South Carolina Court of Appeals Diverges from Damico Opinion, Sending Recent Construction Defects Cases to Arbitration

By on September 14, 2023
Leave a comment

Could the latest opinion from the South Carolina Court of Appeals be the distant ringing of a death knell for runaway construction defects verdicts? On the heels of the Damico ruling earlier this year, the courts have issued several opinions distinguishing various arbitration agreements from the one analyzed in Damico and have sent subsequent cases to arbitration.

This summer, the Supreme Court and Court of Appeals compelled arbitration in Cleo Sanders v. Savannah Highway Automotive Company, et al. Appellate Case No. 2021-000137 / Opinion No. 28168 (petition for rehearing pending) and Joseph Abruzzo v. Bravo Media Productions, et al. Appellate Case No. 2020-001095 / Opinion 6004. Now, in the matter of Jonathan Mart, on behalf of himself and others similarly situated, Respondent, v. Great Southern Homes, Inc., Appellant, Appellate Case No. 2018-001598, the Court of Appeals reversed the circuit court’s order denying a homebuilder’s motion to dismiss and compelled arbitration in this action, which was brought by the homeowner, individually and on behalf of other similarly situated homeowners. 

Looking solely at the sales contract between the buyer and homebuilder, the Court of Appeals distinguished Damico from the case at hand, finding that “the arbitration provision in the [sales contract]—standing alone—contains no such oppressive or unconscionable term.” The key issue is looking only at the arbitration provision, not the entire contract. Importantly, the court reiterated language from Damico noting, “…while the Sales Contract here is certainly an adhesion contract, a ‘take-it-or-leave’ it contract of adhesion is not necessarily unconscionable, even though it may indicate one party lacked a meaningful choice. Rather, to constitute unconscionability, the contract terms must be so oppressive that no reasonable person would make them and no fair and honest person would accept it.”

Questions as to 1) the validity of a provision requiring a home buyer to waive the implied warranty of habitability without separate consideration and 2) the validity of the homebuilder’s effort to transfer its warranty obligations to a third party upon the closing of the transaction have also been raised but not yet been discussed. Presumably, the answers to these questions will be determined by the arbiter. Could we see a difference between arbiters’ willingness to award plaintiffs punitive damages versus the jury verdicts of the past? The outcome remains to be seen. We will continue to provide further updates as developments occur.

To read more legal updates from the firm’s Construction practice group, please click here.

Filed under Uncategorized

Lien Law Change in Idaho

By on November 22, 2022
Leave a comment

On July 1, 2022, the Idaho Legislature’s amendments to I.C. 45-507 came into effect. This statute regulates the steps and requirements to sustain a valid mechanics and materialmen lien. There were three changes to the statute: (1) clarification as to who may personally serve a notice of lien; (2) additional contents that must be included in a lien claim; and (3) authorization for attorney fees.

Prior to the amendments, any person could, on behalf of the entity (contractor) seeking to establish a lien, personally serve the owner of the property with a claim of lien. Now, for personal service to be considered effective, the owner or reputed owner must be personally served by an officer “authorized by law” to serve process. Essentially, a process server needs to be employed for personal service. A contractor may still serve an owner via certified mail

The second change relates to required disclosures. Now, in order to have a valid lien, a contractor must attach a copy of the required disclosures and acknowledgement of receipt of said disclosures with the claim of lien. If the claim does not contain the required documents, it will be considered invalid. This is an important change, because even if the contractor provides all required documents to the owner if there is no copy of the documents attached to the claim of lien the contractor will lose their lien rights – assuming the deficiency is not corrected prior to the statute of limitations running.

The most notable change to the statute is the potential to recoup attorney’s fees, by either party. The statute allows an award of attorney’s fees and costs to the prevailing party in any court proceeding regarding a lien filed pursuant to this section. This can be seen as beneficial and detrimental to contractors. While placing a lien on a property is a relatively simple process, doing so while ensuring all requirements have been met can be difficult, especially if a contractor files the lien without help from counsel. Should a lien be deemed invalid, the contractor will no longer have a lien and will likely be instructed to pay the homeowner’s attorney’s fees and costs.

Filed under Lien

Price Escalation Impacts

By on July 1, 2022
Leave a comment

This Bulletin provides guidance to contractors, subcontractors, suppliers, and others to ensure compliance with contractual change order requirements in the event work on a construction project is impacted by price escalation.

