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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.

 

Construction Claims Advisor Reader Survey

 

We asked.  You responded.  We listened!  See the Reader Survey Results article below.



 

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.


 

The government did not waive a contractual completion deadline by acquiescing to the contractor’s continued work. The government was not required to evaluate the time required to complete the work. The default termination for failure to meet the contract completion date was affirmed.


 

A contractor did not have written subcontracts with trade contractors and no established obligation to pay the trade contractors. The contractor’s mechanic’s lien, which included amounts owed to the trade contractors and not the contractor itself, was substantially overstated and constructively fraudulent.


 

The results of the recent survey indicate that our readers are very happy with both the newsletter and the available material in the free resource library. This does not mean we will rest on our laurels and nothing will change; in fact, readers will see some immediate positive changes.

 

Here’s what we learned from the survey. To start, more than 25% of our readers are architects/engineers. When Construction Claims Advisor first started publishing, 80% of the audience were contractors or construction managers. The other 20% consisted of public and private owners, claim consultants, attorneys and A/Es. A closer look at the answers provided by the A/Es in the new survey is that they found Construction Claims Advisor useful in helping to better manage design as well as construction projects to avoid claims, and to help engineers achieve continuing education goals. Read more.


Volume: 17, Issue: 4 - 03/06/2019

 

No contractor ‒ prime, sub, or lower-tier sub ‒ should ever be allowed on a jobsite without a written agreement. Fundamentally, that contract defines contractual responsibilities and allocates risk. A summary of the many things that can go wrong under an informal, oral arrangement would take paragraphs. A recent appellate court decision from Illinois added a new wrinkle. Read more.

 

Construction Claims Advisor Reader Survey

 

Construction Claims Advisor is conducting a survey to measure reader satisfaction, and, more importantly, to learn how we can improve the value of the newsletter to you, including possible new or additional content.  Please take three minutes to participate in the survey, which can be done on your smartphone, tablet or computer.  Watch your inbox for an email message with a link to the survey, or click here to take the survey now.  Thank you.


 

A contractor did not have written subcontracts with trade contractors and no established obligation to pay the trade contractors. The contractor’s mechanic’s lien, which included amounts owed to the trade contractors and not the contractor itself, was substantially overstated and constructively fraudulent.


 

An engineer’s construction monitoring agreement disclaimed liability for consequential damages. General damages flow directly and necessarily from a breach of contract. Consequential damages arise from the non-breaching party’s dealings with third parties; in this case, the project owner’s dealings with the construction contractor.


Volume: 17, Issue: 3 - 02/15/2019

 

A large percentage of private disputes are resolved through arbitration. In reviewing an arbitration award in a construction contract dispute, a federal appeals court recently said, “We have become an arbitration nation.” The court then defined the scope of an arbitrator’s authority when interpreting and applying contract clauses.


An erroneous legal interpretation of a clause by an arbitrator is not grounds to vacate an award. And, arbitrators are entitled to find that the parties to a contract, through their conduct, waived or modified a contract clause. However, an arbitrator does not have authority to disregard an express contract provision, effectively reading it out of the contract in order to produce a desired result. Read more.


 

Arbitrators may find that parties to a contract waive or modify the terms of that contract through their course of conduct, but arbitrators may not disregard the express terms of a contract in order to reach a desired result. An arbitrator exceeded his authority when he refused to enforce a subcontract clause against the subcontractor because it would produce an unjust result.


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