This article summarizes statutory remedies available to contractors, subcontractors and material suppliers when upstream parties fail or refuse to release payments on public and private construction projects. Entities furnishing work or materials have several statutory means to enforce their rights to payment, including mechanic’s liens, payment bond claims, and/or claims for violation of state prompt
Tocci Bldg. Corp. v. IRIV Partners, LLC, 101 Mass. App. Ct. 133 (2022)
For the first time, the Appeals Court of Massachusetts has construed the Massachusetts Prompt Payment Act (the statute), requiring strict compliance on the part of owners and contractors who wish to withhold payments from contractors or subcontractors.…
Most are familiar with California’s harsh penalty for unlicensed contractor work. California Business and Professions Code Section 7031 (Section 7031) bars any recovery for compensation for work performed by an unlicensed contractor under any theory of recovery “regardless of the merits of the cause of action.” Cal. Bus. and Prof. Code § 7031(a). It is well-established that subcontractors are covered by Section 7031 from recovering from owners and general contractors if not properly licensed. See Cal. Bus. and Prof. Code § 7026. However, in Kim v. TWA Construction, Inc., 78 Cal.App.5th 808 (2022), the California Court of Appeal, in a matter of first impression, expanded the effect of Section 7031(a) to bar a licensed general contractor recovering from an owner for work completed by an unlicensed subcontractor.
Continue Reading CA Court of Appeal Affirms Bar on Recovery of Licensed General Contractor for Work Performed by Its Unlicensed Subcontractor
Bean Sprouts LLC v. LifeCycle Construction Servs. LLC, No. 001268-CV-2021 (Pa. Super. Feb. 17, 2022)
The Superior Court of Pennsylvania recently raised the bar for state courts to assert jurisdiction over out-of-state defendants in actions brought by residents arising from out-of-state projects.…
Continue Reading Pennsylvania Appellate Court Affirms Dismissal of In-State Subcontractor’s Suit Against Out-of-State General Contractor for Lack of Jurisdiction, Despite “Long-Term and Ongoing Contractual Relationships”
Construction and Energy Practices Honored With National Awards
Law360 has named two Troutman Pepper practices among its Practice Groups of the Year for 2021. The firm achieved the national recognition for both its Construction and Energy practices. According to Law360, 91 firms submitted nearly 900 nominations for the awards, which “honor the law firms behind the litigation wins and major deals that resonated throughout the legal industry in the past year.”
Construction Group of the Year
“We are excited to be recognized nationally for our work in the construction space,” said Mike Subak, who leads the firm’s Construction Practice Group. “Our team advises industry leaders on both their largest projects as well as their day-to-day details, and the work is incredibly rewarding.”…
Continue Reading Law360 Recognizes Troutman Pepper Practices as 2021 Practice Groups of the Year
This article summarizes the current landscape in Pennsylvania and California as COVID-19 restrictions are lifted, and highlights important considerations for employers in the construction industry in relation to vaccines and navigating a post-mask mandate world.
Continue Reading COVID-19 and Remobilization: Returning to the Construction Site Without Mandated COVID-19 Restrictions
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
On April 20, Pennsylvania Gov. Tom Wolf amended his March 19, 2020 Order titled, “Regarding the Closure of All Businesses That Are Not Life Sustaining.” Under the previous order, construction was permitted to continue only if the business qualified as “life-sustaining” and was performing emergency repairs or if the business obtained a waiver.
The amended order paves the way for construction projects to start again throughout the Commonwealth. On April 23, Gov. Wolf announced that statewide construction can commence on May 1, 2020 and provided additional information related to the amended order in an accompanying document titled “Guidance for Businesses in the Construction Industry Permitted to Operate During the COVID-19 Disaster Emergency.” Gov. Wolf specified that the amended order applies to “all businesses in the construction industry in the Commonwealth, including those in new construction, renovation, and repair[.]” Prior to May 1, all construction industry businesses must continue to follow existing guidelines. A full list of businesses that may maintain in-person operations before May 1 can be found here.…
Continue Reading Pennsylvania Governor Paves Way to Reopen Construction on May 1
COVID-19 has created a severe disruption to the construction industry. Certain jurisdictions, including Boston, San Francisco and Pennsylvania, have placed restrictions on construction projects deemed “nonessential” and require waivers for certain projects to continue. Owners, contractors, suppliers and others may currently have more questions than answers. This article addresses some important concerns, and provides links to additional resources that more specifically address these concerns.
Continue Reading COVID-19 and the Construction Industry: Important Considerations
Decker Constr. Co. v. Wesex Corp., No. 2:18-cv-727, 2019 BL 232653 (S.D. Ohio June 24, 2019)
In Decker Construction Co. v. Wesex Corporation, the United States District Court for the Southern District of Ohio declined to dismiss a cause of action for fraudulent misrepresentation against Third-Party Defendant Mark Schrader (“Schrader”), the former Chief Financial Officer of Wesex Corporation (“Wesex”). Wesex served as the general contractor on a construction project in New Albany, Ohio (the “Project”). In its claim against Schrader, Third Party Plaintiff CCL Label, Inc. (“CCL”), the construction manager on the Project, alleged that Schrader signed affidavits included in Wesex’s payment applications that falsely certified Wesex’s subcontractors had been paid for their work on the Project. Schrader sought dismissal on the basis that the Court lacked personal jurisdiction over him and that CCL failed to state a claim.
Continue Reading Ohio Federal Court Declines to Dismiss Action Against the Officer of a General Contractor Who Allegedly Submitted False Certifications Regarding Payments Made to Subcontractors With Payment Applications