This is a continuation of the series of blogs on preserving your rights to get paid on a construction project. The most effective tool you have to get paid is by filing a construction lien. But, there’s a lot to consider before you file that lien. This blog will cover how long your lien will last once it is filed. The Nebraska Construction Lien Act provides that your lien will [...]
Immigration and Customs Enforcement (ICE) is responsible for enforcing U.S. immigration laws, including auditing how employers are completing I-9 forms. ICE conducted nearly 6,000 I-9 audits in 2018, nearly five times more than in 2017. It’s time you get ready for an ICE audit by auditing your own I-9 policies and procedures. Below are some proactive steps to prepare for an ICE audit. Confirm you have I-9s for Every Employee [...]
Ever get that sinking feeling on a public project that you might not get paid? The good news is that in Nebraska, general contractors working on a project in excess of $15,000, must file a bond on the project. This blog will address how to make a proper claim on the bond. The process for making a bond claim is found in section 52-118.01 Neb.Rev.Stat. The process and time frame [...]
When a contractor receives a delay claim from a subcontractor, it’s important to pass on the claim to the owner or the contractor could be liable for the subcontractor’s entire claim. A recent decision out of New York underscores the importance of passing subcontractor claims to the owner. In the case Rad and D’Aprile, Inc.v Ariel Construction Corp., the subcontractor, Rad, made a claim for delay damages to the general [...]
Cannabis laws are popping up around the country and are impacting the way employers select employees. Take Illinois for example—it is now legal to possess and consume cannabis in Illinois, but employers can still maintain their zero tolerance policies, with certain significant limitations. Zero Tolerance Employers may still prohibit employees from using cannabis while they are working, but employers can no longer decline to hire, discharge, or take other adverse [...]
Construction contracts often require contractors to receive and hold payments in trust for the benefit of paying labor and materials furnished on a project. The purpose of the trust is to protect downstream contractors and suppliers from the risk of nonpayment of their claims against a financially distressed contractor. Trust Contract Provision A typical trust provision provides: All sums received by Contractor under this Contract are received by Contractor in [...]
Construction contracts have often included arbitration clauses and they can serve a good purpose of expediting resolution. But, what happens if the arbitrator gets it wrong? Your options are limited, and as one court stated: the parties bargained for an arbitrator’s decision; if the arbitrator got it wrong, then that was part of the bargain A recent case out of the Eight Circuit Court of Appeals (covering Arkansas, Iowa, Minnesota, [...]
Construction contracts typically require a subordinate contractor, either the general contractor subordinate to the owner or subcontractor subordinate to the general contractor, to list the upstream party as an additional insured and require the subordinate party to indemnify the upstream party for any claims or damages on the project. The goal of these two provisions is to shift the risk of liability for injuries sustained by a subordinate party's employees [...]
Ouch. That’s what a New York judge called a contract to remediate petroleum contamination at 47 gas stations. Sometimes, it’s hard to believe the contracts that get signed. In this case, Environmental Risk hired subcontractor Science Applications to remediate petroleum contamination at 47 gas stations. Environmental Risk first required its subcontractor to sign a Professional Services Master Agreement. Environmental Risk then required its subcontractor to sign three separate, but basically identical, [...]
What if you came across dinosaur bones on the work site like they did on a project in Denver, Colorado? Would you get extra time to complete the work? What does the construction contract allow? Let’s play out that scenario. You reach out to your local construction lawyer and inform him that your project has been delayed because you came across dinosaur bones. After he stops giggling about the situation, [...]
When you are involved in construction litigation, you have battles on several fronts, including those against subcontractors, owners, insurers and the court. Shoring up your defenses on each of these fronts is imperative, or you may lose the battle or, worse yet, the war. An opinion out of the Eleventh Circuit Court of Appeals (overseeing federal courts in Alabama, Florida and Georgia) Carithers v. Mid-Continent Casualty Company, illustrates the various [...]
Employers in the construction industry have long known the value of apprentice programs, such as those offered by Associated Builders and Contractors. But, did you know that having or participating in a qualified apprentice program may become a requirement to bid on government projects? If organized labor gets it way through the so-called Responsible Contractor Reforms, it could happen. Supplemental Conditions, a construction blog worth reading, recently posted an article on [...]