Construction projects are being impacted by increased costs for most construction materials. The Producer Price Index shows a 69% increase in the cost of construction materials from March 2020 to March 2022. Many construction contracts do not address escalation or specifically exclude change orders for material escalation, leaving the risk of escalation of construction materials with the contractor, subcontractor, or suppliers.

Bid Protection Tips:

  • Keep bids open for less than 30 days with a designated sunset date:
    • Keeping your bids open for less than 30 days can help protect you from sudden changes in pricing and help maintain your bids’ competitive status.
    • If asked to extend time a bid is open, reconfirm prices before agreeing.
  • Lock in material prices and confirm agreement:
    • Getting a signed, written agreement with your supplier – that notes the specific price agreed to – will be extremely valuable.
  • Consider Specific Proposal Terms:
    • Make sure to include in your bids/proposals language such as:
      “Upon release by customer to proceed to purchase raw materials, this proposal becomes a binding agreement.”
    • If you include this language in a proposal, make sure that the proposal is specifically incorporated by reference into the contract.

Contract Protection Tips:

We also recommend that you check all contracts for an Escalation Clause, which will compensate you in the event there are increases in raw material or equipment costs. Look for a clause like this:

Material prices, including construction materials, are based on current prices at the time of the Proposal. Any significant price increases (meaning a price increase exceeding (10%) in materials necessary to perform the work, that occur during the period of time between the date of this Proposal and Substantial Completion of the Project, shall cause the contract price to be equitably adjusted by an amount reasonably necessary to cover any increase. Further, if material or equipment required by the contract are not available due to shortage or unavailability or if the price to procure such material or equipment increases as set forth in this provision, then an acceptable substitute shall be found and an adjustment in the contract price shall be made accordingly. Contractor shall be entitled to an extension of time for any delay in obtaining delivery of the item necessary for completion of the Work.

Additionally, define unavailability to obtain materials as an excusable delay or force majeure event in the contract.

If the contract does not include an escalation provisions, you should revise to include a provision. Check the Prime Contract to see if escalation has been addressed. If so, the owner and the contractor should not object to including an escalation provision in downstream contracts.

Supply Protection Tips:

  • Negotiate for release of funds to make early purchases when needed.
    • Negotiate contracts that allow you to purchase materials in advance to avoid a price increase or product unavailability.
  • Confirm product lead times in advance of project needs;
    • Put a hold on material verified to be in stock.
    • Make purchases early when feasible.
    • Obtain guarantees from your suppliers.

Price Escalation Action Items:

If you experience a price escalation impact, it is imperative that you comply with the notice provisions of your contract and track your actual time and damages:

  1. Keep meticulous records of all increased expenses and provide supporting documentation as required to obtain payment.
  2. Track your material costs to establish the increased cost versus the amount at bid.
  3. Follow the recommendations set forth in GRSM Construction Bulletin – Protect Your Right To Payment.

For questions, contract Denise M. Motta.

Filed under Price Escalation

Force Majeure Recommendations

By on July 1, 2022
Leave a comment

This Bulletin provides guidance to contractors, subcontractors, suppliers, and others to ensure compliance with contractual change order requirements in the event work on a construction project is impacted by a force majeure event.

Contract Protection Tips:

A force majeure event is defined as an unforeseeable circumstance that prevents someone from fulfilling a contract. Because many events arising on a construction project could be arguably unforeseen, it is imperative that the contract contain a Force Majeure provision. Examine all contracts for the applicable Force Majeure provision. Look for a clause like this:

§ 8.3.3     Any failure or omission by Owner or Contractor in performance of its obligation shall not be deemed a breach or create any liability for damages or other relief (other than additional time) if it arises from any cause beyond the reasonable control of such party, including, without limitation, acts of God, floods, fire, explosions, storms, earthquakes, acts of public enemy, war, terrorism, rebellion, insurrection, riot, sabotage, invasion, epidemic, quarantine, strikes, lockouts, labor disputes or other industrial disturbances, or any order or action by any governmental agency, or causes of similar nature.

