program, then send Joe an email.

The second conference, the Tennessee Association of Construction Counsel Fall Meeting, will be held the very next day on November 6, 2009.  For the construction lawyers, there are three seminars right up your alley:

• Litigation Strategies for the Construction Law Practitioner, by experienced litigator Andy Ness
• Steel Structural Collapse of the Chicago Post Office Building, by engineer and expert Ian Chin (pdf)
• Bankruptcy Law for the Construction Practitioner, by bankruptcy guru Dan Puryear

For the non-construction lawyer:  You will not want to miss the mock trial! Learn from the pros on how to best present your case.  Participants include: Davidson County Chancellor Ellen Hobb Lyle (as judge), Tim Gibbons and Todd Panther (as advocates), and Gary Parkes and David Wright (as fact and expert witnesses).

The TACC conference is being coordinated by Vic McConnell, another one of my partners ( ...and another-all-around-great-guy...).  If you have any questions about the program, then send Vic an email.

• Email This
• Print
• Comments
• Trackbacks

Released in 1968, the lyrics from Steppenwolf's psychedelic rock song blare out: "I like to dream, right between my sound machine..."  Yep, you remember ... the Magic Carpet Ride!

The Maryland Court of Appeals recently decided a construction case based upon a set of pre-contract discussions that Judge Harrell described as a "complicated series of events from which this appellate 'magic carpet ride' springs..."  In Questar Builders v. CB Flooring, the court upheld the duty to act in good faith and deal fairly in construction contracts. The appellate court reversed and remanded the trial court's decision for a determination of whether the contractor (Questar) acted in bad faith when it terminated for convenience the flooring subcontractor (CB Flooring).

Questar received bids from three subcontractors to install the "magic carpet" in the luxury midrise apartment and townhome complex.  CB Flooring submitted a bid for $1.12 million and CTI submitted a bid for $1.24 million.  Interestingly, the third subcontractor's bid was so low that it left Questar with the impression that the subcontractor misunderstood the scope of the project.    (...I wonder if all the low estimates being submitted on public contracts these days fall into this category? Certainly not! ... Sarcasm ... )

Ultimately, disputes arose between Questar and CB Flooring about design changes in the selection of the carpet and the resulting increases in the cost of work.  Questar reportedly used CB Flooring's original bid to obtain CTI's agreement to perform the same work for $1,000 less than the original winning bid.  Meanwhile, Questar terminated CB Flooring, alleging breach of contract, as well as a contractual right to terminate for convenience.

The trial court held that CB Flooring did not breach the subcontract agreement with Questar.  The court also rejected Questar's claim that it had a right to terminate for any reason.  Based upon the evidence presented, the judge found that the subcontract was improperly terminated.

On appeal, the appellate court held that the termination for convenience clause "may" be enforceable, but that the trial court failed to determine whether the termination was made in good faith and in accordance with fair dealing.  Therefore, the case was remanded to the trial court for a determination of that issue.

The opinion is a long read (...50 pages...), but sheds some light on the limitations inherent in a contractual right to terminate:

"Questar's contention that it was entitled to terminate the Subcontract for any reason whatsoever goes too far and is inconsistent with the terms of the Subcontract. To be sure, a right to terminate in the absence of the other party's breach does not equate necessarily with the right to terminate based on a whim. We shall not read into the Subcontract such unfettered power."

This point was highlighed by the American Subcontractors Association, which filed an amicus brief in the appellate proceedings.  In its brief, ASA argued that an exception to the scope of the good faith and fair dealing covenant would "not only poison business relationships and eliminate business certainty, but also does great damage to the ability of subcontractors to rely on their signed contracts as a reliable indicator of future work and expected revenues" and would otherwise make subcontracts "illusory and meaningless."

This case provides a good warning to contractors: Beware of subcontractor shopping after you have already entered an agreement with another party.  While you may have the contractural right to terminate for cause, do not make a decision in haste without adequate basis for the termination.  These magic carpet ride cases often involve hotly disputed facts leading up to the termination and you may find yourself defending a lawsuit.