A recent article in ENR described the setbacks associated with a public rail project. There are problems with the schedule, concrete quality, including precast girders , panels and rail ties, and allegations of fraud. In a nutshell--a mess. But, I wonder if there are contract provisions that address these problems. Below are some problems on the project and my thoughts on contract provisions. Schedule. The article mentions that the general [...]
As this year’s construction projects are in full swing, it’s a good time to review your rights to payment. Since 2014, the Prompt Pay Act has been a tremendous resource for contractors to recover retainage and interest from upstream contractors and owners for failing to timely pay on a project. Here are a few highlights from the Prompt Pay Act. Limit on Retainage. Retainage may not exceed 10%. And, when [...]
If you or your construction company have ever been sued, you know it can be a stressful time. You have deadlines, you have subcontractors clamoring to get paid or defended, and it’s a generally awful situation. But, keep your mind on the prize--to make sure you have insurance coverage that will provide a defense to these claims. The most important step to ensure you have coverage is to tender your [...]
Construction material costs are rising, at least that’s what AGC, ABC, ACEC, ENR and the government are saying. So, let’s assume that its true—construction material costs are rising. What can you, as a general contractor or subcontractor do about it? Not surprisingly, it all comes down to your contract and whether you included a cost escalation clause. What is a Cost Escalation Clause? These clauses are pretty self-explanatory in [...]
While this is not typically a topic of discussion on this construction blog, two recent construction related lawsuits filed in Nebraska highlight the importance of making sure your key employees do not walk away with your projects and employees. We all know the situation. A long-term, faithful employee gets the itch to head out on his own or take another job for a few more dollars. Maybe you wish the [...]
Back in 2014, I posted a blog about the problems contractors were having digging the tunnel for Route 99 in Seattle. Bertha, the boring machine, hit a pipe and some rocks and got stuck, causing two years of delay. Well, that problematic situation, now a $624 million lawsuit, has wound its way through the courts and the Seattle Tunnel Partners (“STP”) is blaming the slow down on the pipe they [...]
Let’s face it, some projects just don’t go well and everyone knows there will be a fight over payment at some point. If there were only some way to avoid costly litigation or arbitration. Or is there? You could include a mandatory mediation provision in your contract to require the parties try to resolve the matter before litigation or arbitration is initiated. What is Mediation? Mediation is not simply requiring [...]
On large construction projects, with several layers of contractors, there is the risk of conflicting contract provisions. For example, the owner’s architect may use an AIA contract, the general contractor may use its own contract with the subcontractors, and some subcontractors may use their own contract with subsubcontractors. With so many contracts, there are almost certainly conflicting provisions, be it relating to indemnity, insurance and waivers of damages. It is [...]
Employees do the darnedest things. But, you’d hope they wouldn’t do them in front of an OSHA inspector. Isn’t there some way you can defend your company against an OSHA citation and penalty when there is truly no defense to the employee’s misconduct? Well, there is—the “unpreventable employee misconduct defense” may be of help, but only if you meet the four elements necessary for the defense. As you will read, [...]
What is a subcontractor to do when the owner has demanded additional work, but has refused to pay for it? Typically, a subcontractor cannot sue the owner because the subcontractor doesn’t have a contract with the owner. Perhaps the subcontractor and general contractor should enter into a liquidating agreement through which the general contractor can pursue the claim on the subcontractor’s behalf. Liquidating agreements bridge the privity gap between owners [...]
OSHA has long held the opinion that general contractors may be held liable for subcontractor’s OSHA violations and the Eighth Circuit Court of Appeals, overseeing the Midwest, has agreed since 2009. To combat this risk, general contractors would be well served to incorporate targeted indemnity provisions into their subcontracts that require subcontractors to pay for all claims and costs associated with subcontractor caused OSHA violations. OSHA’s Multi-Employer Policy OSHA’s Multi-Employer [...]
I recently had a discussion with an insurer about whether defense costs were included within the policy limits of a client’s coverage or in addition to policy limits. This was an important discussion because if costs of defense were included in the policy limits, my client was going to exceed those policy limits in a hurry. How would this situation play out with your insurance? Fortunately, the majority of insurance [...]
During a construction project, subcontractors may be performing poorly and a general contractor may want to terminate a subcontractor for default. A recent case out of the Eight Circuit Court of Appeals (overseeing the Midwest) rejected a general contractor’s right to terminate for default because the general contractor, not the subcontractor, was the first one to breach the contract. The case, Randy Kinder Excavating, Inc. v. JA Manning Construction Company, [...]
