Construction Law

Contract Modifications May Trigger Disruption Claims

Posted on June 08, 2009
            A government agency hired a general contractor to construct a laboratory building. Bell BCI Co. v. United States, 81 Fed. Cl. 617 (2008). After nine months from the beginning of construction, the government asked that an additional floor be added to the building...

Failure to Raise All Related Claims at Once May Preclude Parties from Bringing Any Remaining Claims Later

Posted on May 19, 2009
                        The legal doctrine of res judicata or claim preclusion precludes parties from bringing suit for claims they should have brought up in earlier suits...

Contractors, Remember to Perfect Your Mechanic's Lien to Stay Protected

Posted on May 13, 2009
            Section 29-5-10 of the South Carolina Code of Laws Annotated allows providers of labor or materials for the repair, alteration, or erection of a structure to file a lien either on the structure or on the owner's interest in the land on which the structure is located...

Exception to the Economic Loss Rule Extended to Commercial Construction

Posted on May 13, 2009
            The economic loss rule is a court-created doctrine that bars liability in tort where the only damages are injuries to the defective product itself: this means no personal injuries or damages to other property exist...

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Wrongful Conduct Found Not Covered by Insurance Policy

Posted on May 06, 2009
                The City of Shawnee, Kansas, hired a contractor to perform work on a project. Utility lines ran throughout the job site. The bid solicitation documents indicated that the utility lines would be relocated not to interfere with the contractor's work...

U.S. Senate Expresses Concern over Chinese Drywall Issues

Posted on April 30, 2009
            On March 30, 2009, Florida senator, Bill Nelson, introduced to the Senate Bill S.Res.91. The bill is entitled: "A Resolution Calling on the Consumer Product Safety Commission, the Secretary of the Treasury, and the Secretary of Housing and Urban Development to Take Action on Issues Relating to Drywall Imported from China...

No-Damages-For-Delay Clause May Be Unenforceable

Posted on April 13, 2009
                Williams & Sons Erectors, Inc. v. South Carolina Steel Corp., 983 F.2d 1176 (2d Cir. 1993).            The parties to a contract may choose how to share liability...

Short Contract Law Lesson

Posted on April 09, 2009
            Construction projects usually involve many parties, many tasks, and consequently many different agreements. Thus, understanding basic concepts of contract law is very important...

A Promise by E-Mail Must be Supported by Consideration

Posted on April 07, 2009
    Inland Constr. Co. v. Cameron Park II, Ltd., LLC, 640 S.E.2d 415 (2007).            A contractor sued a corporation for money owed by the corporation under the terms of their construction contract...

When Does a Claim for Defective Work Arise?

Posted on April 06, 2009
                Lee v. Prof?l Constr. Servs., 982 So. 2d 837 (La. Ct. App. 2008).            A Louisiana Court of Appeal barred a claim against an engineer because it was brought beyond the limitations of the statute of repose...

Commercial General Liability Insurance Carrier Did Not Cover Liability for Professional Services

Posted on March 20, 2009
        Wimberly Allison Tong & Goo, Inc. v. Travelers Prop. Casualty Co. of Am., 559 F. Supp. 2d 504 (D.C. N.J 2008).            This case involved an architect who was sued by several parties who either sustained injuries or lost loved ones when a parking garage colapsed...

Obtain a Subcontractor's Proof of Insurance for Each Job

Posted on March 10, 2009
                        In February, 2009, in Hardee v. McDowell, the South Carolina Supreme Court addressed a contractor's ability to shift liability under the South Carolina Uninsured Employer's Fund...

An Architect Could Enforce Copyrights Several Years after the Statute of Limitations Expired

Posted on March 10, 2009
            In Warren Freedenfeld Associates, Inc. v. McTigue et al., 531 F.3d 38 (1st Cir. 2008), the court of appeals reversed the trial court?s decision to dismiss an architect?s complaint because the period during which he could sue had expired...