In the aftermath of the COVID-19 pandemic, a variety of Force Majeure clauses have been added to construction contracts. Given supply chain issues, it is advisable to include a clause addressing specific supply chain impacts provided by the contractor or supplier providing: “lack of or failure of or other inability to obtain necessary transportation, fuel, power, materials, machinery, equipment or facilities, delays caused by other contractors, subcontractors or their subcontractors of any tier, or any materialmen or suppliers” Also, it is recommended that the clause specifically provide: “Any such delay shall extend the time for completion of the contract by not less than the duration of the delay.”

Force Majeure Event Action Items:

If you experience a force majeure event, it is imperative that you comply with the notice provisions of your contract and track your actual time and damages.

  1. Provide notice and request for a time extension, as well as associated costs. Notice should be provided in accordance with the contract provisions. Remember to check the timing of notice (e.g., within 5 days of occurrence of the event) and the method of notice (e.g., in writing delivered by certified mail return receipt requested). If your contract does not contain specific requirements of what must be included in the notice, the following Example Notice Language may be used:

    At this time, [Contractor/Subcontractor/Supplier] is being delayed by a Force Majeure Event, which is outside of its control. [Describe Event]. [Contractor/Subcontractor/Supplier] has been impacted by the Force Majeure Event. Among other impacts, we continue to face impacts to our labor force and disruptions to the delivery of material and detailing services.

    It is impossible to notify you of the full impact the Force Majeure Event will have on costs and schedule; however, we hereby request a day-for-day extension. [Contractor/Subcontractor/Supplier] will submit its costs associated with this impact along with documentation of the schedule impacts. [Contractor/Subcontractor/Supplier] reserves all rights that it has under the contract and applicable law to an extension of time for any delay and costs that result from this force majeure event.

  2. Check all contracts for clauses relating to compensation in the event of a shutdown or delay. Is there a No Damages for Delay Clause? Look for a clause like this:

    No claim for damages . . . other than for an extension of time shall be made or asserted against the owner for any reason whatsoever. The contractor shall not be entitled to an increase in the contract sum or payment or compensation of any kind from the owner for direct, indirect, consequential, impact or other costs, expenses or damages, including but not limited to costs of acceleration or inefficiency, arising because of delay, disruption, interference from any cause whatsoever.

If there is an enforceable No Damages for Delay Clause, begin considering mitigation options that will reduce your job site overhead and general conditions, such as the ability to return rented equipment during any project suspension.

  1. Check contract for Supply Chain Delay provision.
  2. Check contract for Price Escalation provision.
  3. Keep meticulous records of all damages arising from any delay and increased expenses and provide supporting documentation as required to obtain payment.
  4. Follow the recommendations set forth in GRSM Construction Bulletin – Protect Your Right To Payment.

For questions, contact Denise M. Motta.

Filed under Force Majeure

Supply Chain Delay Recommendations

By on July 1, 2022
Leave a comment

This Bulletin provides guidance to contractors, subcontractors, suppliers, and others to ensure compliance with contractual change order requirements in the event work on a construction project is impacted by supply chain delays.

Contract Protection Tips:

The construction industry is being impacted substantially by inability to obtain necessary construction products due to supply chain issues. Most construction contracts do not accommodate time extensions due to supply chain impacts. To address this gap in contract terms, we recommend including language such as: “lack of or failure of or other inability to obtain necessary transportation, fuel, power, materials, machinery, equipment or facilities, delays caused by other contractors, subcontractors or their subcontractors of any tier, or any materialmen or suppliers” as part of the defined force majeure event under the contract.

This provision can be included in the Change Order section of the contract as well by including a provision such as: “If the Work is delayed by the failure of or other inability to obtain necessary transportation, fuel, power, materials, machinery, equipment or facilities, delays caused by other contractors, subcontractors or their subcontractors of any tier, or any materialmen or suppliers, contractor shall be entitled to a change order for its costs and time associated with the delay.”

If the contract does not include a supply chain provision, you should revise to include a provision. Check the Prime Contract to see if supply chain delays have been addressed. If so, the owner and the contractor should not object to including supply chain provision in downstream contracts.

Supply Chain Delay Action Items:

If you experience supply chain delay, it is imperative that you comply with the notice provisions of your contract and track your actual time and damages.

