CLOSE X
RSS Feed LinkedIn Instagram Twitter Facebook
Search:
FMG Law Blog Line

Archive for the ‘Construction & Design Professional’ Category

Pennsylvania Taking Steps to Help the Small Contractor

Posted on: November 21st, 2019

By: Josh Ferguson

There are currently two bills in the Pennsylvania House of Representatives intended to limit the ability of property owners, managers and general contractors from pushing their liability onto the sub-contractors.

Pennsylvania State Representatives introduced House Bill 1887, which would allow for only limited indemnification within construction contracts.  The Bill would amend Act 164, which has been in force since 1970.  If passed as written, the bill would significantly curtail broad and intermediate forms of indemnification.  Any level of negligence contributed by the owner or general contractor could eliminate their right to indemnification from a subcontractor.  This Bill would align Pennsylvania’s anti-indemnity statutes with that of Delaware, New York, and Ohio.

A similar indemnity limiting bill has been proposed to protect snow and ice management contractors. The Commercial Snow Removal Service Liability Limitation Act has been reintroduced into the Pennsylvania General Assembly. The proposed legislation, House Bill 1702, is intended to limit property owners and managers from passing on their negligence through hold-harmless agreements and indemnification clauses. Similar legislation has been adopted into law in Illinois, Colorado and Connecticut.

For further information or for further inquiries you may contact Joshua Ferguson of Freeman Mathis & Gary, LLP, at [email protected].

Georgia’s Statute of Repose Bars Contractual Claims Involving Deficient Construction

Posted on: November 21st, 2019

By: Jake Carroll

Georgia’s statute of repose provides an eight (8) year deadline for actions seeking to recover damages for deficiencies in construction.[1] The period runs from the substantial completion of the work, and was enacted with the intent of establishing an outside time limit on actions arising out of the improvement of real property. While Georgia courts have consistent held that the statute of repose bars claims for negligent construction, and that common law claims for indemnity and contribution are also barred by this statute of repose,[2] Georgia state courts have never addressed whether the statute also bars related contractual claims (i.e. indemnity, contribution, and breach of warranty).[3]

In S. States Chem., Inc. v. Tampa Tank & Welding, Inc.,[4] the Georgia Court of Appeals clarified the reach and application of the statute, holding that since Georgia’s statute of repose makes “no distinction” among claims sounding in negligence and those sounding in contract, “the statute broadly precludes any action to recover damages brought outside the eight-year period of repose.”[5] “It is well settled that ‘a statute of ultimate repose frames the time period in which a right may accrue, if at all. Therefore, if an injury occurs outside this time period, the injury is not actionable[.]’”[6] While the opinion specifically addressed claims for breach of an express promise to renovate a storage tank, the court’s reasoning appears to apply to bar all untimely contractual claims alleging deficiency in construction—including indemnity, contribution, and breach of warranty.

The decision provides clarity as to which claims are subject to the statutory window of liability for completed projects. However, even with these changes, owners and contractors should still review their construction contracts for specific provisions regarding completion, statutes of limitations, and indemnity. Additionally, the Court’s decision in S. States does not extend the statute of repose to claims for contractual indemnification where the indemnitor does not allege deficient construction and the indemnification provision does not require a showing of negligence.[7] Those claims would still be governed by the applicable statute of limitations.

If you have questions regarding this decision, or any other construction questions, Jake Carroll practices construction and commercial law as a member of Freeman Mathis & Gary’s Construction Law, Commercial Litigation, and Tort and Catastrophic Loss practice groups. Mr. Carroll represents business and commercial entities in a wide range of disputes and corporate matters involving breach of contract and warranty claims, business torts, and products liability claims.

