Tag Archives: NC construction law

January 13, 2014 · 8:57 AM

When the Plans & the Code Don’t Mix, Can a Sub Sue a Design Professional for Negligence?

Photo by CGehlen via Flickr

Photo by CGehlen via Flickr *

Talk about being stuck between a rock and a hard place.

You’re an electrical sub who notices during your performance that installing certain light fixtures per plans would run afoul of the manufacturer’s instructions and violate the building code.  You bring the issue to the attention of your general contractor, who submits an RFI.  The architect’s response directs you to proceed per plans.  The system later malfunctions, and you incur significant cost researching the problem, ultimately concluding that the installation method directed by the architect is the culprit.  The architect refuses to pay your costs for researching the issue.

Might you have a claim for negligence against the architect?

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October 25, 2013 · 2:00 PM

Construction Tweets of the Week for the Week Ending Friday, October 25, 2013

1.  Scott Wolfe of Zlien.com tweeted about the pros and cons of filing a claim of lien on real property in advance of a construction mediation.  The linked blog post notes that while a claim of lien might enhance the claimant’s negotiation leverage, it might simultaneously generate adversarial tension up the chain, which in turn could make a mediated resolution more difficult to achieve.

It’s an interesting strategic question, particularly now that N.C. Gen. Stat. § 44A-23(d) expressly gives subs and suppliers the option to file their lien claims within 120 days of the prime contractor’s date of last furnishing, as opposed to their own date of last furnishing.  More than ever, timing is everything.    Continue reading →

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Filed under Construction Risk Management, Delay Claims, Federal law, policy & news, Federal Procurement, Lien Law, State law, policy & news, Subcontractors

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October 22, 2013 · 9:52 AM

Mediator/Arbitrator Hybrids: The Next Big Thing in Construction Dispute Resolution?

One of the oft-cited advantages of arbitration is that it is simpler, cheaper and faster than litigation.  Recent figures from the American Arbitration Association (“AAA”) suggest that while a commercial case may take up to two years to run its course through the judicial system, commercial cases can be resolved via arbitration between six months and a year.

Still not fast enough for you?  Then perhaps you might be interested in the following fast-track alternative dispute resolution procedure:

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October 3, 2013 · 8:58 AM

Who Benefits from Subcontractor Default Insurance? Not Project Owners.

The good folks at Bricker & Eckler, an Ohio law firm, recently blogged about a New York appellate decision concering subcontract default insurance (“SDI”), often referred to as “SubGuard” based on a Zurich SDI product of the same name.  The case involves a private owner who alleged it was misled by its construction manager (presumably at-risk) into believing that the SDI policy the CM had procured from the project’s largest subcontractor provided coverage to the owner in the event of that sub’s default.  Turns out the policy only named the CM, but not the owner, as an insured, and when the owner discovered it had no coverage after the sub’s default, it sued the CM for fraud, among other claims.

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September 25, 2013 · 8:00 AM

Is a 20-Year Express Warranty Good for Only Six Years in North Carolina?

Ten years ago, you had the roof on your office building replaced.  Your roofer had assured you that the new membrane would be waterproof, wouldn’t crack and would be well-suited for your building over the long-haul.  He even backed up these representations with a document stating that both the membrane and his workmanship were “fully warranted for 20 years.”

The work was substantially complete on September 15, 2003, and until recently, the new membrane hadn’t given you any problems.  After storms passed through your neck-of-the-woods last week, however, your “new” roof leaked.  Big Time.

Turns out you’re going to need to replace your roof immediately, ten years earlier than expected.  Adding insult to injury, interior spaces were damaged, including common areas and rented space, and the operations of some of your tenants were disrupted.  You suspect they might seek rent abatement, maybe more.  Good thing you kept that 20-year warranty in a safe place, right?

Kind of.  Under a recent North Carolina appellate decision, you might be able to compel the roofer to replace the roof, but you’re not likely to succeed in recovering any monetary damages from him.

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January 23, 2013 · 9:30 AM

10 Big Changes to Bidding, Performing & Making Verified Claims On NCDOT Projects

I represent a number of highway/heavy contractors, all of whom know that doing business with the North Carolina Department of Transportation (“NCDOT” or the “Department”) requires careful attention to the agency’s “Standard Specifications for Roads and Structures.”  NCDOT’s Standard Specs contain both front-end “General Requirements” (what would be called “General Conditions” on virtually any other public or private construction contract) and back-end standards for all aspects of highway work — from earthwork, pipe culverts, subgrade and asphalt pavements to signing, materials, pavement markings and electronic signalization.As my highway/heavy clients also know, the NCDOT’s Standard Specs are regularly revised every 4-6 years.  Last year, NCDOT issued the 2012 version of its highway construction bible, updating the 2006 version.  This post focuses on what I consider to be the ten most significant changes to NCDOT’s front-end “General Requirements.”  As you will see below, these ten revisions affect how contractors obtain, perform and make claims on NCDOT work.

