Fairfield Connecticut Building Expert Directory

Texas Legislature Puts a Spear in Doctrine Making Contractor Warrantor of Owner Furnished Plans and Specifications

May 31, 2021 — Paulo Flores, Timothy D. Matheny & Jackson Mabry - Peckar & Abramson, P.C.
The Texas Legislature has just sent Senate Bill 219 (“S.B. 219”) to the Governor for signature; if this legislation is signed by the Governor, it will further erode the Texas legal doctrine that makes the contractor the warrantor of owner-furnished plans and specifications unless the prime contract specifically places this burden on the owner. Background 49 states follow what is known as the Spearin doctrine (named after the U.S. Supreme Court case of United States v. Spearin) in which owners warrant the accuracy and sufficiency of owner-furnished plans and specifications. Texas, on the other hand, follows the Texas Supreme Court created Lonergan doctrine, which has been an unfortunate presence in Texas construction law since 1907. In its “purest form,” as stated by the Texas Supreme Court, the Lonergan doctrine prevents a contractor from successfully asserting a claim for “breach of contract based on defective plans and specifications” unless the contract contains language that “shows an intent to shift the burden of risk to the owner.” Essentially, this then translates into the contractor warranting the sufficiency and accuracy of owner-furnished plans and specifications, unless the contract between them expressly places this burden on the owner. Over the years some Texas courts of appeal had ameliorated this harsh doctrine, but in 2012, the Texas Supreme Court indicated Lonergan was still the law in Texas, in the case of El Paso v. Mastec. In 2019, the Texas Legislature took the first step toward hopefully abrogating the Lonergan doctrine by implementing a new Chapter 473 to the Texas Transportation Code with respect to certain projects undertaken by the Texas Department of Transportation, and Texas political subdivisions acting under the authority of Chapters 284, 366, 370 or 431 of the Transportation Code, adopting, as it were, the Spearin Doctrine in these limited, transportation projects. Now, the legislature has further chipped away at the Lonergan doctrine with the passage of S.B. 219. Reprinted courtesy of Paulo Flores, Peckar & Abramson, P.C., Timothy D. Matheny, Peckar & Abramson, P.C. and Jackson Mabry, Peckar & Abramson, P.C. Mr. Flores may be contacted at PFlores@Pecklaw.com Mr. Matheny may be contacted at tmatheny@pecklaw.com Mr. Mabry may be contacted at jmabry@pecklaw.com Read the court decision
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Construction Defect Bill Removed from Committee Calendar

February 12, 2013 — CDJ STAFF
Colorado State Senator Mark Scheffel has removed Senate Bill 13-052 from the Senate Judiciary Committee’s calendar because he feels an upcoming study on construction near transit centers will be important for the consideration of the bill. SB 13-052 would affect construction defect claims in communities that were within a half mile of public transportation. Critics claim it would gut construction defect protections, as even a bus stop would count as a “mass transit center.” Scheffel says he doesn’t know what the study will find, but says that whether he likes or hates it, it will be relevant. Read the court decision
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Walmart Seeks Silicon Valley Vibe for New Arkansas Headquarters

June 18, 2019 — Matthew Boyle - Bloomberg
Walmart Inc. took inspiration from McDonald’s Corp., Apple Inc. and locations like Stanford University when designing the new headquarters that will start taking shape this summer. The 350-acre campus will be located just a few blocks east of Walmart’s current home, a patchwork of more than 20 buildings in Bentonville, Arkansas. It will feature bike paths, food trucks and outdoor meeting areas -- part of an effort to lure younger, digitally-savvy workers to northwestern Arkansas. Read the court decision
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Reprinted courtesy of Matthew Boyle, Bloomberg

Allegations Confirm Duty to Defend Construction Defect Claims

June 11, 2014 — Tred R. Eyerly – Insurance Law Hawaii
Relying upon the same case cited by the Hawaii Supreme Court in its seminal decision on duty to defend, the federal district court determined the allegations sufficiently established a duty to defend construction defect claims. Voeller Constr. v. Southern-Owners Ins. Co., 2014 U.S. Dist. LEXIS 61862 (M. D. Fla. May 5, 2014). The Bay Harbor Clearwater Condominium Association, Inc. sued Voeller Construction for statutory breach of warranty and building code violations which allegedly caused damage to the condominium structure. The complaint alleged that the damage was unknown to the unit owners at the time they purchased their units. The project was completed in 2007. Expert reports attached to the complaint listed July 7, 2010, as the earliest date of discovery of the damage to the property. The CGL policies were effective from January 24, 2007 to May 9, 2009. Therefore, the insurer argued there was no coverage because the alleged "property damage" was discovered for more than one year after the policies expired. The court determined there was a duty to defend. Citing Trizec Props., Inc. v. Biltmore Constr. Co., 767 F.2d 810 (11th Cir. 1985), the court noted that if the complaint alleged facts which created potential coverage under the policy, the duty to defend was triggered. The Hawaii Supreme Court relied on Trizec and made the same ruling in Dairy Road Partners v. Island Ins Co., Ltd., 92 Haw. 398, 412, 992 P.2d 93, 107 (2000). Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii
Mr. Eyerly may be contacted at te@hawaiilawyer.com

