All state and local government public works construction projects must follow the public bidding and procurement laws, which seek to protect the public against the squandering of public funds and prevent abuses such as fraud, waste, and favoritism. Local governments[i] are required to provide public notice and to competitively award public works construction contracts,[ii] unless an exception applies, such as where the estimated cost of the project will be less than $100,000.[iii] A contractor forfeits its right to payment if it performs work knowing that the local government did not follow the public procurement laws. Local governments who take competitive… Read more
Tag: scahalan
Will a Duty to Inspect the Site Adversely Affect a Differing Site Conditions Claim?
Last month, we discussed why utility contractors should insist on the inclusion of a differing site (changed) conditions (“DSC”) clause in their contracts. A DSC clause allocates to the owner the risk that actual physical conditions at the site are materially different from the expected physical conditions at the site, along with establishing a procedure for adjusting the contract price and time for DSCs. Absent a properly drafted DSC clause, the doctrine of sanctity of contract normally places the risk on the contractor if the work is more difficult, costly, or time-consuming than expected due to a DSC. DSCs fall… Read more
Differing Site Conditions: What Are They and Are You Protected?
You’ve contracted to install underground utilities. Once the work begins, you discover soils with inadequate bearing capacity, large amounts of unanticipated rock, groundwater at levels higher than anticipated, buried debris, or hazardous wastes. None of these conditions were expected. As a result, the cost you promised to the owner to install the utilities is no longer feasible. Who bears this risk? A “differing site condition” (also known as a “changed condition”), which is abbreviated in this article as a “DSC,” is an unknown and hidden, concealed, or latent physical condition encountered at a site that differs materially from the reasonably… Read more
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
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
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
Sovereign Immunity from a Surety’s Subrogation Claims? Not in Georgia
Authored by Darren Rowles and Scott Cahalan When a surety receives notice that its principal has defaulted, the surety is faced with a decision. Depending on the terms of the bond, the surety can either complete the work at its own expense, obtain bids from completion contractors and then arrange for them to contract directly with the owner or other obligee, allow the obligee to arrange for completion of the work with the costs to be paid by the surety, settle with the obligee, or it can choose to defend against the default and assert the principal’s claims, if any, against… Read more
Mississippi’s Stop Payment Notice Statute Found Unconstitutional
Authored By: Darren Rowles and Scott Cahalan In several states, including Mississippi, California, Arizona, New Mexico, and Washington, subcontractors and suppliers are used to filing a “stop notice” or “stop payment notice” when they are not paid for work performed at a project. See also North Carolina (lien on funds). However, the recent holding in Noatex Corp. v. King Constr. of Houston, LLC, 2013 U.S. App. LEXIS 20656, 14-15 (5th Cir. Oct. 10, 2013), calls into question the constitutionality of stop notice statutes and the remedies they provide to lower-tier contractors and suppliers. A stop notice is a notice to… Read more