Impact Claims Must Be Released Expressly

Posted on March 10, 2009
                        The United States Court of Federal Claims allowed a contractor to recover losses suffered due to over 200 contract modifications by the defendant, a government entity called the National Institutes of Health (NIH)...

Scope of Contractors' General Liability Insurance

Posted on March 10, 2009
            Auto Owners Insurance Co. v. Newman, a 2008 case in the South Carolina Court of Appeals, involved a commercial general liability (CGL) insurance policy issued to a contractor. The subcontractor in the case installed stucco siding defectively, which allowed water to seep into the home and cause damage...

A Surety's Potential Liability

Posted on March 10, 2009
            RLI Ins. Co. v. Indian River School Dist., 556 F. Supp. 2d 356 (D. Del. 2008).                        A surety was found responsible for a contractor?s financial obligations resulting from overpayment by owner...

Contractors, You Cannot Contract Out of Liability for Your Own Negligence

Posted on March 06, 2009

Employers, Keep in Mind Possible OSHA Inspections

Posted on February 24, 2009
            Employers should be prepared for a possible workplace inspection by the Occupational Safety and Health Administration (OSHA). An inspection may be conducted because of a complaint, fatality in the facility, a scheduled inspection, or a follow-up visit...

Contractors, Consider Upgrading Your License Over Risking Disciplinary Action

Posted on February 23, 2009
                        In South Carolina, general and mechanical contractors have limitations on the amount of money a project they undertake may cost, unless the contractors qualify for the unlimited group...

A Contractor's Liability for Negligence

Posted on February 23, 2009
            Contractors may be held liable for their negligent performance of a contract. Under the economic loss rule, economic loss alone precludes punitive damages?additional damages to punish for wrongful conduct...

Zoning Considerations: Developers' Reliance on Representations by the County

Posted on February 19, 2009
            Quail Hill v. County of Richland, 379 S.C. 314 (Ct. App. 2008).            Plaintiff bought property from the government in reliance on representations by County officers and staff regarding zoning...

A Lis Pendends, Without More, Will Not Provide Notice of Interest on Property!!!!

Posted on February 13, 2009
            In its recent opinion, Horry County v. Ray, the South Carolina Court of Appeals held that a county's lis pendens alone did not give notice to a mortgagee of the county's interest on property...

The New South Carolina Illegal Immigration Reform Act!

Posted on February 11, 2009
            While traditionally a federal issue, numerous states have taken the immigration matter in their own hands. South Carolina has recently adopted the Illegal Immigration Reform Act (?the Act?)...

Rights under the False Claims Act

Posted on February 10, 2009
            Allison Engine Co. v. United States, 128 S.C. 2123 (2008)            This appeal involved a claim under the False Claims Act (FCA)...

Trust Fund Statutes

Posted on February 09, 2009
            Officers of a closely-held construction company usually first pay debts for which shareholders may be found personally liable such as employment taxes or personally guaranteed debts...

A Contractor Must Pay a Subcontractor All Undisputed Amounts Due

Posted on February 06, 2009
            A contractor did not meet the requirements of the Texas Prompt Payment Act when the contractor wrongly withheld undisputed amounts owed to the subcontractor. ARCO Construction Company, Inc...

Residential Property Disclosure Statement

Posted on February 05, 2009
            McLaughlin v. Williams, 379 S.C. 451 (Ct. App. 2008).            A purchaser could not bring a claim for fraud and negligent misrepresentation when the purchaser had notice of the defects from the inspection reports...

Attorney's Fees in a Mechanic's Lien Action

Posted on February 04, 2009
            The South Carolina Court of Appeals affirmed the lower court's ruling of limiting awarded fees and costs to the amount of the mechanic's lien. Mozingo & Wallace Architects, L...

Subcontractors, Be Prepared to Deal with Your Contractor's Bankruptcy - Know Your Rights, but Also Your Obligations!

