P.A.L. Environmental Safety Corp. v. North American Dismantling Corp. Et Al., No. 19-11630, 2020 BL 198779 (E.D. Mich. May 28, 2020)

A Michigan federal court partially granted Consumers Energy Company’s (“CEC”) motion to dismiss P.A.L. Environmental Safety Corporation’s (“PAL”) complaint alleging numerous causes of action in connection with its suit against CEC and contractor North American Dismantling Corporation (“NADC”) for outstanding payment stemming from asbestos abatement work at a CEC-owned power plant in Essexville, Michigan (the “Power Plant”).

According to the decision, CEC, as owner, and NADC, as prime contractor, entered into a written contract whereby NADC agreed to abate, dismantle, and demolish the Power Plant.  In turn, NADC subcontracted with PAL to perform abatement of all asbestos containing material at the Power Plant.  While the subcontract price was $7,996,331, PAL alleged entitlement to an adjusted price of $23,841,833 in unpaid labor and materials for its asbestos abatement work.  Specifically, PAL alleges that it performed additional work not accounted for in the subcontract including fly ash and coal dust removal, refractory brick abatement, and extra asbestos removal.

While PAL’s complaint included numerous counts against Defendants NADC, CEC, and labor and material payment bond surety North American Specialty Insurance Company (“NASIC”), the opinion is most notable for its treatment of CEC’s motion to dismiss several counts against it including: (i) quasi-contractual claims; (ii) a third-party breach of contract claim; and (iii) a negligent misrepresentation claim.
Continue Reading Michigan Federal Court Permits Subcontractor’s Quasi-Contractual Claims to Proceed Despite Existence of Express Contract Covering the Same Subject Matter

Gables Construction, Inc. v. Red Coats, Inc., No. 23, 2020 BL 193791, 2020 MD LEXIS 264 (Md. May 26, 2020)

Upper Rock II, LLC (“Upper Rock”) contracted Gables Construction, Inc. (“GCI”) to construct a multi-building apartment complex in Rockville, Maryland (the “Project”) per the terms of the American Institute of Architects (“AIA”) A102TM-2007, Standard Form Agreement Between Owner and Contractor and AIA A201TM – 2007, General Conditions of the Contract for Construction.  The General Conditions required Upper Rock to purchase and maintain a property insurance policy.  It also contained a waiver of subrogation provision under which Upper Rock waived all rights against GCI and other Project participants for damages caused by fire to the extent covered by insurance.
Continue Reading Maryland Court Holds No Right of Contribution Where a Waiver of Subrogation Precludes Common Legal Responsibility

N. Plains Res. Council v. United States Army Corps of Eng’rs, No. 4:19-cv-00044-BMM, 2020 BL 35412 (9th Cir. May 14, 2020)

Oil and gas pipeline construction may no longer proceed under Nationwide Water Permit 12 (NWP 12). The Ninth Circuit, by way of a two-judge panel, denied challenges to a district court decision vacating NWP 12 and enjoining the United States Army Corps (Army Corps) from authorizing oil and gas pipeline construction projects pursuant to NWP 12. The Order, which was issued without an opinion, has national effect and set a briefing schedule for reconsideration of a motion for an administrative stay. N. Plains Res. Council v. United States Army Corps of Eng’rs, No. 4:19-cv-00044-BMM.
Continue Reading Ninth Circuit Orders Enjoinment of Oil and Gas Line Construction Proceeding Under Nationwide Water Permit 12

Days after the World Health Organization declared the COVID-19 outbreak a global pandemic, governments from around the world scrambled to enact measures aimed at mitigating the spread of the virus. In the United States, cities and states have enacted travel restrictions, issued shelter-in-place orders, and directed nonessential businesses to shutter. While all aimed at mitigating the spread of the virus, these measures will have an immense disruptive impact on businesses and industries around the world — the construction sector included.

As notices concerning force majeure, changes in law, and change orders swirl, parties should prepare themselves for how these disputes will be managed and resolved. The COVID-19 outbreak will rapidly reshape how the construction sector does business. This article offers our insight into just once facet of the construction industry: alternative dispute resolution and how the COVID-19 outbreak has and will affect construction disputes going forward.
Continue Reading ADR for Construction Disputes During COVID-19: How to Manage Dispute Resolution Before and After the Dust Settles

Much has been written about whether and how COVID-19 qualifies as a force majeure event, and some additional information can be found here. But typical force majeure provisions entitle contractors to only schedule relief. While force majeure clauses may limit exposure to liquidated or consequential damages for delays, contractors who incur increased costs resulting from COVID-19 related delays should carefully evaluate the entirety of their contractual rights to not only an extension of time, but also recover prolongation costs. To assist in this endeavor, this article looks beyond force majeure to other potentially relevant contractual provisions. Potential remedies under the various contractual clauses discussed below will depend on the specific contractual language and project-specific facts.
Continue Reading COVID-19 and the Construction Industry: Looking Beyond Force Majeure to Recover Time and Costs for Delay

With the signing of the United Nations Convention on International Settlement Agreements Resulting from Mediation in August 2019, there has been a newfound focus on how parties can improve and expand the use of alternative forms of dispute resolution outside conventional litigation and arbitration proceedings.  Pepper Hamilton attorneys Albert Bates and R. Zachary Torres-Fowler contributed

This article was originally published on December 3, 2019 on ConsensusDocs. It is reprinted here with permission.

Construction contracts often include a “no damage for delay” clause that denies a contractor the right to recover delay-related costs and limits the contractor’s remedy to an extension of time for noncontractor-caused delays to a project’s completion date. Depending on the nature of the delay and the jurisdiction where the project is located, the contractual prohibition against delay damages may well be enforceable. This article will explore whether an enforceable no-damage-for-delay clause is also a bar to recovery of “acceleration” damages, i.e., the costs incurred by the contractor in its attempt to overcome delays to the project’s completion date.

Continue Reading Does a No-Damage-for-Delay Clause Also Preclude Acceleration Damages?

Chinese Hosp. Ass’n v. Jacobs Eng’g Grp., Inc., 2019 BL 330340, 2 (N.D. Cal. Sept. 03, 2019)

This case arises out of the alleged breach of contract and defective design for the construction of a new hospital in San Francisco.  During construction, property owner and plaintiff Chinese Hospital Association (“Chinese Hospital”) became aware of alleged defects involving the designs provided by its subcontractor, architect-defendant Jacobs Engineering Group, Inc. (“Jacobs”).  Chinese Hospital terminated its contract with Jacobs for convenience mid-construction.

Continue Reading Owner Did Not Waive Right to Damages by Terminating Design Contract for Convenience

Skanska USA Building, Inc. v. J.D. Long Masonry, Inc., No. 1:16-cv-00933, 2019 BL 336852, (D. Md. Sept. 9, 2019)

On September 9, 2019, a Maryland federal court awarded Skanska USA Building, Inc. (“Skanska”) compensatory damages, pre- and post-judgment interest, and litigation expenses including attorney and expert fees in its suit against subcontractor J.D. Long Masonry, Inc. (“Long”) for defective masonry work at a Johns Hopkins University research facility.

Continue Reading Maryland Federal Court Upholds Contractual Indemnity Clause and Awards Judgment Interest and Attorneys Fees in Masonry Suit