  1. Provide notice and request for a time extension, as well as associated costs.
    Notice should be provided in accordance with the subcontract provisions. Remember to check the timing of notice (e.g., within 5 days of occurrence of the event) and the method of notice (e.g., in writing delivered by certified mail return receipt requested).
  2. Check all contracts for clauses relating to compensation in the event of a shutdown or delay. Is there a No Damages for Delay Clause? Look for a clause like this:

No claim for damages . . . other than for an extension of time shall be made or asserted against the owner for any reason whatsoever. The contractor shall not be entitled to an increase in the contract sum or payment or compensation of any kind from the owner for direct, indirect, consequential, impact or other costs, expenses or damages, including but not limited to costs of acceleration or inefficiency, arising because of delay, disruption, interference from any cause whatsoever.

If there is an enforceable No Damages for Delay Clause, begin considering mitigation options that will reduce your job site overhead and general conditions, such as the ability to return rented equipment during any project suspension.

  1. Keep meticulous records of all damages arising from any delay and increased expenses and provide supporting documentation as required to obtain payment.
  2. Follow the recommendations set forth in GRSM Construction Bulletin – Protect Your Right To Payment.

For questions, contact Denise M. Motta

Filed under Supply Chain Delay

Protect Your Right To Payment By Following Nedd

By on July 1, 2022
Leave a comment

In order to preserve your right to payment, you must satisfy the contractual requirements supporting a change order for the increased costs or time due to the delay. The key to the successful presentation of change order claims is educating your team on the following:

1.    NOTICE

  • Review the change order and notice provisions of your contracts. Make your contract searchable and insert the term “Noti” and look for the items listed below.

  • Who:  Check the designated representative for notice.

  • It may not be the project manager.

  • Confirm who can authorize the change order.

  • Is owner approval required?

  • Ensure that the party approving the change order has authority to do so.

  • What:  Check for specific information required by the contract.

  • Provide ALL information available.

  • If certain information is not yet available, state that the information will be provided when available.

  • Reserve all rights to amend and submit additional information.

  • Request both an increase to the Contract Sum and Contract Time.

  • Make the request even if you do not believe the delay or time necessary will cause a significant impact.

  • When:  Check the time deadline for notice.

  • Does the contract provide for waiver if notice is not provided?

  • How:  Check the method for providing notice.

  • Does it require certified mail?

  • Is email sufficient?

  • If email is not proper notice, be sure to issue via the required method in addition to email.

  • IF YOUR CUSTOMER DOES NOT ALLOW A TIME EXTENSION OR REJECTS YOUR NOTICE, respond and provide further notice that you consider the rejection a “Constructive Acceleration” and will be forced to incur overtime and other potential labor, material, and equipment costs.

2.    ENTITLEMENT

  • Prepare and submit an entitlement packet that demonstrates your legal and factual entitlement to a change.

  • Legal Entitlement: Review your contract for clauses that would allow for the recovery of delay and/or acceleration costs, or look for common law options that may invalidate no-damages-for delay clauses such as the delay was “beyond the contemplation of the parties” or if you were “constructively accelerated”.

  • Search your contract for the following terms:

  • “Excusable Delay”

  • Delay

  • God (Acts of God)

  • Epidemic

  • Quarantine

  • No Damages for Delay

  • “Time Extension”

  • “Sole Remedy”

  • “Accelerat” – Acceleration damages are different from delay damages. If you request a time extension and are not granted the extension, you may have a claim for directed, or constructive acceleration.1

  • Factual Entitlement: Prepare a comparison demonstrating the impact on your baseline schedule from your planned schedule.

  • Supplement entitlement packet to substantiate the basis for the change order.

  • Track and document each day of delay through schedules, time sheets, daily reports, payroll documentation, or other project records.

  • Provide updated entitlement packet to support change order request as information is updated.

  • Save the entitlement packet and all supporting information where it can be easily located, updated, and shared.

3.    DAMAGES

  • Track and document amount of actual costs incurred (to the extent possible).

  • Monetary Damages may include:

  • Increased cost of materials

  • Increased cost of labor

  • Increased cost of equipment rental charges

  • Storage of materials

  • Additional supervision or field costs for the extended duration

  • Costs associated with de-mobilization and re-mobilization

  • Lost overhead and profit

  • Costs for extended general conditions, equipment costs, or rental costs

  • Additional bond or insurance premiums

  • Tax implications

  • Document and provide proof of ALL Expenses:

  • Labor – Compare original estimated hours with actual hours delayed or spent in overtime.

  • Use daily time cards, certified payroll, daily reports, or a separate phase code in your job cost accounting to track actual labor delays and impacts.