Posted on February 03, 2009
            As a subcontractor, you should understand the challenges that come with a contractor?s bankruptcy. Authors Jay Clark and Larry Longsdon discussed the many issues to consider when a contractor files bankruptcy in The Contractor's Compass journal...

Interpreting Contract Terms Concerning Allocation of Risk

Posted on February 01, 2009
               The Armed Services Board of Contract Appeals rejected a contractor's argument that it could charge the government an "equipment" price for what was in fact a cost for weather-damaged materials (ASBCA No...

Differing Site Conditions and Were They Differing After All?

Posted on January 31, 2009
                        A contractor was unsuccessful in appealing a denial of its claim for equitable adjustment based on differing site conditions, commercial impractibility, undisclosed superior knowledge, and failure to cooperate theories in front of the Armed Services Board of Contract Appeals (ASBCA No...

Get Help with Obtaining Government Bonds

Posted on January 30, 2009
                  Small business contractors can use the U.S. Small Business Administration?s (SBA) Surety Bond Guarantee (SBG) program to obtain government bonds...

Florida District Court Holds that Satute of LImitations on Construction Defect Case Did Not Begin to Run until After Transfer of Control to Association

Posted on January 30, 2009
                A Florida district court found that a condominium association had 4 years during which it could bring action against a contractor, developer, and architect for construction defects...

Contractors, pay your taxes or get disbarred from Federal contracting!!!

Posted on January 29, 2009
            Contractors should think twice when choosing not to pay or when disregarding federal taxes. Regulation 52.209-5 provides an additional certification that all contractors must make when bidding for federal contracts...

Concurrent Delay Damages, Award and Allocation

Posted on January 28, 2009
                        Michael and Daniel Drewry discussed the downstream allocation of concurrent delay damages in the ABA newsletter Under Construction...

Existing Home Sales Increase by 6.5% in December

Posted on January 26, 2009
According to the National Association of Realtors, sales of existing homes increased by 6.5% in the month of December.  Read article.

Comply with Construction Trust Fund Statutes to Avoid Personal Liability!

Posted on January 22, 2009
            Officers of a closely-held construction company usually first pay debts for which shareholders may be found personally liable such as employment taxes or personally guaranteed debts...

No Mechanic's Lien on Property for Which Materials Have Been Fabricated but Not Delivered

Posted on January 21, 2009
            The South Carolina Code provides: ?A person to whom a debt is due for ? materials furnished and actually used in the erection, alteration or repair of a building ? by virtue of an agreement with ? the owner ? shall have a lien upon the building ?...

Rules Established by the FAA for Vacating, Modifying, or Correcting Arbitration Awards Are the Exclusive Grounds for Modifying an Arbitration Award and Cannot be Modified by the Parties

Posted on July 06, 2008
    The case Hall Street Assocs., LLC v. Mattel, Inc., 128 S.Ct 1396 (2008), arose from a dispute concerning the responsibility for clean-up of a manufacturing site when excessive levels of pollutants were found in the property?s well water...

Homeowner's Refusal to Make One Payment in a Construction Installment Contract Constitutes a Substantial Breach of the Contract

Posted on July 03, 2008
    The South Carolina Court of Appeals recently decided that a homeowner's refusal to make an installment under construction contract constituted a substantial breach of the contract.  See Silver v. Aabstract Pools, 376 S.C. 585, 658 S...

Proper Measure of Damages For a Claim Against Title Insurance for Newly Discovered Encumbrance is the Difference Between the Value of the Entire Tract While Encumbered and the Value of the Entire Tract Without Encumbrances.

Posted on July 01, 2008
    In a recent case before the S.C. Supreme Court, Stanley v. Atlantic Title Ins. Co., 377 S.C. 405, 661 S.E.2d 62 (2008) a landowner purchased lakefront property, a portion of which, unbeknownst to the purchaser and title insurance company, served as a drain field for a neighboring tract of land...