[1] O.C.G.A. § 9-3-51(a) (“No action to recover damages for any deficiency in the . . . construction of an improvement to real property . . . shall be brought against any person performing . . . construction of such an improvement more than eight years after substantial completion of such an improvement.”).
[2] See e.g., Std. Fire Ins. Co. v. Kent & Assoc., 232 Ga. App. 419, 420 (1998) (“[C]laims for indemnity and contribution are among those contemplated by the Legislature when it enacted [O.C.G.A. § 9-3-51].”); Gwinnett Place Assoc., L.P. v. Pharr Engineering, 215 Ga. App. 53, 55 (1994) (indemnity claim); Krasaeath v. Parker, 212 Ga. App. 525 (1994) (contribution claim).
[3] Notably, a federal court interpreting Georgia’s statute of repose held that contractual indemnity claims in cases involving allegations of deficient construction were barred. Facility Constr. Mgmt. v. Ahrens Concrete Floors, Inc., 2010 U.S. Dist. LEXIS 29242, 2010 WL 1265184 (N.D. Ga. Mar. 24, 2010). However, that opinion was only persuasive to Georgia state courts.
[4] No. A19A0960, 2019 Ga. App. LEXIS 657 (Oct. 31, 2019).
[5] Id. at 18 (emphasis added).
[6] Id. (quoting Rosenberg v. Falling Water, Inc., 289 Ga. 57 (Ga. 2011) (citation omitted)).
[7] See Nat’l Serv. Indus. v. Ga. Power Co., 294 Ga. App. 810, 813 (2008).

How Technology is Changing the Construction World

Posted on: October 8th, 2019

By: Aaron Miller

The construction industry is growing at an enormous rate.  The Bureau of Labor Statistics expects the industry to add over 800,000 jobs between 2016 and 2026, finishing top amongst goods-producing industries.  Part of the reason for such a high rate of growth in the construction industry is the advent of new technology which not only enables contractors to keep costs down, but has been a big factor in the construction industry being able to add more jobs at such a high rate.

One of the fastest-growing technological advancements assisting the construction industry are drones.  While lower-end models can cost a few thousand dollars, the upper models can cost anywhere from $10,000 to $15,000.  Although this may seem like a substantial cost, there are substantial cost-savings and benefits associated with the use of drones.  Drones can assist with multiple areas of construction, such as 3-D mapping for site surveying of unstable or inaccessible terrain, inspections of unsafe locations, and damage assessments.  It is expected that over the next few years, the influx of new models into the market will make the cost much more palpable, even for smaller projects.

While drones are readily available to assist in construction projects in the present, technology will drastically change the construction industry in the not so distant future.  Researchers at MIT are currently working on robots, called Fiberbots, a digital fabrication platform that utilizes a series of small robots that work cooperatively to create fiber-based structures.  While the robots have so far only built tubular structures that are more for show than utility, the structures did survive outside during the Massachusetts winter, proving that they could be used in the future on permanent construction projects. In addition, the robots would be able to reach tighter areas less suitable for a human worker.

With the advent of new technology, comes new legal concerns as well.  The use of drones and robots opens up users to a variety of new legal issues. For example, who is contractually responsible for the use of the technology, the provider or the purchaser?  Is additional training for construction workers required? How should risk be allocated if an injury or building defect occurs due to use of the advanced technology?  While the advent of AI and other new technology will no doubt benefit the construction industry, we can expect legal developments will follow.

If you have any questions or would like more information, please contact Aaron Miller at [email protected].

The Statute of Repose Defense is Expanded

Posted on: September 23rd, 2019

By: Jeff Alitz

In John C. Rankin v. South Street Downtown Holdings, Inc v. Truexcullins and Partners Architects, decided August 6, 2019, The New Hampshire Supreme court extended the application of that state’s Statute of Repose to bar not only direct claims filed by plaintiff’s, but also to claims for indemnification and contribution that are filed by third-party plaintiffs after that state’s 8 year statute of repose period has run. In so ruling the Court clarifies – at least in New Hampshire – confusion over the reach and application of the Statute.

