A New York appellate court issued a decision in 2016 that serves as an important reminder to all tiers of the construction industry: courts take the notice provisions in your construction contracts very seriously. In the Schindler Elevator Corp. v. Tully Const. Co., Inc. case, the Appellate Division dismissed a subcontractor’s claim in its entirety because emails and letters that the subcontractor provided to the prime contractor did not comply with the strict notice provision in the prime contract. Continue Reading
The new — and much anticipated — Pennsylvania State Construction Notices Directory (“Directory”) is expected to go live this December 31. With this rollout, the PA legislature will have established a statewide directory system for owners to list projects and create a new lien notice requirement for projects in excess of $1.5 million. The Directory for the Pennsylvania Mechanics’ Lien Law, which was signed into law in October 2014, provides the following important changes: Continue Reading
As a follow-up to our July post on New Jersey state budget problems threatening public construction projects, the political fight over funding New Jersey’s Transportation Trust Fund (“TTF”) finally ended on September 30, 2016. Governor Chris Christie and the legislature agreed to a compromise whereby the TTF will be reauthorized for eight years and funded with an additional 23 cent per gallon gas tax, for a total funding of $2 billion per year. As part of the compromise, the estate tax will be phased out by 2018, the sales tax will be reduced by 3/8th of a point, and other credits and deductions will be added to the NJ tax code.
On November 21, 2016, a federal judge in Texas issued a nationwide injunction blocking the Department of Labor’s new overtime rule, which sought to expand the obligations of employers to pay overtime by, among other things, doubling the minimum salary threshold for the “white-collar” exemption under the FLSA. The decision brings relief to employers who were bracing themselves for the rule’s December 1, 2016 effective date. Continue Reading
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In the world of construction, the old legal saying “equity aids the vigilant, not those who slumber on their rights” rings true. A weary contractor risks more than an OSHA violation – when a contractor fails to protect its legal rights, it can wake up near the end of the project only to find that it has lost a substantial amount of money with little ability to recover.
[Note from the Editor: Due to an inadvertent editing error, omitted from our post entitled NJ Supreme Court Gets It Right! Consequential Damages Caused By A Subcontractor’s Defective Construction Work Is Insured was the fact that the property damage at issue occurred after the project was completed. The insurance coverage at issue in the case was completed operations coverage included in the commercial general liability form. The corrected article appears below.]
The New Jersey Supreme Court’s August 4, 2016 decision in Cypress Point Condominium Association, Inc. v. Adria Towers, LLC opened the door for general contractors to obtain insurance coverage under their commercial general liability (CGL) policies for property damage caused by their subcontractor’s defective work after the project was completed. Continue Reading
Contractors doing work on publicly-owned projects in Pennsylvania may find it more difficult to recover statutory penalties and attorneys’ fees if the owner withholds funds in bad faith. Pennsylvania’s Procurement Code, which governs bidding on public projects and payment to prime contractors and subcontractors, is intended to “level the playing field” between government and contractor. Similar, but not identical to the private prompt payment act, the statute provides for the award to the contractor of interest, a penalty in the amount of 1% of the unpaid balance per month, and attorneys’ fees if the public entity acts in bad faith by refusing payment that is due to the contractor. Pennsylvania courts previously interpreted this statute to mean that if a jury determined that the public entity acted in bad faith, then an award of penalties and attorneys’ fees was required.
Over the past year, many states experienced budget crises that threaten public works spending and, in some cases, caused entire project shut downs. In Pennsylvania, a stalemate over the budget for Fiscal Year 2016-2017 lasted almost nine months, causing companies and non-profit grant recipients who had contracts with the Commonwealth to suspend their services or temporarily close. In New Jersey, Governor Christie and the legislature deadlocked over taxes, including an increase to the gas tax that would fund the Transportation Trust Fund (“TTF”). As a result, Governor Christie issued Executive Order No. 20, which shut down all construction projects funded by the TTF that were not “absolutely essential for the protection of the health, safety, and welfare” of New Jersey citizens. The Executive Order was issued on June 30, 2016, a list of projects subject to shut down was published on July 6, 2016 and the projects were shut down by July 8, 2016. Continue Reading
In the recent case of Township of Salem v. Miller Penn Development, LLC, the Pennsylvania Commonwealth Court invoked the often overlooked doctrine of nullum tempus occurrit regi. Read literally as “time does not run against the king,” as a general rule, nullum tempus allows the Pennsylvania state government or agencies to sue government contractors at any time, regardless of a statute of limitations defense. Nullum tempus also applies to claims brought by local governments, such as school districts, municipalities and counties, but only if the local government 1) brings its claims in its governmental capacity and 2) seeks to enforce an obligation imposed by law, as distinct from one arising out of a voluntary agreement.