Award of Statutory Attorney?s Fees Disallowed in the Absence of a Formal Fee Agreement

Posted on July 01, 2008
    In the case of Williamson v. Middleton, an employee and employer came to an agreement that the employer owed the employee $906.62 in back commission at the time of the employee?s departure from the employer?s business. After starting a new job, the employee continued seeking the commission and enlisted the service of a close friend and lawyer that had previously assisted the employee in an unrelated matter free of charge...

Arbitration Clause Stricken for Unconscionability

Posted on June 30, 2008
    In the case of Simpson v. MSA of Myrtle Beach, Inc., 644 S.E.2d 663 (S.C. 2007), an issue over the validity of the arbitration clause arose.  The additional terms and agreements section of a consumer automobile purchase contract contained a broad arbitration clause...

Not Incorporated? Consider Forming a Limited Liaility Company

Posted on June 29, 2008
    S.C. law permits the creation of a Limited Liability Company (LLC).  LLCs allow member(s) to be taxed like a sole proprietorship or partnership.  LLCs provide limited liability as corporations do - members or managers of a LLC are generally not liable for the obligations of the LLC...

?Opt-out? Class Action and Notification Procedure is the Exclusive Method of Class Action Litigation in South Carolina

Posted on June 29, 2008
    In a recent decision, the S.C. Supreme Courtheld that the?Opt-out? class action and notification procedure is the exclusive method of lass action litigation in South Carolina.  See Salmonsen v. CGD, Inc., 377 S.C. 442, 661 S...

What is Float Time, and Who Owns It?

Posted on June 28, 2008
    Float Time is the period in Critical Path Method scheduling that allows the contractor to an excusable delay when the original contract schedule allows more than enough time to perform the work. In other words, the float is the maximum delay allowed before a delay will cause a slow-down in completion of the whole project...

?Or Equal? or Not

Posted on June 27, 2008
    This article was contributed by R. Bryan Barnes of my law firm.    Bid specifications frequently contain the identification of a product to be provided by the bidder but, then allow an "or equal". Bidders who receive the contract may find themselves in the position of being unable to provide the product specified because the product manufacturer has discontinued the line, gone out of business or only provided a limited supply...

Basis for Liens and Assessments Under the S.C. Horizontal Property Act

Posted on June 27, 2008
    Liens for non-payment of assessments to a community association can arise under two different situations. First, the S.C. Horizontal Property Act provides a statutory basis for the creation of liens in the case of condominiums only...

Owner Who Builds His Own Home Offers No Implied Warranty of Workmalike Service nor Owes Duty of Care to Future Purchaser

Posted on June 26, 2008
    In the recent case of Smith v. Breedlove, 377 S.C. 415, 661 S.E.2d 67, the SC Supreme Court held that a private individual who built a home as his personal residence, acting as his own general contractor, was not considered the builder or general contractor when a subsequent buyer sued for breach of implied warranty of workmanlike service...

SC Supreme Court Allows Low Bidder on Government Project to Increase Bid after Bid Opening

Posted on April 16, 2008
    This article was contributed by R. Bryan Barnes of my law firm.     The State of South Carolina launched into uncharted territory when it disallowed the bid protest of the second low bidder in the case of Martin Engineering, Inc...

FCC Issues Order Banning Exclusivity Contract with Cable Providers

Posted on April 02, 2008
    On March 19, 2008 the Federal Communications Commission (FCC) voted unanimously to issue an order banning exclusivity contracts between cable operators (and other multi-channel video programming distributors) and multiple dwelling unit developments...

SC Courts Will Not Enforce Arbitration of Unforseen and Outrageous Torts

Posted on April 01, 2008
    In Chassereau v. Global-Sun Pools, 644 S.E.2d 718 (S.C. 2007),a buyer and seller entered into a contract for the purchase of a swimming pool. The contract contained an agreement to arbitrate any disputes arising out of the contract...