  • Materials – Gather notices from suppliers relating to increased costs and delays. Gather the invoices and checks showing payment for any increased costs.

  • Equipment – Gather proof of down-time hours through daily time cards, certified payroll, daily reports, or a separate phase code in your job cost accounting to track labor.

  • Be prepared to produce your rental agreement of proof of cost and payment for rental.

  • Overhead and Profit – Cite to contract section setting forth allowable OH&P on changes.

  • Storage, Subcontractor and Vendor Costs – Produce invoices and proof of payment for increased costs resulting from delays and acceleration.

4.    DON’T WAIVE YOUR CLAIMS

  • Check language in ALL lien waivers and ALL payment applications and ALL change orders to make sure (1) pending claims, (2) unpaid contract balances, and (3) unpaid retainage are not waived.

  • Be aware of potential releases included in online payment applications (Textura).

  • Confirm that contract does not provide that acceptance of payment is a waiver of all claims.

  • If it does, consider whether to accept payment.

  • Be aware claim deadlines.

  • Follow dispute resolution procedures in the contract (including time provisions).

  • Be aware of statute of limitations to file lawsuits.

  • Bond and lien claim deadlines.

 

For questions, contact Denise M. Motta.

1 A claim for constructive acceleration arises where (1) there is an excusable delay; (2) you properly request a time extension; (3) the request for extension was denied; (4) you were ordered to complete the project by the original completion date despite the excusable delay; and (5) you accelerated performance and incurred additional costs. A claim for directed acceleration arises where (1) you are ordered to accelerate (perform in a shorter period than originally allowed by the contract schedule); (2) the delays prompting the acceleration were excusable; and (3) you accelerated performance and incurred additional costs.

Filed under Change Orders, Right to Payment

Gordon & Rees Ranked #4 of Top 50 Construction Law Firms in the Nation by Construction Executive Magazine

By on June 1, 2022
Leave a comment

Gordon Rees Scully Mansukhani has been ranked as the No. 4 construction law firm in the nation by Construction Executive in the magazine’s 2022 ranking of The Top 50 Construction Law Firms™.  As the only law firm with offices and attorneys in all 50 states, Gordon & Rees’ construction group (with over 150 construction lawyers) delivers maximum value to our clients by understanding their business and combining the resources of a full-service national firm with the local knowledge of a regional firm.

Led by Allen Estes and Angela Richie, the construction lawyers at Gordon & Rees are uniquely situated to serve our construction clients.  We have attorneys with professional training and practical experience in related fields such as engineering and construction management, as well as lawyers with leadership experience in various construction industry related trade associations, legal advisory committees and government agencies.  “If a client is looking for a legal partner in multiple states who understands their business, Gordon & Rees is that partner,” said Angela Richie.

To develop The Top 50 Construction Law Firms™ rankings, the Construction Executive editorial team reached out to more than 600 U.S. construction law firms to complete their survey. The data collected included 2021 revenues from the firm’s construction practice; the number of attorneys in the firm’s construction practice; percentage of firm’s total revenues derived from its construction practice; number of states in which the firm is licensed to practice; year in which the construction practice was established; and the number of construction industry clients served during fiscal year 2021. The ranking was then determined by an algorithm that weighted these factors in descending order of importance. 

Gordon & Rees is regularly recognized for its top tier construction practice throughout the United States. The group consists of lawyers nationwide who focus their practice on the comprehensive range of legal services required by all participants in the construction industry — architects, engineers, design professionals, design joint ventures, owners, developers, property managers, general contractors, subcontractors, material suppliers, product manufacturers, lenders, investors, state agencies, municipalities, and other affiliated consultants and service providers.

To view Construction Executive’s annual law firm rankings, please click here. 

Filed under Construction

Contractors’ Right to Sue in Washington Requires Registration

By on June 1, 2022
Leave a comment

Summary:

In Washington, contractors must be properly registered in order to pursue a legal action against a customer for breach of contract. Dobson v. Archibald, a February 2022 decision by the Washington Court of Appeals, reinforced how the governing statute – RCW 18.27.080 – does not simply create an affirmative defense but establishes a mandatory pleading prerequisite.1

Discussion:

In 2018, Archibald hired Dobson to refinish his hardwood floors for $3,200. Dobson was not a registered contractor. She had been referred to Archibald by acquaintances who were familiar with her construction and home repair work, including improvements Dobson had made to her own home. Archibald paid Dobson a $700 deposit before Dobson began her work. At the completion of the floor repair project, Archibald was unhappy with the appearance of the floors and informed Dobson that he would not pay the remaining $2,500.