General contractors and owners often time include language in construction contracts that provides them with sole discretion to make decisions. These provisions can severely limit a subcontractor’s ability to negotiate changes or increased pay applications. What do these phrases look like? The “sole discretion” language can take a number of forms, including: Contractor reserves the right, in its sole discretion to . . . As solely determined by Contractor ____ [...]
Employers that are subject to a collective bargaining unit often are required to make contributions to a defined benefit pension plan sponsored by a union. If the employer and the union part ways, the employer may be subject to withdrawal liability--even if the company has made all of its pension contributions. And, this liability can cripple a company. This is a BIG Problem The underfunded status of multiemployer pension plans [...]
We all know the importance of filing a construction lien within 120 days of your last work (90 days in Iowa). But, equally, if not more important, is filing the construction lien on the correct property. Often times on a construction project, the exact address of the project may not be known. And, if there are a few buildings going up on the same general site, it is difficult to [...]
You know the situation—the lender or general contractor is waiving a check in front of you, but they won’t give it to you until you sign a waiver. Before you sign it, make sure you know exactly which rights you are waiving. Nebraska statutes specially allow a contractor to waive lien rights. Section 52-144 allows a contractor to waive lien rights even before the work has been preformed or materials [...]
The information that you must include in a Nebraska construction lien is pretty straightforward. A construction lien must include the following: The real estate subject to the lien; The name of the person against whose interest in the real estate a lien is claimed; The name and address of the claimant; The name and address of the person with whom the claimant contracted; A general description of the services performed [...]
I’ve reviewed three construction contracts this week and all three of them contained a pay-if-paid clause. Are you signing contracts with pay-if-paid clauses? Here are some suggestions to minimize your risk with pay-if-paid clauses. What is a pay-if-paid clause? Pay-if paid clauses eliminate the general contractor’s obligation to pay subcontractors if the general contractor does not get paid. Courts reviewing these clauses have found that a subcontractor that signs a [...]
This is the first in a series of blogs on preserving your rights to get paid on a construction project. The most effective tool you have to get paid is by filing a construction lien. But, there’s a lot to consider before you file that lien. This blog will cover when you must file your lien and where the lien should be filed. The Nebraska Construction Lien Act is contained [...]
After a three year experiment as Vice President and General Counsel at a long time client, I’m back to practicing law at Lamson Dugan & Murray. It was an amazing three years and I learned first hand how hard it is to deal with the day to day operations of a company, let alone the legal details. For the past three years, I was a jack of all trades, and, [...]
Ouch. That’s what a court called a contract to remediate petroleum contamination at a number of gas stations in New York. Sometimes, it’s hard to believe the contracts that get signed. Environmental Risk hired Science Applications to remediate petroleum contamination at 47 gas stations. Environmental Risk had previously entered into a Professional Services Master Agreement with Science Applications, but also required Science Applications to sign three separate, but basically identical, subcontracts called [...]
Sean Minahan, one of my partners, and I were discussing a construction dispute the other day and we commented again and again about the significant organization required to get a construction project to completion. From the contracts, to the schedule, to the funding—everything has to be in lock step or there will be problems that could bring the project to a halt, or worse yet litigation. The same is true [...]
A contractor learned a $12M lesson when it tried to change course on a Corps of Engineer river dredging project. The case also illustrates the importance of documenting problems on a project and providing notice of those problems to the owner. In Weston/Bean Joint Venture v U.S., Weston/Bean was awarded a Corps of Engineers project to provide maintenance dredging on the Miami River to a depth of 15 feet. [...]
I recently had a discussion with an insurer about whether defense costs were included within the policy limits of a client’s coverage or in addition to policy limits. This was an important discussion because if costs of defense were included in the policy limits, my client was going to exceed those policy limits in a hurry. How would this situation play out with your insurance? Fortunately, the majority of insurance [...]
I hope you and your family are enjoying some well earned time off this Thanksgiving. Today’s post provides me an opportunity to thank everyone who gave me ideas for the blog and I thank you for reading it. I’d also like to thank all of my construction clients from whom this blog is written. I appreciate the opportunity to assist you in your construction projects. Finally, we will be smoking, [...]