Social Security Administration: No "No -Match Letters" in 2007

Posted on November 24, 2007
    The SSA announced that it will not issue any "no-match letters" in 2007 as a result of a court challenge to the rule.  The SSA has indicated that it will resume issuing "no-match letters" in 2008.    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice...

New Final Rule from OSHA Requires Employer to Pay for All Safety Equipment Costs

Posted on November 24, 2007
    On November 15, 2007, OSHA issued a new final rule requiring employers to pay for all safety equipment costs.  The new rule goes into effect February 13, 2008 and full compliance is required by May 18, 2008.    Click here to read the final rule...

Developers Have a Fiduciary Duty to Property Owners Associations

Posted on November 24, 2007
    In Concerned Dunes West Residents, Inc. v. Georgia-Pacific Corporation, 349 S.C. 251, 562 S.E.2d 633 (2002),the South Carolina Supreme Court held that a developer has a duty to ensure that the roads and other common areas are in good repair at the time ownership of the common areas are transferred to a property owner?s association or to provide the association with sufficient funds to bring those common areas up to standard as of the date of the transfer...

New Construction Contract Documents, ConsensusDOCS, to be Released on September 28, 2007

Posted on September 27, 2007
   20 construction associations collaborated to create a new series of form construction contract documents.  The Associated General Contractors (AGC) and Construction Owners Association of America (COAA) are folding their form contract documents into the new ConsensusDOCS form contract documents...

Do You Know What the Statute of Limitations is for Your Subcontract?

Posted on September 13, 2007
   The statute of limitations for a breach of a subcontract is three years. See S.C. Code Ann. § 15-3-530. However, subcontracts?contracts executed usually between general contractors and subcontractors?can become subject to a six year statute of limitations under the Uniform Commercial Code (UCC) if a court deems the subcontract to be for a sale of goods as opposed to a service contract...

S.C. Supreme Court Rules that a Mechanic?s Lien Does Not Attach to Land When the only Work Done was Work to Prepare the Land for Landscaping

Posted on September 04, 2007
   In order to file a mechanic?s lien, the party seeking the lien must have performed work in the "erection, alteration, or repair of a building or structure." S.C. Code Ann. §29-5-10(a).  Section 29-5-10(a) further provides that "labor performed or furnished in the erection, alteration, or repair of any building or structure upon real estate includes the ...

SC Supreme Court Rules that Posting a Bond Does Not Affect the Time Deadline in which a Party Must Commence a Suit to Enforce a Mechanic?s Lien

Posted on August 21, 2007
   After filing a mechanic?s lien, a party has six months to commence a suit to enforce the lien. See S.C. Code Ann. § 29-5-120. Failure to enforce a lien within the six month statutory period deprives the party of the remedies available under the mechanic?s lien statutes...

SC DHEC's Free Small Business Assistance Program

Posted on July 10, 2007
   South Carolina Department of Health and Environmental Control (SC DHEC) offers a free nonregulatory service that helps small business determine what regulations apply and help small businesses comply with state and federal law.  Take advantage of this free service and eliminate costly legal fees!   Here is the website...

BROAD ?FLOW DOWN? CLAUSES CAN INCLUDE VENUE

Posted on July 10, 2007
   In a recent federal court decision, Dynamic Drywall, Inc. v. Walton Construction Company, US District Court for the District of Kansas, No. NO06-280-JTM, January 18, 2007, the court held that a subcontract that incorporated a contract between the owner and general contractor determined venue...

SC Court of Appeals: Recent Clarification on Who is a "Prevailing Party? Under a Mechanic's Lien Claim

Posted on June 29, 2007
   The South Carolina Court of Appeals recently decided a case that clarified who a "prevailing party" is under the mechanic?s lien statute. The Court held that if a party offers a successful defense against a mechanic?s lien based on the other party?s failure to comply with statutory time limits on enforcing the lien, then the former is the "prevailing party...