• Email This
• Print
• Comments (2)
• Trackbacks

This weekend my eldest son turned six years old.  What right of passage does every six-year-old boy celebrate in the South?  He goes to a SEC football game.  And so we set out on Saturday evening for a little "guy time" with the Vanderbilt Commodores, hot dogs, nachos and popcorn.  My son was decked out in his new blue polo shirt sent from his O'Ma, while I had on my favorite red, slim-fitting AGC golf shirt.  The problem is ... Vandy's colors are black and gold!  Which means that you are summoned ... ordered ... required ... mandated ... dictated ... to wear either black or gold!  My lack of knowledge did not excuse my non-compliance with the black and gold ritual.  Imagine being the only person in the entire stadium with a red shirt.

If you are a federal contractor, don't be the only person with a red shirt.  Effective today, contractors and subcontractors will be required to use the E-Verify system to verify their employees’ eligibility to work in the United States. In the past, the government attempted to mandate the use of E-Verify, the web based system that employers can use to confirm the legal status of their employees. The proposed law was set to take effect in January of 2009. However, the legislation instigated much debate and several controversial provisions kept it from taking effect.

Although the amended proposal which takes effect today has significantly less bite, E-Verify has broadened in scope. Not only do the provisions apply to contractors and subcontractors on federal projects, but also to any business receiving funds under the federal stimulus project. For more details about E-Verify and some of the hot issues surrounding its controversial history, check out some of the following sites:

• Michael Payne's post on Federal Construction Contracting Blog, which gives a good overview of the law's applicability to certain contracts
• An extensive summary by Nixon Peabody attorneys Kent Jonas and Matthew Zandi
• An article by Federal Times about the federal district court in Maryland which found the  regulation to be legal
• A Wall Street Journal report on the 11th hour bid to overturn the law

Given the current state of the economy, more and more contractors are taking on public projects. For this reason, all contractors and subcontractors would be well advised to prepare for compliance with the mandated use of E-Verify.  Don't be the only one wearing a red shirt.

• Email This
• Print
• Comments (2)
• Trackbacks

A few weeks ago I tweeted about the local building code in Nashville "under review."  Actually, those words were a little weak.  What about these words: "Contractor Leads Attack Against Nashville's LEED Legislation" ... the exact words used by my colleague Stephen Del Percio, attorney and author of Green Real Estate Law Journal.  A good analysis by Steve!  

The original article by Michael Cass in The Tennessean highlights a local contractor's frustration with the LEED requirements on a school project.  However, Councilman Duane Dominy, sponsor of the bill, said he didn't write the legislation specifically to help the contractor and isn't trying to "do away with LEED." 

According to the title of the legislation at issue (BL2009-503), the bill seeks "to allow an alternative to LEED certification based upon lowered measured energy use."  The legislation was introduced on July 21, 2009 and passed its first reading. The bill was then referred to the Codes Committee. It was scheduled for three votes on August 6, 2009, but was "deferred" for a later time.

Importantly, the preamble contains a statement that any alternative should be allowed "provided the alternative system will result in actual lower measured energy use."  There are many signficant highlights of the proposal, including the following:

• it allows for a city-wide approval of an alternative to LEED certification;
• it requires "actual lower measured energy use" for an alternative system
• it requires the governing authority (Metro Goverment) to approve a certified or duly recognized "business energy professional" to monitor the energy use 12-18 months after substantial completion

Finally, here are the two kickers:

D. If the energy use objectives are not met, the pre-determined entity responsible for the warranty shall reimburse the Metropolitan Government for excess energy use costs for any year of the warranty period based on the energy rate costs prevailing during the first year of the warranty period. The entity responsible for the warranty shall provide the Metropolitan Government an irrevocable warranty surety.

E. No warranty penalty or reimbursement shall be applicable if the Metropolitan Government significantly changes the function of the facility beyond what was originally authorized by the final use and occupancy permit.