N.J. Governor Signs Bill Expanding P3s

September 04, 2018 — Nick Steingart - Construction Executive
Government entities in New Jersey that enter into public-private partnerships to help finance public construction projects are now required to utilize a project labor agreement (PLA) and pay state prevailing wages, among other requirements. Previously, P3s were only available to state and county colleges, but did not contain prevailing wage or PLA mandates. The new law, Senate Bill 865, allows the state and its subdivisions, including counties, municipalities and school districts, to enter into agreements with private funding sources provided they follow the additional mandates such as abiding by the state’s prevailing wage law and utilizing a union-only PLA for construction of the project. Reprinted courtesy of Nick Steingart, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Mr. Steingart may be contacted at steingart@abc.org

Reminder: Pay if Paid Not All Encompassing (but Could it be?)

December 09, 2019 — Christopher G. Hill - Construction Law Musings
On numerous occasions, I have discussed the need to be careful with so called “pay if paid” clauses in construction contracts. While such clauses are enforceable in Virginia (when phrased correctly), there are exceptions and limitations (for instance in the Miller Act context). One such exception (that I frankly would have thought to be obvious) is that such clauses do not protect a general contractor from paying all subcontractors. Such a clause only protects a general contractor from payment to those subs for whose work the general contractor has not been paid. In other words, if a general contractor has been paid by an owner for a particular subcontractors work, it cannot use the pay if paid clause to deny payment even in the event that other subcontractors were deficient in their work or the owner has failed to pay the general contractor in full. In Precision Contractors Inc. v. Masterbuilt Companies Inc. (PDF) the Fairfax, VA Circuit Court reiterated this principal stating that nothing in the contract suggests that either party to the lawsuit had any intention to shift the risk of non-payment by the owner or non-performance of other subcontractors to the plaintiff (Precision). Read the court decision
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Reprinted courtesy of The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

Caterpillar Said to Be Focus of Senate Overseas Tax Probe

March 26, 2014 — Richard Rubin and Jesse Drucker - Bloomberg
A U.S. Senate investigative panel is examining Caterpillar Inc. (CAT) and whether the company improperly avoided U.S. taxes by moving profits outside the country, said three people familiar with the inquiry. The Senate’s Permanent Subcommittee on Investigations will hold a hearing in early April, said two of the people. They spoke on condition of anonymity before an official announcement. Rachel Potts, a spokeswoman for Caterpillar, declined to comment. Two staff members for the subcommittee declined to comment. In 2009, Daniel Schlicksup, an employee who had worked on tax strategy, alleged in a lawsuit in federal court that Caterpillar used a “Swiss structure” to shift profits to offshore companies and avoid more than $2 billion in U.S. taxes. He also alleged that Caterpillar used a “Bermuda structure” involving shell companies to return profits to the U.S. without paying required taxes. Mr. Rubin may be contacted at rrubin12@bloomberg.net; Mr. Drucker may be contacted at jdrucker4@bloomberg.net Read the court decision
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Reprinted courtesy of Richard Rubin and Jesse Drucker, Bloomberg

Construction Contract Provisions that Should Pique Your Interest

September 30, 2019 — Christopher G. Hill - Construction Law Musings
Construction contracts are a big part of my legal practice and the drumbeat here at Construction Law Musings. Why? Because not only does your construction contract set the expectations and “rules of the game” for a construction project, it will be read strictly and literally by the Virginia courts should there be a dispute. For these reasons, construction professionals need to be alert for the language in certain key clauses in a construction contract to assure that these clauses are as balanced as possible and also well understood. Here are my “Top Five”:

“Pay if Paid”- These clauses are almost always in the subcontracts between a general contractor and a subcontractor and are enforceable in Virginia if drafted correctly and under the proper circumstances.
Change Orders- Whether work is subject to a change order and the required payment for any changed work are often a key source of contention (read legal fees). A properly drafted and followed change order provision can help avoid much of this contention.
Indemnity- Much has been made in recent years about indemnity provisions and their enforceability. All parties in the construction payment chain can and should be aware of how to best draft their indemnity provisions to make them enforceable. Failure to do so can be catastrophic.

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Reprinted courtesy of The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

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