Dobson recorded a lien against Archibald’s property and filed suit in 2019. Archibald moved for summary judgment, asserting that Dobson could not bring suit because she was not a registered contractor. After a cross-motion for summary judgment by Dobson and Archibald’s motion for leave to amend his answer, the trial court granted Archibald’s summary judgment motion and dismissed Dobson’s suit with prejudice.

The Appellate Court’s analysis started with the statute RCW 18.27.080, which provides, in pertinent part:

No person engaged in the business or acting in the capacity of a contractor may bring or maintain any action in any court of this state for the collection of compensation for the performance of any work or for breach of any contract for which registration is required under this chapter without alleging and proving that he or she was a duly registered contractor …

Dobson contended that nonregistration is an affirmative defense which must be timely pleaded and proved by the defendant. The Court rejected that contention, stating that the plain language of the statute does not support that view. The Court pointed also to Coronado v. Orona, 137 Wn. App. 308, 311 (“Washington contractors cannot sue clients to recover for compensation or for breach of contract if the contractors are not properly registered”). Therefore, registration must be alleged and proved by the plaintiff.

Dobson also contended that she was not a “contractor” under RCW 18.27.010(1)(a) and therefore did not need to be licensed. She argued that the registration requirement did not apply because she was primarily employed as a longshoreman and the flooring work she did for Archibald was “an isolated act in her spare time as a favor.” The Court looked to the statutory definition of a “contractor” and found that “[e]ven a single and isolated business venture is not exempt from the registration requirements of the registration act.”

The Court further clarified that the facts distinguished this case from Rose v. Tarman, 17 Wn. App. 160 (1977), on which Dobson relied. In Rose, the registration requirement did not apply where the parties were two friends with a longstanding social relationship. Here, Dobson and Archibald knew each other exclusively through this specific business transaction. Despite some superficial similarities, “[t]he narrow factual scenario that allowed Rose to avoid the registration bar is simply not applicable to Dobson.” Thus, the Appellate Court affirmed the trial court’s summary judgment dismissal of Dobson’s action.

Takeaways:

For contractors, this court decision reinforces the meaning and effect of Washington’s contractor registration act, RCW 18.27: contractor registration is a prerequisite to filing suit.

For legal practitioners, this Dobson case makes abundantly clear that plaintiffs must plead and prove contractor registration, and actions in the State of Washington that do not meet this pleading requirement will be subject to summary judgment dismissal.

________________________________________________________________________________________________________

1 Dobson v. Archibald, 2022 WL 521496, 505 P.3d 115 (Feb. 22, 2022)

Filed under Breach of Contract, Contractor

The Importance of Engaging Design Professional Experts Early, with a Focus on Massachusetts Law

By on June 1, 2022
Leave a comment

In any Massachusetts case alleging negligence against a design professional, an expert witness on the topic of liability is a critical, early consideration. Given the expense of expert witnesses, counsel representing design professionals are wise to evaluate (1) the need for an expert, (2) the timing of the engagement of an expert, and (3) the scope of the expert’s services.

To begin, not every allegation of negligence against a design professional necessitates an expert opinion. “The test for determining whether a particular a particular matter is a proper one for expert testimony is whether the testimony will assist the jury in understanding issues of fact beyond their common experience.” Herbert A. Sullivan, Inc. v. Utica Mutual Insurance Co., 439 Mass. 387, 402 (2003) (addressing duties of an insurer). For instance, in its ruling in Parent v. Stone & Webster Engineering Corp., the Massachusetts Supreme Court noted no expert would be necessary to prove professional negligence where an electrician was injured by a mislabeled distribution box carrying 2,300 volts. 408 Mass. 108 (1990). It is reasonable to expect lay jurors to comprehend the duty of an electrician to properly label a distribution box carrying potentially fatal quantities of voltage. To the extent liability is readily recognizable to the average juror (i.e. “within the ken of the average juror”), significant cost savings are achievable by forgoing the use of an expert witness. That, however, is the exception.

