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Posts from February 2010.

In a recent Fairfax Circuit Court case, Travelers Indemnity Co. v. Simpson Unlimited, Inc., the court wrestled with the issue of what exactly constitutes an “improvement” under Virginia’s statute of repose found in Virginia Code Section 8.01-250.

Three Flint Hill Partnership, RLLP designated Simpson Unlimited Inc. to act as in independent contractor on a building construction project, requiring Simpson to repair and replace exterior building components, including removing and replacing terrace soffits on the eighth floor, as well as cleaning other building surfaces. Simpson submitted its application for final payment on December 4, 2002, and was paid for its work on December 16, 2002.

The Fourth Circuit has just issued their decision upholding the district court’s ruling in Universal Concrete Products Corporation v. Turner Construction Company, the topic of a December 2009 blog post on the Granby Tower litigation.

The parties agreed that the pay-when-paid clause in the Turner-Universal contract was unambiguous. However, just as it did at the trial court level, Universal argued that the subcontract incorporated the contract between Turner and the owner, creating an ambiguity about whether Turner would pay Universal before being paid by the owner. Universal relied on language that stated the costs the owner would reimburse Turner included “[p]ayments made by the Construction Manager to Subcontractors in accordance with the requirements of the subcontracts.” Just like Judge Martin, the Fourth Circuit concluded that clause related only to the reimbursement amount and not the timing of the payments.

Liddell, Alice & Lorina on See-Saw (Lewis Carroll picture 1860)Land use policy is the fulcrum in the tug of war between the property rights of individual owners and the regulatory interest of communities in establishing and enforcing a vision of their own community.  Three separate conversation and analysis threads bring home the reality that the cookie cutter approach to development and even to the ordinances and interpretations that govern development are not the best approach.  Indeed, inflexibility of approach and failing to encourage a more diverse and vibrant style of development are exactly the failings that the new schools of thought of "urbanism" are seeking to replace.

Roman shield scutum Dura-EuroposMy friend Vickie Pynchon recently posted at Chris Hill's blog, Construction Law Musings, on "How to Get Sued".  On the flip side, there are some simple pointers that all individuals and entities can follow that will dramatically reduce the chances of being sued.  These tips apply across a spectrum of businesses and are certainly not limited to just construction, real estate and land use.

A recently completed study by Arlington's Retail Task Force outlined some interesting conclusions for ground floor retail, suggesting something contrary to the status quo of conventional urban planning thought .  Traditionally, in Arlington County, as well as other urban jurisdictions, it has been a moot argument that good urban planning require ground floor space to be used almost solely for retail, or other similar uses that are thought to improve the pedestrian experience and serve the immediate vicinity's every-day needs.  Quite frankly, ground floor retail is simply expected by jurisdictions for almost all urban projects.

February 16, 2010
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Yale Harkness TowerAward winning design does not necessarily translate to an effective, successful or liveable built environment.  My interest and passion for interesting design is somewhat tempered by my having seen the consequences of projects not matching constructability and coordination with interesting design.  As I have previously revealed obliquely in my post on How to Pick a Lawyer, I am a junky for interesting technology, construction and design.  I still think that instead of art for arts sake, our building environment is our living environment and at its best, design and construction integrate these two potentially disparate arenas.

I have spent a career of construction litigation crossing boundaries in the industry.  I cut my teeth defending design professionals, but I have since represented contractors and subcontractors.  I have worked with owners and product manufacturers.  Each camp has its own shorthand description of the failures of others.  I have heard the constant grumblings of the inability of contractors to follow the plans and specifications (or at worst even read them).  On the other side, I have heard contractors complain that architects draw pretty pictures but are clueless about how to put buildings together.  I have seen examples where each criticism was fair and others where they were totally unwarranted.

NewspaperThere are a number of important construction law and economic developments that I want to pass along to our readers.  Given timing and the plethora of topics to address, I wanted to share these developments in a more rapid fire format so these updates remained timely.

Washington Snowstorm Lincoln MemorialSo, here in the Washington, DC area we are buried under a couple feet of snow.  You know we have a lot of snow when the Lincoln Memorial steps have been transformed into a good tobogan run.  Unfortunately, so much snow means a ton of dead load placed on roof structures.  There are a number of roof collapses reported around the area.  So far, the major blessing is it appears that none of these events have led to any serious personal injuries.  You can definitely expect that these significant collapse events will trigger equally significant property damage claims, business interruption issues, and perhaps threaten the long-term viability of some businesses.  These events include:

Here is a news report on the Baileys Crossroads roof collapse from WJLA:

[embed]http://cfc.wjla.com/mediaplayer.swf[/embed]

With the threat of more snow potentially on the way, the region may not have seen the last of these problems.  Building owners may face some significant hurdles to full recovery, including finding out the limitations of their insurance policies, facing problems with statutes of limitations and/or statutes of repose, and finding that responsible parties are casualties of the current economic crisis and thus are judgment proof.  All of these factors point to a few very important lessons:

  • Know and understand your insurance coverage and its limitations before you have problems
  • When shopping for insurance, evaluate risk and consider not just shopping for the lowest price; you may find that going cheap on insurance ultimately costs you far more
  • Know and understand applicable statutes of limitations and statutes of repose prior to entering into design, construction, or property purchase agreements
  • Factor in the impacts of these time limitation issues when you asses the appropriate levels and types of insurance your purchase
  • Do your homework - conducting detailed inspections prior to purchase and properly evaluating the strength and credentials of your consultants and contractors is an investment of time and money, but it is worth it in the long run rather than face a catastrophic loss in the future

Image by vpickering

Football PuntAfter much back and forth, the Soil and Water Conservation Board announced on January 14th that they voted to suspend their hotly debated changes to stormwater regulations to permit an additional 30-day comment period.  The stage was formally suspended on January 26, 2010 which means that the status will be stuck in suspension until a new round of comments opens from February 15 through March 17.

We reported on the both the initial regulations and later changes to the proposed regulations which eased some of their impacts on the home building industry.  The Home Builders Association of Virginia indicates that they mobilized significant response and opposition to even the later round of regulations.

In 2002, Brenda Kersey received a $71,397 mortgage loan to purchase a home in Richmond, Virginia. The loan was a Federal Housing Administration (“FHA”) loan governed by FHA regulations. PHH Mortgage Corporation was the holder of the note in connection with Ms. Kersey’s loan.

Like so many unfortunate homeowners, Brenda Kersey fell behind on her mortgage payments. PHH appointed the Professional Foreclosure Corporation of Virginia (“PFC”) as substitute trustee on the Deed of Trust securing the mortgage and instructed PFC to foreclose on Ms. Kersey’s home. PFC scheduled a foreclosure sale without having or attempting to arrange a face-to-face meeting between PHH and Ms. Kersey.

Hand with MoneyRockville based contractor Hann & Hann will pay $600,000 plus the plaintffs' legal fees to settle a wage and overtime based class action suitAs reported in the Washington Post by Rubin Castaneda on January 30, 2010, Hann & Hann agreed to pay overtime plus 50% for every employee working with the company not paid overtime between May 8, 2006 and May 8 2008.

There are a couple important subtexts to this case and settlement.  First, reports describe the 200 plus employees and former employees as almost all Spanish speaking immigrants.  This naturally raises questions not only of immigration status, but also of whether the contractor was perceived as taking advantage of employees less able to defend themselves.  In this case, the employees not only had the Immigrant and Refugee Rights Project at the Washington Lawyers' Committee for Civil Rights and Urban Affairs on the case, but also were represented by Arnold and Porter pro bono.