Volume: 17, Issue: 7 - 04/16/2019
It is self-evident that a contractor and a subcontractor to whom the contractor has assigned a portion of the work should be working from the same defined scope of work. What happens when a contractor negotiates a change order with the project owner, increasing the scope and the price of the work, and fails to disclose the change order to the subcontractor performing that work? A Tennessee court sorted out this situation as it addressed claims for fraud and breach of contract.
Other cases in this issue involve design professional responsibility during the construction process and interpretation of representations made in a contract. Read more.
A contractor did not defraud a subcontractor when the contractor failed to disclose it had negotiated a change order with the project owner, increasing the scope of work and contract price, while insisting the sub perform the expanded scope of work at its originally quoted price. The subcontractor suffered no actual economic harm.
Neither the language in a construction contract nor the consulting engineer’s conduct during construction made the engineer responsible for job site safety. The engineer’s knowledge of dangerous conditions, without job site authority, would not create a duty to warn an employee of the contractor.
A contractual warning of “periodic delays” caused by traffic was not a representation of the volume of traffic, just the frequency of delay. The project owner did not withhold superior knowledge because traffic flow could be readily determined through site observation.
Volume: 17, Issue: 6 - 03/29/2019
Workers’ compensation insurance, as mandated by state law, is essential on any construction project. The failure to insist on compliance can be catastrophic. One inexperienced project owner narrowly avoided liability, thanks to a recent ruling by the Virginia Supreme Court.
Other cases in this issue involve statute of limitations on engineering firms and anti-bid shopping statutes. Read more.
A nonprofit organization that undertook a one-time project to restore an historic building was not in the trade or business of real estate development or construction. Consequently, the project owner could not be considered the statutory employer of a worker, employed by an independent contractor, who was injured at the site. The project owner was not liable for workers’ compensation benefits.
A statutory claim limitation period started to run even though potential defendants – two engineering firms – questioned the cause of damage to equipment [Big Bertha tunnel boring machine (TBM) on the Alaskan Way Viaduct project]. Disputed causation does not toll a statute of limitation once the damage has occurred and the claimant has reason to know the cause of the damage.
A public project owner could invoke the procedures of the state anti-bid shopping statute regarding substitution for a subcontractor. Although the statute refers only to the prime contractor invoking the procedure, allowing the owner to initiate the process supports the objective of protecting the public through owner control over subcontractors.
Volume: 17, Issue: 5 - 03/15/2019
It is not unusual in the private real estate development industry to have common or overlapping ownership of property developers and constructors. Regardless of whether this is disclosed or undisclosed, it can pose risks and pitfalls for third parties on a project. This includes subcontractors, sureties, lenders and insurers.
A recent decision of the Montana Supreme Court provides an example. A developer and a constructor, commonly owned, entered into a collusive settlement agreement designed to subject the constructor’s insurer to an inflated liability claim. The court considered this fraudulent. Read more.
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A settlement agreement between a project owner and a constructor, which included a stipulated judgment against the constructor, was a collusive arrangement designed to maximize recovery from the constructor’s insurer. The project owner and the constructor were commonly owned by the same individual.