Failure to Follow Claims Presentation Procedures in Contract Can Be Fatal to Claim

Posted on June 19, 2007
   In Woodburn Construction Company v. EnCon Pacific (US District Court for the Western District of Washington No. C05-5811fdb, January 17, 2007), the court held that a subcontractor's failure to timely present claims against a general contractor pursuant to the terms of a written subcontract constituted waiver...

How to Take Offensive Action When a Mechanic?s Lien is Filed Against Your Property

Posted on June 19, 2007
   Under South Carolina law, any person who is owed money for providing labor, materials, or service actually used in building, repairing, or altering a building may file a mechanic?s lien against the property where the building is located...

SC Courts: Contractors and Subcontractors can Sue Design Professionals for Economic Losses Resulting from Professional Negligence

Posted on June 12, 2007
In South Carolina, contractors and subcontractors can sue design professionals for economic losses resulting from professional negligence.  See Tommy L. Griffin Plumbing & Heating Co. v. Jordan, Jones & Goulding, Inc., 320 S.C. 49, 57, 463 S...

Construction Material Prices Likely to Continue to Climb Over Coming Months

Posted on April 20, 2007
Beware of price escalation of materials!  Jeff Taylor, Chief Economist for the Associated Builders and Contractors, has warned members of his organization that prices for construction materials are likely to continue to rise during the coming months...

US Department of Labor: 56,000 Construction Jobs Created in March 2007

Posted on April 20, 2007
The US Department of Labor's Bureau of Labor Statistics reported on April 6, 2007, that construction jobs increased by 56,000 in March.  The Bureau of Labor Statistics also reported that 61,000 construction jobs were lost in February most likely caused by "unusually adverse weather...

Common Myths About South Carolina Mechanic's Liens

Posted on March 29, 2007
This article was written by R. Bryan Barnes, a fellow shareholder in my firm.   Mechanic?s liens are creatures of statute. As a result, they are at various times tricky and misunderstood. The misunderstandings have given rise to many myths...

U.S. Fourth Circuit Court of Appeals: Unpaid Subcontractors Have No Absolute Right to Interpleaded Funds Owed to a Contractor in Bankruptcy on Government Projects

Posted on February 24, 2007
The U.S. Fourth Circuit Court of Appeals held in In Re: Baltimore Industries, Incorporated, that unpaid subcontractors do not have an absolute right to interpleaded funds (funds were deposited into court to determine who was entitled to the remaining funds)  when a government contractor has filed a petition for bankruptcy...

Contractors and Subcontractors Must Obtain Certificate of Workers' Compensation Insurance From Their Subcontractors Before EACH Project or Else Face Additional Exposure

Posted on February 21, 2007
A recent South Carolina case demonstrates the importance of contractors and subcontractors obtaining a certificate of workers? compensation coverage for EACH subcontractor before EACH new project, regardless of whether they have an ongoing relationship with the subcontractor...

OSHA Issues Updated Electrical Installation Standard

Posted on February 20, 2007
On February 14, 2007, the U.S. Department of Labor?s Occupational Safety and Health Administration (OSHA) issued a final rule for its updated electrical installation standard.  This is the first significant change in approximately 25 years. The updated standard includes a new alternative method for classifying and installing equipment in Class 1 hazardous locations, new requirements for ground-fault circuit interrupters and new provisions on wiring for carnivals and similar installations...

First Lien on Funds Rule; Subcontractors, Laborers, and Material Suppliers May Place a Lien on a Contractor's Funds

Posted on February 19, 2007
S.C. Code Ann. § 29-7-10 establishes certain rules regarding general contractors? payments to laborers (including private security guards), subcontractors, and materialmen. Once the general contractor receives a payment from the property owner, the general contractor must pay all his laborers, subcontractors, and materialmen for their work on that particular job from the money he has just received...