Unlike a statute of limitation, a statute of repose period typically starts to run on the completion of an improvement to real property and the period ends on a date established by state law. A substantial majority of states have enacted such time bar statutes of repose though there are state by state variations in them that should be considered by parties and their counsel. The statutory period is set by state law and it can vary from as short a period as 4 years (Tennessee) to up to 15 years (Iowa). Unlike the statute of limitations, there is no “discovery” component to the statute of repose or any “tolling” of the running of the statutory time period, rather, the period described in that statute starts to run when a real estate improvement is complete and ends with finality when the statutory time period concludes. No exceptions are typically available. At least one state’s highest court has called the application of the statute of repose “draconian”.

Consistent with that comment, after considering if third-party claims (brought by parties who were timely joined to the Rankin lawsuit), could be filed after the New Hampshire Statue of Repose period had run the New Hampshire Supreme Court implicitly ruled that the third party claims did not relate back to the successfully pled initial complaint, nor was there any exception that could save and preserve the third party claims. Accordingly, in broadly interpreting the preclusive language in the New Hampshire statute, that state’s highest court found that the statute does in fact means what it says and it does bar indemnification and contribution based claims that are not filed within the 8 year period established by the statute. While the Rankin decision is of course only binding in New Hampshire lawsuits the straightforward issue the case presents and the near universal presence of statutes of repose in other states suggests the case decision will be instructive to other state courts that consider this issue.

If you have any questions or would like more information, please contact Jeff Alitz at [email protected]

Georgia Federal Judge Enforces Contractual Liability Limitation, Cuts Jury Verdict in Half

Posted on: September 19th, 2019

By: Jake Carroll

A federal judge in Georgia enforced a limitation of liability clause in a construction contract for engineering services—reducing the jury’s award from $5.7 million to just over $2 million. See U.S. Nitrogen LLC v. Weatherly, Inc., No. 1:16-CV-462-MLB, (N.D.Ga. Sept. 16, 2019).

The case arose from the design and construction of an ammonium nitrate solution plant in Midway, Tennessee. The project owner, US Nitrogen (“USN”), hired Weatherly to provide engineering services related to the construction, and entered into a written contract.

Constructing the plant cost more money and took longer than the parties initially anticipated—to the tune of $200 Million. USN attributed more than $30 million of cost overruns and delays to Weatherly’s design, and brought suit against Weatherly for breach of contract, breach of warranty, professional negligence, negligent misrepresentation, and bad faith.

Following discovery, Weatherly moved for partial summary judgment, arguing that the contract contained an enforceable limitation of liability provision which capped the damages USN could seek to fifteen percent (15%) of Weatherly’s contract price. Weatherly also argued that the terms of the contract prevented USN from recovering consequential damages.

The court agreed with Weatherly—finding that USN could only recover up to $2,203,800 of the more than $30 million it was seeking—and the case proceeded to trial for the jury to determine the amount of damages incurred by USN as a result of Weatherly’s breach. Although the jury ultimately awarded $5,755,000 in damages, the court reduced the award to $2,203,800, pursuant to its earlier findings, and consistent with the terms of the contract. However, the judgment is not final: either party may still appeal the decision to the Eleventh Circuit Court of Appeals.

While Georgia courts have long recognized limitation of liability clauses as valid and enforceable, this case is another example of how carefully drafted contract language can mitigate future risk. Typically, a party’s exposure can be limited to the amount of compensation under the contract, or even less in Weatherly’s case. Such clauses are most frequently seen in contracts for services such as agreements with design professionals and testing laboratories. Nonetheless, there is no reason that they could not be included in general contracts and subcontracts.

If you have questions regarding this decision, or any other contract drafting questions, Jake Carroll practices construction and commercial law as a member of Freeman Mathis & Gary’s Construction Law, Commercial Litigation, and Tort and Catastrophic Loss practice groups. Mr. Carroll represents business and commercial entities in a wide range of disputes and corporate matters involving breach of contract and warranty, business torts, and products liability claims.