A couple of thoughts on this new legislation: First, it will be interesting to see whether a surety will step up to the plate with an irrevocable warranty.  I cannot imagine the difference in energy costs savings and losses would be so significant so as to place the risk beyond insurability. 

Second, there remains a carve-out in the event that the owner changes the function of the building beyond what was anticipated.  In other words, there appears to be a less stringent standard ... or no penalty ... for major rennovations that perhaps change the function of the building.

Finally, the legislation demonstrates that there is, and will continue to be, tension between the LEED rating system and alternative rating systems, particularly as local and state jurisdictions become more green-saavy in their understanding of sustainable design, energy performance, and longterm investment strategies.

• Email This
• Print
• Comments
• Trackbacks

Mom always said I was a late bloomer (... Wonder what she meant? ...)  Well, you can call me late to this game, but hopefully not too late. 

Perhaps the best summary of the new LEED 2009 Minimum Program Requirements (MPR) can be found on Stephen Del Percio's Green Real Estate Law Journal.  Last week, Chris Cheatham's Green Building Law Update caught on fire with comments about his post on LEED Decertification.  The match that lit the fire turned out to be the following language found on USGBC's website about the MPRs:

NOTE: CERTIFICATION MAY BE REVOKED FROM ANY LEED PROJECT UPON GAINING KNOWLEDGE OF NON-COMPLIANCE WITH ANY APPLICABLE MPR.  IF SUCH A CIRCUMSTANCE OCCURS, REGISTRATION AND/OR CERTIFICATION FEES WILL NOT BE REFUNDED. 

A couple of observations from my neck of the woods.  First, I am not sure that the fact USGBC has wielded this revocation stick is as noteworthy as its ramifications. Indeed, verification requirements and revocation/de-certification processes appear in various substantive areas of law (i.e., union and labor, banking, minority business, etc.). What is noteworthy, again, is the fact that the revocation stick will have undetermined consequences. 

In other words, the authority to revoke LEED certification from a project raises legal concerns beyond the scope of LEED’s stated intent—that is, to provide “building owners and operators a concise framework for identifying and implementing practical and measurable green building design, construction, operations and maintenance solutions.” Now we are talking about issues like: third party standing to initiate decertification proceedings, time elapsed certification, regulation enforcement and insurance coverage questions.

Next, would you be surprised to learn that the concept of "permit revocation" has been adopted by a local municipality for green projects that fail to provide proof of LEED certification? That’s right, last fall the City of Gaithersberg, Maryland adopted the “Green Building Requirements” to amend its building code, which included the following revocation provision:

3110.2.4 Verification. Within eighteen (18) months after the receipt of a Certificate of Use and Occupancy, the applicant shall provide proof to that the required LEED-level rating was obtained. Failure to submit the required proof shall be grounds for revocation of the Certificate of Use and Occupancy.

This code was passed almost one year ago. I’m looking into whether any revocations have occurred yet under this new Gaithersberg ordinance.

 Finally ... and here's the kicker … apparently, a LEED revocation is underway or has already occurred somewhere out there. According to the literature for the Green Buildings Seminars in September 2009, there is one reported instance of decertification proceedings. Lawrence Spielvogel, an independent consulting engineer, is scheduled to “discuss why this non-compliance typically occurs, and will describe the actions of the designers that led to the first ever decertification of and plaque removal from a LEED Certified project.” 

 Did I read that correctly?  Let's ask Larry ...  ring ... ring ... [conversation] ... hang up phone ... Yes, I read that correctly! Looks like we have to wait for the presentation in September 2009 to report on the whole scoop.  Perhaps Shari will go for me?

 And now ... what I promised in the title of this post ... here is what some the industry experts have said about the revocation issue:

  If I missed you, send me an email and I will update the list.

• Email This
• Print
• Comments (2)
• Trackbacks

I realize that the title to this post may scrunch some “What you talkin’ about, Willis?” eyebrows to the many LEED AP-construction-green-building-attorneys out there. However, the title really conveys the first words that ran through my mind as I read Gary Cole’s post on The Real Green Goblin – Emerging Legal Liability for Green Design Professionals and Contractors on his blog LAW/ARK.

