General contractors are all too familiar with the limitations in a CGL policy relating to defective work. Those limitations exclude coverage for costs associated with damage caused by “your work.” There is a limited exception to the “your work” exclusion in some CGL policies that affords coverage for damage to other work caused by defective work performed by subcontractors (the “Subcontractor Exception”). Regardless, there is no coverage for the costs of correcting the defective work itself – only for damage to other work caused by the defective work. Water intrusion situations provide good examples of how this coverage works. A subcontractor’s… Read more
Construction Law
The Spearin Doctrine Cont’d: Some Important Nuances and Exceptions
Last month, we discussed the Spearin doctrine, which establishes that a project owner impliedly warrants that plans and design specifications will be adequate if the owner issues and the contractor complies with the plans and specifications.[1] As a result, a contractor can use the Spearin doctrine defensively to avoid the consequences of defective plans and specifications or offensively to bring a claim if the defective plans and specifications cause its work to be more expensive, timely, or difficult. The Spearin doctrine’s applicability and longevity have spawned a number of nuances and exceptions, some of which we discuss in this month’s… Read more
Colorado Bill Proposes Shortest Statute of Repose for Construction Claims in the Nation
Colorado State Senator Ray Scott recently introduced a bill (SB15-091) to reduce Colorado’s statute of repose for construction claims from 6 years down to 3 years. The bill is set to take effect on August 5, 2015, if the General Assembly adjourns on May 6, 2015, as scheduled, and no referendum petition is filed. If the bill passes, Colorado would have the shortest statute of repose for construction claims in the nation. By comparison, several states maintain statutes of repose of 10 years or longer. A “statute of repose” is one of two types of timing limitations that cuts off… Read more
Contractors Bear the Burden for Costs to Repair
Imagine that you’re a general contractor responsible for the construction of a large mixed-use development. Now imagine that you mistakenly installed a brand of piping for the plumbing systems that was different from the brand specified by the owner. The pipe you installed was of similar quality to the pipe specified, so you’re thinking no harm no foul. Unfortunately, the owner is particularly litigious and decides to file suit against you for breach of contract hoping to recover damages in the amount it would cost to remove and replace all of the piping with the brand specified by the owner…. Read more
Mercedes-Benz Stadium Fly-Through: Watch It
The New Mercedes-Benz Stadium, which will be home to the Atlanta Falcons and Atlanta United (set to begin play in 2017), is currently under construction. Several renderings of the unique design for the stadium have been available to the public for some time. However, a new fly-through video released this Tuesday shows the much-anticipated Mercedes-Benz Stadium in all its glory, including the unique retractable roof, a gigantic window providing a view of downtown Atlanta, and the 360-degree HD “halo” video board running the entire circumference of the stadium. The fly-through video gives fans a look at each part of the… Read more
The Spearin Doctrine: Determining Who Bears the Construction Risk of Design Errors
All owners, contractors, and subcontractors should carefully negotiate contract clauses that govern their relationships. In addition, all construction participants should be aware of the many implied obligations in construction contracts. An implied obligation is one that is not expressly stated in a contract but implied, by courts, arbitration panels, and dispute review boards. One such implied obligation is the implied warranty of the adequacy of the plans and specifications, also known as the Spearin Doctrine. Before the turn of the 19th century, the law generally placed all construction risk on contractors, except in the event that their contract expressly stated… Read more
AIA Additions and Deletions Report May Be More Important Than You Think
The parol evidence rule is a substantive common-law rule that prevents a party to an integrated (complete) written contract from presenting extrinsic evidence that contradicts or adds to the written terms of the contract unless one of a handful of narrow exceptions applies. The rule means that one cannot use evidence of prior negotiations to alter the terms of an integrated (complete) written contract. The American Institute of Architect’s (“AIA”) proprietary software requires changes in the form agreement to be shown as redlined or strikethrough text, or as an Additions and Deletions Report appended to the end of the document. For… Read more
Georgia Lien Law: How much time do I really have to file a Lien Action?
In 2009, Georgia amended its lien statute. One of the many amendments to the statute requires lien claimants to include on the face of the lien the following statement in at least 12-point bold font: “This claim of lien expires and is void 395 days from the date of the filing of the claim of lien if no Notice of Commencement of Lien Action is filed in that time period.” (emphasis added). O.C.G.A. § 44-14-367. The failure to include this language in the claim of lien shall invalidate the lien and prevent it from being filed. Id. By now, most… Read more
Effective Immediately: Brand New Mississippi Lien Laws
In an earlier blog post, we discussed a Fifth Circuit Court of Appeals opinion, Noatex Corp. v. King Constr. of Houston, LLC, 732 F.3d 479 (5th Cir. 2013), which found Mississippi’s Stop Notice Statute unconstitutional. The ruling was particularly harsh because Mississippi did not allow subs and suppliers the right to record a lien. After the ruling, the only apparent recourse for subs and suppliers that had not been paid for work completed was to sue those with whom they had a contract for breach of contract. We questioned how the Fifth Circuit’s ruling would affect Mississippi’s lien laws. Now… Read more
Utility Interference Work in New York
Imagine you are a contractor that has decided to pursue work with the city. You are lucky enough to secure a lucrative contract to upgrade the city’s infrastructure, but you discover that certain other infrastructure owned by a private utility must be relocated to complete your work. Now imagine that the private utility refuses to relocate its infrastructure and refuses to enter into a contract to allow you to relocate the utility’s interfering infrastructure. The utility’s lack of cooperation is likely to cause significant and costly delays on your job with the city. What can you do? In Perfetto Contracting… Read more