Construction Dispute

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The Army Corps of Engineers denied a construction permit for Alaska’s Pebble Mine project to proceed in accordance with the Clean Water Act (CWA).[1] Excavation of Pebble Mine — a sprawling depository of gold, copper, and molybdenum — would discharge fill material and dredge into U.S. waterways.

The project’s developers applied for a permit under the CWA, requiring the Army Corps to assess the project’s potential impact on nearby bodies of water. When project-produced dredge and fill threaten unavoidable adverse impacts on waterways, projects may not proceed without appropriate mitigation measures.

Gov. Wolf’s businesses closure orders and the business waiver process recently came under fire from the Western District of Pennsylvania Federal Court and the Pennsylvania Auditor General Eugene DePasquale. Gov. Wolf’s prior orders forced nearly all activities of the construction industry to cease in-person operations.

On September 14, the U.S. Court of Appeals for the Third Circuit addressed the perennially thorny issue of whether the courts or arbitrators retain the authority to resolve questions involving the enforceability of arbitration agreements. In MZM Construction Company, Inc. v. New Jersey Building Laborers Statewide Benefits Funds,[1] the Third Circuit held that the courts must decide questions of arbitrability in cases where a party challenges the validity of the underlying contract that contains the arbitration agreement — even when the putative arbitration agreement refers these questions to the arbitrators. The court’s decision highlights the complexities associated with the enforcement of arbitration clauses and the limits to a party’s ability to compel arbitration.

Albert Bates, Jr. and Danielle J. Volpe were published in Mealey’s International Arbitration Report with their article, “Zooming Ahead: Challenges and Considerations for Virtual International Arbitration Proceedings in the Wake of COVID-19 Pandemic.”

Danielle Volpe is a former associate of Troutman Pepper who recently became the General Counsel

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.

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.

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.