I must admit that I jumped to various conclusions prior to reading Cole’s entire post. Instead, I focused on the following statements:

The bad news is that attorneys, especially those already practicing in construction law, will soon realize that aside from green design and construction’s sometimes specialized and occasionally ill-defined vernacular, there’s no real novelty in the types of claims that might arise.

No new frontiers of jurisprudence need be explored–a leaky green roof is still a leaky roof–whether it also requires regular mowing and landscape maintenance changes little from a legal perspective.

As I continued reading the post, however, I realized that Cole was marching in the right direction, particularly with the following statement: “In non-legal terms, most legal liability associated with green design and construction will arise from one issue–though it’s an issue with many faces–unfulfilled expectations.” Cole even makes a call out to the “fellow attorneys” reading the post with a disclaimer that this is an oversimplified analysis of the legal claims available.

When discussing green building claims, perhaps the best point made by Cole is understanding the balance between a project’s “green marketing claims” (or its “form”) and its “real performance (or its “substance”). I view that so-called "balance" at the heart of the issue. While it can be said that green building disputes will arise primarily from parties’ unfulfilled expectations–as do most commercial contract disputes–the form and substance will be an inherent part of any claim, whether pursued in contract, tort or otherwise.

Cole may be right that there is no novelty to the traditional types of claims (contract, tort, statutory, etc.) that may arise in green construction disputes. However, the novelty in the green building industry is the new set of standards that will inevitably become part of the legal dispute. In other words, while “a leaky green roof is still a leaky roof” … there will be new risks to be allocated, different types of damages lost, additional players involved, varied proof required and, yes, perhaps a novel cause of action alleged because that leaky green roof system failed.  Given the relatively uncharted territory, I cannot say that "green building for attorneys is merely hoopla" ( ... my words ... not Cole's ...)

• Email This
• Print
• Comments
• Trackbacks

I know that I am a few hours early, but Governor Phil Bredesen is scheduled to sign the Tennessee Clean Energy Future Act of 2009 today at 1:30pm.  He will be joined by key legislators, as well as members of his Energy Task Force.

Among other provisions, the new law will provide for: (1)  a limited statewide residential building code to promote energy efficiency, (2) new energy usage guidelines for state buildings and vehicles, and (3) an extension of Tennessee’s emerging industry tax credit to the clean-energy technology sector. You can find the bill summary on the General Assembly's website, along with the full text of the new law.

Under the new law, the State Building Commission has the authority to implement various cost-saving measures. 

The measures may include, but shall not be limited to, maintenance, repair or replacement of lighting and mechanical equipment and related controls. Energy cost saving measures may be implemented through contracts with energy professionals including, but not limited to, energy service companies, commissioning and retro commissioning firms and agencies and energy auditing consultants.

There are no new state-wide LEED certification requirements, though.  In due time ... in due time.

• Email This
• Print
• Comments
• Trackbacks

You don’t always say what you mean. And you don’t always mean what you say. 

In construction contracts, parties attempt to use plain and ordinary words to describe their respective obligations. For example, when the parties use the word “shall” in their agreement, they generally understand that the obligation specified is mandatory. Or when parties use the word “may” in their contract, performance is permissive or optional given the plain meaning of the word. Consider the following construction contract provisions:

“If the Owner fails to make payment for a period of 30 days, the Contractor may, after seven days written notice, terminate the Contract and recover from the Owner payment for Work performed.”

“The Work may be suspended by the Owner as provided in Article 14 of the General Conditions.”

“Payments may be withheld on account of (1) defective Work not remedied, (2) claims filed by third parties, or (3) failure to carry out the Work in accordance with the Contract Documents.”

In all of theses examples, it seems clear that the parties agreed to allow—but not require—the specified performance. The word “may” was permissive in nature.

