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The COVID-19 pandemic continues to impact the construction industry, and many countries continue to implement new or more stringent restrictions on entry into their borders. Those travel restrictions can impact any company with cross-border supply chains or employee travel. This article addresses some of the travel restrictions in place in the United States, Canada, and members of the European Union (EU); exceptions to those requirements; and some best practices when navigating across borders.
Continue Reading COVID-19 and Border Crossings: Considerations and Best Practices for Global Constructors and Suppliers Crossing US, Canadian, and European Borders

Mealey’s International Arbitration Report – Nov. 2020
[Editor’s Note: Copyright # 2020, LexisNexis. All rights reserved.]
Commentary by Troutman Pepper Partner Albert Bates, Jr.

Mealey’s International Arbitration Report recently asked industry experts and leaders for their thoughts on what events had an impact on global economy that have led to an increase in filings. We would like to thank the following individuals for sharing their thoughts on this important issue.

  • Sarah Reynolds, Partner, Mayer Brown, Chicago
  • Peter A. Halprin, Partner, Pasich LLP, New York
  • Helen Conybeare Williams, Counsel & Solici­tor Advocate, Haynes and Boone LLP, London
  • Sandra Smith Thayer, Partner, Pasich LLP, Los Angeles
  • Lisa Houssiere, Principal, McKool Smith, Houston
  • Gene Burd, Partner, FisherBroyles, Washington
  • Albert Bates Jr., Partner, Troutman Pepper, Pittsburgh
  • Charlie Lightfoot, Co-chair of International Arbitration Practices and Managing Partner, Jenner & Block, London
  • Thomas Wingfield, Associate, Jenner & Block, London.
    Continue Reading International Arbitration Experts Discuss The Impact On The Global Economy

When is it going to return to “normal”? We all have been asking that question. Well, for the construction industry, it may never return to “normal.” COVID-19 may have permanently changed the landscape of the construction industry in many ways. Depending on your perspective, many changes could be for the better. We may have to alter how we do business to address some new issues and business concerns. Here are just a few issues that the pandemic has brought to the forefront of our industry.
Continue Reading Subtle (and Not So Subtle) Effects of COVID-19 on the Construction Industry

On June 8, 2020, Level 10 Construction, LP (“Level 10”), a construction company hired by Sea World San Diego (“Sea World”), filed a Complaint in California federal court alleging that Sea World is withholding over $3.2 million dollars in payments from Level 10. In the Complaint, Level 10 alleged that Sea World has declined to issue payments until the Sea World park reopens. Sea World has remained closed since March 2020 due to COVID-19.
Continue Reading Level 10 Construction v. Sea World LLC: Can Force Majeure Save Sea World?

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

D.A. Nolt, Inc. v. The Philadelphia Municipal Authority, 2020 BL 199761 (E.D. Pa. May 28, 2020)

The Philadelphia Municipal Authority (the “Authority”) contracted D.A. Nolt, Inc. (Nolt) to renovate a building that would serve as the City’s new police headquarters. After Nolt had performed a portion of the renovation work, the Authority cancelled the project. Nolt sued the Authority, alleging that the Authority owed it $2.5 million for work performed before the project was cancelled. The Authority denied that payment was due, claiming that Nolt had delayed the project by 255 days and that a $10,000 per day liquidated damages provision in the contract thus offset Nolt’s claim.

Nolt moved for summary judgment on the Authority’s liquidated damages counterclaim. It argued that the provision was unenforceable because the $10,000 per day amount was not a reasonable forecast or approximation of the loss the Authority expected to suffer in the event of delay. Nolt cited testimony from the Project Director for the City’s Department of Public Property, who was responsible for finalizing the Authority’s contract with Nolt. The Director testified that he did not estimate the anticipated harm that might occur in the event of a delay in Nolt’s work. Rather, he determined that $10,000 per day was reasonable because prior City projects of a similar scope and magnitude included $10,000 per day liquidated damages provisions. The Director was not personally involved in the analysis which the City had undertaken on the referenced prior projects, and he did not personally analyze any of the calculations or estimates that the City completed for those prior projects.
Continue Reading Federal Court in PA Finds Liquidated Damages Provision Unenforceable Where the Per Day Liquidated Damage Amount Was Copied from Contracts for Prior Unrelated Projects Rather than a Project-Specific Forecast of Likely Damages

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

On April 17, the California Court of Appeal decided Crosno Construction, Inc. v. Travelers Casualty & Surety Company of America,1 effectively narrowing the scope of enforceable “pay-when-paid” provisions in construction subcontracts to the extent the subcontractor seeks recovery against a general contractor’s payment bond surety. Although the Crosno case involved a public works project, the rationale and holding should apply with equal force to private works projects. Basing the bulk of its decision on the Wm. R. Clarke Corp. v. Safeco Insurance Co.2 case, the court found that an open-ended “pay-when-paid” provision in a subcontract is not enforceable against a subcontractor that seeks to recover on a public works payment bond claim. This article discusses the Crosno decision and the implications for contractors on both sides of the contract moving forward.
Continue Reading California Appeals Court Provides Guidance on ‘Pay-When-Paid’ Provisions in Construction Subcontracts