Wouldn’t it be nice to know ahead of time what an OSHA inspector will be looking for when he comes to your work site? Well, I know the secret. And, it’s not really a secret. Just look at OSHA’s top ten citation standards and it becomes quite clear. In 2015, OSHA’s top ten most frequently cited violations are: Fall protection (C) Hazard communication Scaffolding (C) Respiratory protection Lockout/tagout Powered industrial trucks Ladders [...]
I had the pleasure of speaking at the National Association of the Remodeling Industry (NARI) Education Day earlier this month. During my presentation, “The Myth of the One Year Warranty”, we discussed the impact of arbitration clauses in construction contracts and who should act as arbitrator. While the American Arbitration Association is certainly a popular forum, there are others. For example, the New York Times recently wrote about a hardwood [...]
A recent case out of New Mexico highlights the importance for subcontractors to review their contract with the general and the contract between the general and the owner. In Centex/Worthgroup, LLC v. Worthgroup Architects, L.P, the architect claimed that the limitation of liability clause in the prime contract trumped the provisions of the subcontract. The court disagreed and ruled that the specific provision in the subcontract controlled. In the case, [...]
We all know the importance of filing a construction lien within 120 days of your last work. Nebraska Construction Lien Act, § 52-137. But, equally, if not more important is filing the construction lien on the correct property. Often times on a construction project, the exact address of the project may not be known. And, if there are a few buildings going up on the same general site, [...]
Fitness for Duty examinations can be an important part of an employer’s hiring and retention protocol. The Nebraska Supreme Court recently clarified when an employer may require applicants and employees to undergo fitness for duty examinations. In Arens v. Nebco, Inc., the court ruled that an employer must have a legitimate, nondiscriminatory reason for its demand that a current employee submit to a fitness for duty examination. In this case, [...]
I often advise clients on the use of E-Verify and the importance of getting policies and procedures in place to ensure compliance. This is particularly true for clients that do federal and state work. Now it’s my turn to follow my own advice. I was recently appointed to represent the Nebraska Board of Engineers and Architects. As such, I am a contractor for the State of Nebraska. That means I [...]
A recent case out of Missouri emphasizes the importance of providing notice to a surety when a bonded subcontractor is in default. When the question of whether a surety will be obligated under the bond is in the balance, notice is crucial. In CMS v. Safeco Insurance Company, Safeco provided a performance bond to a subcontractor for the benefit of CMS. The bond specifically provided: PRINCIPAL DEFAULT. Whenever the Principal [Subcontractor] shall be, [...]
You may know this situation all too well. You’ve submitted your certified claim to the contracting officer and there it sits. You ask for a decision and they say soon, but it’s not soon. And pretty soon, several months have gone by. Since the Court of Federal Claims’ decision in Rudolph and Sletten, Inc. v. U.S., the government may have to decide in 60 days or your claim will be [...]
I just attended an Associated Builders and Contractors meeting during which Lueder Construction discussed a fatality on one of its worksite. OSHA fully investigated the incident and did not issue a single citation. This is a testament to the safety plan and training Lueder had in place well before this incident. One defense to an OSHA citation is unpreventable employee misconduct. However, proving this defense requires substantial planning, well before an [...]
The California Court of Appeals has allowed the second lowest bidders on public construction projects to sue the lowest bidder where it appears that the lowest bidder was only the lowest because it paid its employees less than the established prevailing wage. This is a novel theory for recovery, but may provide for an opportunity to challenge improperly low bids. Background Between 2009 and 2012, American Asphalt outbid two asphalt companies [...]
Perhaps in anticipation of Labor Day, the National Labor Relations Board issued its ruling in Browning-Ferris Indus. of Cal. d/b/a BFI Newby Island Recyclery, establishing an easier standard for unions to prove that a joint employer relationship exists. This will make it easier for unions to make the upstream company, like a parent company, liable for unfair labor practices, even if the upstream company had no direct involvement. Some Background [...]
What is a subcontractor to do when the owner has demanded additional work, but has refused to pay for it? Typically, a subcontractor cannot sue the owner because the subcontractor doesn’t have a contract with the owner. Perhaps the subcontractor and general contractor should enter into a liquidating agreement through which the general contractor can pursue the claim on behalf of the subcontractor. Liquidating agreements bridge the privity gap between [...]