According to some courts, however, this traditional line of reasoning is no longer the trend in the context of arbitration provision in construction contracts. For example, in TM Delmarva Power v. NCP of Virginia, the Supreme Court of Virginia held that the parties’ use of the word “may” in the dispute resolution provisions of their construction contract required mandatory participation in arbitration at the election of one of the parties. The arbitration agreement provided:

“If any material dispute, disagreement or controversy concerning this Agreement is not settled in accordance with the procedures set for in [previous section] . . . then either Party may commence arbitration hereunder by delivering to the other Party a notice of arbitration.”

The court held that the above provision was mandatory at the election of one of the parties: “The word ‘may’ . . . means that either party may invoke the dispute resolution procedures, but neither party is compelled to invoke the procedures. . . . [But] once a party invokes the arbitration provision, the other party is bound to arbitrate.”  The Delmarva court reasoned that the disputes provision would be “rendered meaningless” if the word "may" was interpreted as permissive because parties to a commercial contract can always choose to submit their disputes to arbitration.  The Fourth Circuit reached the same dcision in United States v. Bankers Ins. Co.

Given the trend that the courts have interpreted the term “may” as “shall” in the context of arbitration agreements, parties to a construction contract must be careful in understanding both the plain, ordinary meaning and the legal meaning of the particular words used. In the above examples, if the parties wanted arbitration of disputes to be permissive and non-mandatory, they could have clarified their contract by including more explicit language (i.e., "any and all disputes, upon mutual agreement, may be arbitrated" or "with the consent of the other party, either party may commence arbitration").  It is important in contract drafting that you say what you mean and you mean what you say.

• Email This
• Print
• Comments
• Trackbacks

Within the past couple of months, BNA started a new report called Infrastructure Investment & Policy Report.  Earlier this week, I was contacted by BNA reporter Kate Naseef to share some thoughts about HR 2454, the climate change legislation that was recently approved by the House Energy and Commerce Committee and its affect on the construction industry. 

According to AGC and ABC representatives, Naseef writes, the climate change bill is a "mixed bag" because it offers both opportunities for new construction and building modifications, but it could also lead to increased costs and delays given the regulatory hurdles. The article also highlighted comments from Cathy Altman, a good friend and construction attorney in Dallas:

Fewer, Bigger, Green Projects

 

As building shifts to more carbon-friendly facilities, there will be fewer, but bigger projects “because of the higher capital costs of green construction,” Cathy Lilford Altman, an attorney with Carrington, Coleman, Sloman & Blumenthal, L.L.P in Dallas, said.

 

A cap-and-trade program and renewable energy standards are going to further experimentation and use of new technologies and new construction means and methods, “which could open up opportunities, but also create risks,” Altman said. “There's a certain amount of trial-and-error that is going to be inevitable,” she said. Owners are going to want guarantees that designers and contractors might not be able to give until the new technologies and processes are tested.

 

Designers, engineers, and contractors are going to have to get accustomed to working with new materials and new technologies that add cost on the front-end of a project, Matthew DeVries, an attorney with Smith Cashion & Orr, PLC in Nashville and author of www.bestpracticesconstructionlaw.com, a construction law blog, said. Whether or not this results in savings down the road remains to be seen, he said. 

Although there are reports that HR 2454 will be brought to the House floor next week, it will be interesting to see any mark-ups from the Transportation and Infrastructure Committee chaired by Rep. James L. Oberstar.  For those of us outside the Beltway, keep us informed BNA!

------------------

According to its website, BNA "publishes—in print and electronic formats—more than 350 daily, weekly, monthly, and up-to-the-minute news services covering the full range of legal, legislative, regulatory, and economic developments that impact the business environment around the nation and the world."  If you are not a subscriber of BNA, you can take a test run of all of its services. 

• Email This
• Print
• Comments
• Trackbacks

“Intellectual property is an extremely important and valuable asset that is often overlooked or ignored in the construction industry.” So said Brian Hickey and Edward Benes at the ABA Forum on the Construction Industry’s annual meeting in April in New Orleans.

