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Doug Hanson

The Punch List provides you with a review of current state and federal cases, as well as legislative and regulatory changes, affecting the construction industry. Some of the topics include contracts, classification of workers, construction bidding, independent contractors, negligence, construction defects, liens, insurance claims, and various other important topics in the industry.  Click on the subscription button below to customize your updates.
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Contractors’ Teaming Agreement Held Unenforceable “Agreement to Agree”

Tuesday, 20 August 2013 15:21


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A federal district court in Virginia recently held that a “teaming agreement” between two contractors was unenforceable. Teaming agreements are commonly used agreements wherein a general contractor agrees with a subcontractor, prior to the award of the government contract, to enter into a subcontract with the particular subcontractor if the contractor is ultimately awarded the government contract. Such agreements are typically lacking in specific detail but are commonly used and allow contractors and subcontractors to put together strong proposals for winning government contracts. In this case, however, the court called into question the enforceability of such agreements.

   

Contractors’ Uninsured Exposure Tool: Consent Judgments

Tuesday, 20 August 2013 13:05


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After an insurance company refuses to defend or indemnify an insured under the insurance policy, the insured can be left in a vulnerable position. Often times, when faced with such a position, an insured can enter into a consent judgment with the injured party, whereby the insured will concede liability and assign its rights under the insurance policy to the injured party. In turn, the injured party agrees not to enforce the judgment against the insured, instead filing a lawsuit against the insurance company in an attempt to establish the right to collect from the insurance company under the policy’s terms. The Supreme Court of South Dakota recently decided a case wherein a general contractor conceded liability in the construction of a $1.3 million dollar home and assigned his rights to the homeowners to proceed against the insurance company.

   

Defective Workmanship can now be an “Occurrence” under Commercial General Liability Policies in West Virginia

Thursday, 15 August 2013 08:34


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West Virginia recently joined the majority of states which have held that defective workmanship in a construction project is an “occurrence” under commercial general liability (CGL) insurance policies.  The decision by the Supreme Court of Appeals of West Virginia expressly overruled several prior cases that had arrived at the opposite conclusion for construction law claims. Now, if it is found during the course of a construction project that defective workmanship caused a personal injury or damage to the property, such loss will be covered in the definition of an “occurrence” for CGL insurance coverage.

   

Contractors Must Follow Correct Administrative Procedures to Pursue Lawsuits Against Government Boards

Wednesday, 14 August 2013 13:21


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The Tennessee Court of Appeals holds that challenges to board and commission decisions must strictly follow the administrative procedures established by the governing statutes.  Failure to comply with these administrative processes will prevent a trial court of having subject matter jurisdiction over a particular claim. The case arose from a contractor who had submitted bids for various projects with the Metropolitan Development and Housing Agency (“MDHA”).

   

Pay-if-paid clauses: Shifting the Risk of Nonpayment to Subcontractors

Monday, 22 July 2013 08:11


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Securing payment for services rendered is naturally a critical component to business operations in the construction industry. The unique relationship between general contractors and subcontractors in the industry has given rise to certain payment clauses that can directly impact the ability of a subcontractor to secure payment for work performed.  For instance, “pay-if-paid” clauses shift the risk of a project owner’s nonpayment to a subcontractor, rather than the general contractor. Under such a clause, the general contractor is only liable to pay a subcontractor if the contractor is paid by the owner.  In contrast to pay-if-paid clauses, “pay-when-paid” clauses place the risk of an owner’s nonpayment on the general contractor because it must pay the subcontractor within a reasonable time of receiving payment from the owner, regardless if the owner ever actually pays the general contractor.  Disputes frequently arise over the interpretation of such clauses when owners fail to pay general contractors, in whole or in part. The Ohio Court of Appeals recently sought to determine whether a contract payment provision clearly and unambiguously indicated that the subcontractor was obligated under a paid-if-paid clause or a pay-when-paid clause.

   

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