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Filed under Contract Review & Negotiation, Delay Claims, Feature story, Highway Contracts, State law, policy & news

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January 17, 2013 · 11:21 AM

Foul Weather, Contract Time and Excusable Delay

Would snow tonight = excusable delay for contractors tomorrow? Image courtesy of The Weather Channel.

Would snow tonight give rise to excusable delay tomorrow? Image courtesy of The Weather Channel.

Is it just me, or has it been exceedingly gray and wet in Raleigh-Durham, NC so far in 2013?  Heck, forecasters are even calling for 3-6 inches of snow overnight in the Triangle (note to self: pick up milk, bread and other essentials during the lunch break, before the grocery stores shelves are predictably and thoroughly picked over).

The unusually dreary skies around here of late have me thinking about the intersection between the weather and construction delay claims.  Specifically, I’ve been ruminating on this question: when is a contractor’s project delay excused by nasty weather?

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December 28, 2012 · 10:19 AM

Forecasting Governor-Elect McCrory’s Infrastructure Funding Priorities

I recently came across this blog post from The Council of State Governments’ “Knowledge Center” blog.  The post forecasts the 2013 transportation funding challenges and priorities in 20 different states, North Carolina included.  Here’s what the post had to say about what might be expected once former Charlotte Mayor Pat McCrory (R) becomes our governor in January:

The Associated Press recently looked at where incoming Gov. Pat McCrory (the longtime Charlotte Mayor) stands on transportation issues: “Don’t punish cities that must spend lots of money improving interstates, he says.  Develop decades-long construction plans.  Keep politics out of funding road projects and work with the private sector.  And don’t be afraid to try something risky, like the Republican did in 1998 by lobbying for a referendum by voters that raised the local sales tax to help build Charlotte’s first light rail line.”  Transportation advocates in the state are reportedly encouraged that the governor-elect, who championed transportation’s ability to improve the economy as Mayor of Charlotte, could endorse more sustainable transportation revenue sources and win support from legislators.  But, as a Business Journal article pointed out earlier this fall, North Carolina’s gas tax is already among the highest in the nation and while the state has turned to tolling to help finance some projects, they have faced challenges with a couple of toll road projects.

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December 20, 2012 · 5:36 PM

N.C. Liens/Bonds, They Are A-Changin’ Part I: “Perfecting” Liens Under the New Regime

As 2012 draws to a close — faster than many of us can believe — the dawn of a new era under North Carolina’s mechanic’s lien and bond statutes quickly approaches.  And that means it’s high time for me to end my brief blogging hiatus with a series dedicated to helping construction industry participants throughout the state understand the changes that are rapidly coming down the pike.

By way of brief recap, legislation protecting general contractors from double payment liability on public projects and legislation protecting title insurers from “hidden liens” on private projects made splashy headlines this past summer.  I’ll be delving into the nuts and bolts of those significant changes as this series continues.  This post, however, is dedicated to addressing a less-publicized, but no less substantial, alteration to the lien law that every potential lien claimant will need to bear in mind in 2013, and beyond: the process by which lien rights are “perfected.”

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October 22, 2012 · 9:00 AM

The Surety’s Salvage Efforts: Equitable Subrogation v. Contractual Assignment Rights

It was an honor and pleasure to speak at last week’s surety and fidelity claims conference in Philadelphia hosted by the American Conference Institute.  Mark Oertel, a surety attorney from Los Angeles, and I closed out the conference on Thursday, October 18 with a presentation entitled “The Interplay Between Equitable Subrogation and the General Agreement of Indemnity’s Assignment Clause.”

Our remarks focused on two of the tools sureties use to minimize loss after satisfying claims made under payment and performance bonds.  One of those tools, equitable subrogation, allows the surety to step into the shoes and assert the rights of those entities to whom or on whose behalf the surety has performed or made payment.  That means after it performs its bond obligations, a surety becomes “subrogated” to the owner’s right to apply contract funds to completion costs, to the bond principal’s right to recover against poor-performing and/or late-performing subcontractors, and to the subs’ and suppliers’ rights to payment.  Since the courts have held that the surety’s equitable rights trump the rights of bankruptcy trustees, lenders and taxing authorities, equitable subrogation is undoubtedly the most powerful weapon in the surety’s salvage arsenal.

That’s MOST powerful.  Not ALL powerful.

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