In their joint presentation entitled When the Colors Run Together: Recent Development in the Intellectual Property Aspects of Construction, Brian and Ed highlighted the risks and liabilities associated with the four basic types of intellectual property: (1) copyrights; (2) trademarks, service marks, and trade dress; (3) patents; and (4) trade secrets. Here is why intellectual property finds its way onto our radar screen at Best Practices:

“Economic realities and environmental initiatives will drive a search for streamlined designs, new systems, and innovative materials. Industry leaders will develop standard components and process that can achieve savings in time and money. To the extent that some of these new products, methods, and designs may be protected through copyrighted drawings, trademarks, patents, trade secrets or other means, the inventors and creators will endeavor to do so.”

Brian and Ed did a great job explaining in their presentation how intellectual property relates to construction, architecture and engineering. In simple terms: Construction begins with ideas. Ideas take the form of an expression. Expressions are copied, stored, distributed. Those expressions are edited and improved.  You see where this is going … the expressions become subject to protection. These authors packaged this broad issue—intellectual property in the construction industry—in such as way as to understand the risks and walk away with some good pointers, including the following:

• Allocate ownership of copyrights through contractual provisions
• Understand the “thorny” collaborative design issues that naturally arise with multiple parties
• Appreciate the risks of “copying” information
• Evaluate the need for registration of your own information

I truly appreciate Bryan and Ed’s hard work to bring to light intellectual property for all those hardhat construction lawyers, owners, developers, architects, engineers, contractors and suppliers. 

[Note: Unfortunately, I was unable to attend their presentation because I was speaking on The Green Explosion: The Legislative Impact of Alternative Energy, Climate Change and Sustainability on the Construction Industry. However, their written paper was thorough and easy-to-read.]

• Email This
• Print
• Comments
• Trackbacks

That's not exactly how the headline reads ... but close enough.  The actual title is BIM Promotes Sustainability: Practitioners are Finding Paths to Green through Interoperable Software.  As reported by McGraw Hill Construction, this article demonstrates the practical utility of Building Information Modeling (BIM) on a construction project ... a green one!  MH reports about the restoration of the historic Grant School in Washington, D.C.: "The contractor had nearly finished the time-consuming coordination of mechanical, electrical, and plumbing trades. Then work ground to a halt. Local legislation had just passed requiring all public buildings to achieve LEED certification."

Although the project was exempt from the change in the law, the School wanted to demonstrate their commitment to green by seeking LEED certification.  Using BIM, modifications to the design (including the mechanical systems and the acoustics) were relatively straightforward.   Without BIM, the work would would have been prohibitive given the increased costs and delays associated with the re-design.

Two cool things ...

First, the Grant School project featured by MH typifies the benefits of technology in the industry.  According to Dwayne Sellars, BIM manager for Turner Construction, his company is using BIM even in situations where the architect does not because the model reveals conflicts between systems that are often discovered only in the field. 

Second, not only does the Grant School project illustrate the effective use of BIM technology, the format of article itself is exciting.  The article is presented in a case-study format as part of McGraw Hill's Continuing Education Center.  You can review the information and take a test for 1.00 credit for HSW/SD.  According to CEC, after reading the full article you will be able to: 

• Describe building-information modeling (BIM).
• Explain strategies for applying BIM to promote sustainability.
• Discuss uses of BIM at different phases of a building's life cycle.
• Understand how BIM relates to green "best practices" within your own discipline.

The real import of the article--and particularly the convergence of BIM and LEED--is realized upon reading the concluding paragraph:

Architects are receiving better, earlier energy-related analysis; engineers are providing more focused expertise during design; builders are reducing waste in construction; and facility managers are increasing the efficiency of their operations. And many of those experiencing the benefits of technology and teamwork have visions of still more capabilities and benefits in the future.

No time for the test, McGraw Hill ... but thanks for the good information.

• Email This
• Print
• Comments
• Trackbacks

 As I was watching the evening news this week, I learned that my new home may have some Chinese drywall within its four corners.  What does that mean?  Well, I am too late to the game to accurately capture what has been going on the world of Chinese drywall litigation.  Just check out the growing number of Google-News archives for "Chinese drywall."  Or check out the new legislative update from ENR on drywall issues.