Far more often the duty of care is more nuanced, and an expert is required to prove liability. For instance, “[a]rchitects, like other professionals, do not have a duty to be perfect in their work, but rather are expected to exercise ‘that skill and judgment which can be reasonably expected from similarly situated professionals’ . . . Expert testimony is generally needed to establish this professional standard of care.” LeBlanc v. Logan Hilton Joint Venture, 463 Mass. 316, 329 (2012). While contracts for architects, engineers, surveyors and other design professionals often expressly set forth their duties, those contractual terms are not typically sufficient to establish liability against the design professional. More explanation is required to educate the average juror on duties (written and/or implied) of design professionals.

Furthermore, design professional deviations from the common practices of the profession do not always constitute negligence. Design creativity can be “stifled” and progress in the fields of engineering and architecture could be halted if “untried configurations” subjected the practitioners to liability. Klein v. Catalano, 386 Mass. 701, 717 (1982).

Once there is a determination that an expert is necessary legal counsel ought to engage such services early. The early involvement of an expert can assist the attorney in analysis of discovery, preparation for depositions, evaluating exposure, and mediating. Tempting as it may be to delay the procurement of an expert until the point of necessity, hoping that the matter will resolve before incurring expert-related costs, it is more typically a false saving; it invites the classic conundrum of not knowing what you do not know.

That is not to say the initial engagement of an expert need be expensive. An expert can be engaged early at minimal cost. Formal written reports are not needed early in the case. Indeed, it is unadvisable to do so unless the outcome of said report is certain. An attorney experienced in defending Massachusetts design professionals can often identify liability assessments early. Even in that instance, the preparation of a formal, written opinion is typically an expensive endeavor. An informal, verbal opinion is usually sufficient for purposes of identifying available defenses (including the affirmative defenses accompanying the Answer), preparing discovery demands to other parties, responding to discovery demands and participating in mediation.

Therefore, the scope of the expert’s services is best to be left flexible. A tiered approach is often advisable. The potential of a full disclosure, suitable for purposes of Massachusetts Rule 26, must be considered. However, before that requirement is realized, an expert can be engaged on an hourly basis to review the available documents, provide insights thereon, and present a preliminary verbal opinion. Depending on counsel’s assessment of the efficiency, credibility and value of that preliminary verbal opinion, more expert services can be arranged.

Of course, an expert’s opinion (be it verbal or written) can never eclipse the role of the juror. Attorneys must be keenly observant of this foundational truth of the practice of law – an expert is merely a component of the case; it cannot be the end-all-be-all. “The role of an expert witness is to help the jury understand issues of fact beyond their common experience. Under modern standards, expert testimony on matters within the witness’s field of expertise is admissible whenever it will aid the jury in reaching a decision, even if the expert’s opinion touches on the ultimate issues that the jury must decide. [citation omitted] An expert may not, however, offer his opinion on issues that the jury are equally competent to assess.” Simon v. Solomon, 385 Mass. 91, 105 (1982). Moreover, the ability of an opposing party to produce a contradicting expert opinion must never be discounted.

The expert is a critical component to most cases alleging negligence against design professionals in Massachusetts. That being said, the expert need not break the bank for such a case.

Filed under Design Professional

Connecticut Appellate Court Confirms That Paid If Paid Clauses Remain Enforceable

By and on June 1, 2022
Leave a comment

In Electrical Contractors, Inc. v. 50 Morgan Hospitality Group, 212 Conn. App. 724 (2022), the Appellate Court affirmed the trial court’s finding that payment from the property owner to the general contractor was a condition precedent to the general contractor’s obligation to pay the subcontractor. Here, the plaintiff, an electrical subcontractor on a commercial construction project, sued the defendant, the general contractor, for nonpayment of over $350,000. The subcontract between the plaintiff and defendant provided that “[the plaintiff] expressly agrees that payment by [the owner] to [the general contractor] is a condition precedent to [the general contractor’s] obligation to make partial or final payments to [the plaintiff] as provided in this paragraph . . . .” The Court held that this provision clearly and unambiguously means that the general contractor was not obligated to pay the subcontractor unless the general contractor received payment from the owner. The court further made a point to distinguish “pay-if-paid” and “pay-when-paid” clauses, noting that the latter “merely postpones a general contractor’s obligation to pay its subcontractors for a reasonable period of time,” whereas the former creates a “condition precedent” to payment.

Filed under Contractor, Paid If Paid Clauses, Subcontractors

← Older posts