Here is a round-up of a few my favorite posts:

• On Construction Law Monitor, Scott Wolfe discusses the difficult choices faced by builders, homeowners, and construction attorneys.  These posts contain thoughtful considerations and practical checklists when dealing with drywall claims.
• On his other blog called Chinese Drywall Blog, Scott highlights a chart of drywall shipments from China, which is easy to read and provides great information (prepared by the Harold Tribune).

I have not seen or heard of any claims in Tennessee, but there were reports on the news that new homes ( ... like mine ... ) being built in the 2005-2006 "may" have some of the tainted materials.  We know it made it to Charleston, South Carolina ... but did it make here? 

• Email This
• Print
• Comments (1)
• Trackbacks

As I was driving to work, a super-hero-like voice interrupted my morning news program on the radio: "Green Power Switch is coming to a neighborhood near you!  Green Power Switch will allow you, the consumer, to choose to purchase “green” energy from the companies that sell the power that TVA generates."

That’s right! The Tennessee Valley Authority and local power companies are banding together to offer their customers various alternatives of renewable energy (i.e., solar, bio fuels and wind).

Self, I ask, what’s the big deal with that? The big deal is that the speeches and PowerPoint presentations we’ve heard on renewable energy legislation and its effects on the construction industry are becoming a reality.  

Just a few weeks ago, the Green Ribbon Committee on Environmental Sustainability issued its recommendations to Nashville Mayor Karl Dean, including the following: 

• "Implement program at NES to switch from petroleum oil to a soybean-based oil for transformers used city wide."
• "Develop a Metro Green Fleet program to expand the use of electric vehicles, hybrids and bio-diesel to help diversify energy supplies, decrease emissions and support regional economic activity."
• Adopt an Advanced Metering Infrastructure (AMI) system for NES residential customers that would enable them to manage their energy consumption and conservation efforts.

From government initiative ... to legislative enactment  ... to industry standard ... to consumer incentive ... renewable energy will have a dramatic effect on the construction industry as a whole. Already, we are seeing green-related ordinances that affect the day-to-day business operations of your hard-hat construction contractors, laborers and suppliers.  Take, for example, the green cement ordinance in Dallas, Texas that requires use of cement from "dry kilns" versus "wet kilns."  That's good news if you operate a dry kiln ... not so good news if you operate a wet kiln.  In other instances, the issue is finding its way into the court system like City of Albuquerque v. AHRI, which blocked enforcement of various state energy conservation codes in New Mexico on preemption grounds. The plaintiffs were a group of HVAC and water heating equipment trade organizations, contractors and distributors.  (Steve Del Percio discusses the City of Albuquerque v. AHRI case on www.greenbuildingsNYC.com.)  

These are just a few examples of the 411 (... information ...) that you can find here at Best Practices Construction Law.  Check back soon for an overview of other green-related legislation affecting the construction industry.

• Email This
• Print
• Comments
• Trackbacks

It is official.  The Construction Blawg  is retired.  For a number of years, I maintained a construction-related blog called The Construction Blawg … which was highlighted by the ABA Journal Law News Now.  While all of the posts are archived, we may have a difficult time resurrecting the content given the internal hyperlinks and coding and expiration of our domain.  (… for you non-techies, that means that there are a lot of codes within each post that will have to be manually changed … )

Although The Construction Blawg has been retired, I am returning to the cyberworld with Best Practices Construction Law.  You will see some of the old regulars like Rip Rap (...focusing on those random construction stories...), but you will also see some new commentary … with a great emphasis on issues like Green-Building, Technology, Building Information Modeling, Great Tips on Project Management and Alternative Dispute Resolution.

Another significant change in The Construction Blawg family is that I now have five … yes, that’s right … FIVE children … and four of them are under five years old!  So I will have some great stories to tell you, which hopefully will shed light on some best practices in the construction industry.  No, really.  Trust me.

So, out with the old … in with the new!  Make sure you check back regularly.

• Email This
• Print
• Comments
• Trackbacks